A recent report by the World Bank’s International Finance Corporation reveals that by 2050, the annual supply of nickelwill need to increase by 208% and copper by 156% compared to 2020 production levels to meet global net-zero emissions targets. Additionally, at least 15 other minerals and metals must be extracted at similar rates to achieve climate goals, a monumental task that some analysts doubt is feasible. Concerns about the sustainability of this increased extraction are also prevalent.
UN Secretary-General Antonio Guterres emphasized in April that the transition to net-zero emissions must not replicate the negative impacts of current extractive industries on marginalized communities. In line with these concerns, the EU’s Corporate Sustainability Due Diligence Directive, effective from 2029, mandates European companies to demonstrate their environmental and human rights efforts across supply chains.
In July, EU companies BASF and Eramet withdrew from the $2.6 billion Sonic Bay nickel-and-cobalt refinery project in Indonesia. The decision followed criticisms regarding the project’s environmental impact, particularly its threat to the forest home of an Indigenous tribe. This withdrawal highlights the tension between the need for critical minerals and sustainable practices.
The EU’s Critical Raw Materials Act, adopted in April, lists 34 critical and 17 strategic minerals essential for the green transition, facilitating easier sourcing through deals with “friendly third countries.” However, the environmental toll of nickel mining, especially in Indonesia, remains a pressing issue, with deforestation and water pollution linked to the practice.
Frederick Kliem, a research fellow at the S. Rajaratnam School of International Studies, noted that while the EU firms avoid unsustainable mining practices, companies from countries like China are more willing to engage in environmentally damaging activities. This paradox is evident in the EU’s Green Deal, which relies heavily on third-party industries willing to subsidize and sustain environmental damage.
Outgoing Indonesian President Joko Widodo aims to position Indonesia as a global hub for electric vehicle (EV) battery production by boosting nickel mining capacity. Since a 2014 ban on exporting unprocessed nickel, China has invested over $30 billion in Indonesia’s nickel supply chain, underscoring the strategic importance of this resource in the global energy transition.
