Earlier this month, the US government , sounded the alarm , over the usage of , forced labor , in the copper mining of Indonesia.
Because of the high levels of nickel required to produce batteries for electric vehicles ( EV ) batteries and other low-carbon energy technologies, the finding has significant implications for the energy transition.  ,
Indonesia, which holds roughly a quarter of the country’s metal reserves, employs around 6, 000 Chinese immigrant workers under usually predatory conditions: lower wages, extended hours, monitoring and isolation.
Regardless of the cost to humans or the environment, this innovative listing shows what has long been known about Indonesia’s stressed nickel industry.
Nickel’s business in Indonesia is being closely watched for both its intense environmental harm and labor rights violations.
BASF’s recent , withdrawal , from a US$ 2.6 billion metal factory in Weda Bay, Indonesia, reflects mounting international issues. Although BASF attributed its decision to business relationships,  , calls , from environmental and human rights organizations against the task played a major role.
BASF’s leave and the US Department of Labor’s required labor , finding , may serve as a wake-up contact for the fresh energy and mechanical sectors.  ,
Indonesia’s metal economy is powered by billions of dollars of Taiwanese purchase. This poses a risk to the fresh energy change, especially for those that use metal in EV batteries.  ,
An investigative review from , Bloomberg News paints a bleak portrait of Indonesia’s engagement with China. According to the report, rivers in the island are red with own waste and native ecosystems are vanishing. According to the report, employee deaths and conflicts have become alarmingly frequent.
China’s heavy involvement in Indonesia’s metal market, with around  ,$ 30 billion  , funneled into mining and processing, has enabled this extremely rapid growth.
Over the last century, Indonesia’s collected copper output rose from 440, 000 metric tons in 2013 to 1, 800, 000 , metric tons in 2023, according to , USGS information. By 2030, Indonesia is projected to mine and enhance over half of the country’s metal, positioning itself as a world leader—though at considerable value to its people and environment.
The finance of Indonesian metal are powerful, but the real costs are hidden. In contrast, manufacturers in areas like Australia, Canada, and the US experience higher production costs while adhering to stringent economic and labour standards.
The business does not yet value in the cost of forest, tailings pollution, office violence nor CO2 emissions. Fastmarkets, for example, has received inquiries from American mine magnate Andrew Forrest to make distinctions between nickel sources based on CO2 emissions.
Yet without clear carbon accounting, companies hoping to sell to the EU, for example, wo n’t qualify for the EU Battery Passport. Further, companies that buy Indonesian nickel would n’t qualify for US Inflation Reduction Act ( IRA ) tax credits under the US Treasury’s Foreign Entities of Concern guidelines.  ,
American manufacturers and investors should consider the potential risks of purchasing “blood metal” from Indonesia. Beyond the instant price savings, long-term social and functional risks loom.
Public outcry could cause significant company damage, especially for businesses that advertise conservation commitments. Manufacturers could face penalties for purchasing materials that conflict with their mentioned values as US regulators begin to examine commercial misleading.
US Deputy Undersecretary of Labor Thea Lee stated during a briefing on the international status of child and forced labor on September 5 that” the more we hesitant, the more children may be forced into dangerous mines, the more workers will accept exploitation, and the more deeply ingrained labor abuses will become in essential mineral supply chains.
” We must invest in clean energy in nations that are committed to upholding fundamental workers ‘ rights,” Lee said.
The risks beneath the surface must be recognized by business leaders and supply chain managers. Short-term savings from Indonesian nickel could become long-term liabilities.
The risks of Indonesian nickel are too great to ignore, whether it’s the US Department of Defense’s reliance on nickel for military hardware or car buyers looking for ethically produced EVs.
At the Colorado School of Mines, Gabriel Collins is a graduate student researcher studying mineral and energy economics. Former World Bank lead energy specialist, Morgan Bazilian is the director of the Colorado School of Mines ‘ Payne Institute for Public Policy. Simon Lomax is a former Bloomberg News climate change reporter and policy advisor to the Payne Institute.