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Article

17 Jun 2024

Author:
Bloomberg Businessweek

Indonesia: Hidden labour and environmental costs in nickel supply chains challenge EV manufacturers' commitments to responsible sourcing

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Business & Human Rights Resource Centre

"The Deadly Mining Complex Powering the EV Revolution" 17 June 2024

...In most cases, auto manufacturers don’t directly source battery materials, and it’s difficult if not impossible to trace the metal in a given car to a specific nickel facility...an extensive review...shows that nickel from IMIP is present in the supply chain that feeds virtually every major seller of EVs...

...companies processing nickel there have direct or indirect supply relationships with many of the world’s largest manufacturers of batteries and battery materials, including South Korea’s LG Chem, Samsung SDI and SK Innovation... There’s a strong chance that metal is being used, or will soon be, in at least some cars manufactured by Tesla Inc., as well as BMW, Ford, General Motors, Hyundai, Stellantis and Toyota, among others...

Each of these companies has adopted extensive pledges on responsible sourcing... They nonetheless depend on workers who perform dirty, dangerous jobs with few safeguards ...BMW, Ford, General Motors, Mercedes-Benz, Stellantis, Toyota, and Volkswagen emphasized that they don’t have direct business relationships with IMIP, but said they expect companies in their supply chains to comply with labor and environmental standards...LG Chem Ltd. and SK Innovation Co. didn’t respond to requests for comment about their links to IMIP; Samsung SDI Co. declined to comment. Tesla and Hyundai didn’t respond to requests for comment...

Respiratory illnesses are a common complaint in the community surrounding IMIP, whose industrial tenants rely on coal for power...Waterways in the area are rusty red, a result of runoff from mining operations...Very little of the money invested in IMIP has filtered into the community......fatal accidents were common in Indonesian nickel facilities...In interviews with Businessweek, more than a dozen current and former IMIP workers expressed worry about safety conditions, or said they had personally witnessed or been affected by workplace accidents...

Nickel industry managers say they’re mitigating, and compensating for, their social and environmental impacts...To Hamid Mina, IMIP’s managing director, this choice of energy source, and everything else, comes down to the cost to the ultimate end-users: carmakers and their customers...

In 2022, Tesla entered long-term supply contracts for battery materials with two Chinese companies, Zhejiang Huayou Cobalt Co. and CNGR Advanced Material Co...A substantial proportion of that material is likely coming from IMIP, or will soon. Huayou is the majority owner of an Indonesian entity called PT Huayue Nickel Cobalt...CNGR is the lead investor in another IMIP smelter, PT Zhongtsing New Energy...Other EV manufacturers have similar connections to Morowali, through intermediaries...

Another example begins with an IMIP smelter called PT QMB New Energy Materials, which is controlled by China’s GEM Co. The Korean company EcoPro is an investor in PT QMB, and GEM identifies it in filings as a major customer...EcoPro declined to comment...A unit of China’s Contemporary Amperex Technology Co., whose batteries are used in vehicles from Mercedes-Benz and Volkswagen, among others, also has a stake in PT QMB, though a spokesperson said that “no CATL batteries include nickel from IMIP.”...GEM didn’t respond to a request for comment...Huayou and CNGR said they raised safety standards after the Dec. 24 explosion...

Even if carmakers wanted to, it would be challenging to ensure their vehicles don’t contain nickel from IMIP or any other specific mine or smelting complex...the introduction of such a separate supply chain is years away. For now, most carmakers will continue to get their nickel from the cheapest, most abundant sources available—with the costs borne by the mainly poor Indonesian and Chinese workers who operate mines and smelters...

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