Nickel mining for EVs fuels risk of abuses in Southeast Asia

• Demand for electric vehicles (EV) is soaring worldwide
• Indonesia and the Philippines are top producers of nickel
• NGO says nickel mining there poses various rights risks

KUALA LUMPUR - As electric vehicle (EV) production and sales pick up pace in much of the world - with climate-conscious drivers looking to go green - the mining of a key metal is threatening communities and nature in Indonesia and the Philippines, a report has warned.

Most of the EV uptake to date has been in the United States, Europe and China, but as more governments strive to meet their global climate pledges and switch to renewable energy, financial incentives are being ramped up to help manufacturers and drivers make the switch, especially in untapped Southeast Asia.

Countries across the region are jostling to become EV manufacturing hubs. Malaysia, the Philippines and Indonesia are keen to highlight their ample rare earth and nickel reserves, with the latter a key material in producing EV batteries.

However, human rights and environmental abuses are occurring in the nickel sector in Indonesia and the Philippines, according to the Business and Human Rights Resource Centre (BHRRC).

The report is part of the NGO's "just transition" research, looking at how countries are switching to greener, cleaner energy, and how economies can be fair to everyone affected.

"While this shift to greener sources of energy must be encouraged, now is the time to start asking serious questions about the human rights abuses in electric vehicle supply chains," said Pochoy Labog, the author of the report.

Here's what is known about nickel mining and its supply chain in the Philippines and Indonesia:

Why is nickel so important for electric vehicles and where is it being mined?

Demand for nickel - an essential material for EV lithium-ion batteries - is likely to soar in the coming years as more governments offer incentives for people to switch to EVs.

Indonesia and the Philippines and are the top two nickel producers, home to more than half of the world's supplies, according to BHRRC.

Indonesian President Joko Widodo banned exports of nickel ore in 2020, but allowed exports of higher value nickel products, forcing companies to process and manufacture onshore.

Jakarta has signed deals worth more than $15 billion for battery and EV production with manufacturers including Hyundai Motor, LG Group and Foxconn in just three years, while President Widodo has personally tried to persuade Tesla CEO Elon Musk to invest.

The Philippines is also now looking at taxing nickel ore exports to encourage miners to invest in local processing instead of just selling raw ore.

How is the nickel industry affecting Southeast Asian communities?

Nickel mining and processing in Indonesia and the Philippines have major environmental and rights risks, BHRRC warned.

These include a lack of free, prior consent obtained from Indigenous communities for the mining of their lands, the destruction of rainforests, crop damage, water contamination, health issues such respiratory problems, and a decline in local fish stocks.

"The human rights abuses in electric vehicle supply chains need to be urgently interrogated and mitigated if a just transition to renewable energy is to be achieved – and supply chain transparency and accountability must be at the heart of this," said Labog, BHRRC's Southeast Asia researcher.

Some Indonesian nickel mines are also operating without permits and have caused deforestation in protected areas, contaminating the soil and polluting the ocean, Danny Marks, assistant professor of environmental politics and policy at Dublin City University, warned recently. 

Furthermore, making battery-grade nickel produces a lot of planet-heating emissions, activists have said.

How can Southeast Asia's nickel industry be cleaned up?

Labog said solving the nickel industry's challenges in Indonesia and the Philippines would involve electronics companies and other buyers cleaning up their supply chains.

Mining firms must set a clear and urgent goal to implement human rights and environmental due diligence in operations and supply chains, alongside access to remedy, with special emphasis on land and Indigenous rights risks, the report said.

For EV makers, implementing human rights due diligence processes throughout their businesses is vital, using worker and community engagement and adopting a zero-tolerance approach to abuses, according to BHRRC.

Financiers and other investors must also commit to rights-respecting investments by undertaking and promoting analysis consistent with U.N. guidelines for all transition minerals mining and renewable energy investments, the report said.

Buyer and producer countries meanwhile, must adopt human rights legislation to ensure nickel miners and processing firms conduct their business ethically, Labog said.

To help address these challenges, Indonesia's Widodo pledged earlier this year to improve monitoring of environmental standards for nickel mining, saying that companies will be required to manage nurseries to reforest depleted mines and use renewable energy to power their operations.

In the Philippines, the government in 2017 ordered the closure of 26 open-pit mines, mostly of nickel. However, it allowed them to resume operations in 2020 - saying that the companies in question had fixed their mistakes.

Despite the report's findings, Labog said there was still an opportunity for the nickel industry in Southeast Asia to iron out abuses and go green, if all those involved became engaged with the process.

"We can start from the buyers being serious," he said. "These are electric vehicle companies - they already have a social dimension (of) thinking about climate change."

"We have an opportunity here to not replicate past practices," he added.

(Reporting by Michael Taylor in Kuala Lumpur, Additional Reporting by Mariejo Ramos in Manila; Editing by Kieran Guilbert)