According to a recent report by the World Bank’s International Finance Corporation, annual nickel supplies will need to increase by 208% and copper supplies by 156% by 2050 compared to 2020 production in order to meet global net-zero emissions targets.
At least 15 more minerals and metals would need to be mined at a similar rate to meet climate targets, it added.
This will be a monumental task — some analysts believe it will be impossible — and some question whether the growing demand for these critical minerals can be sustainably met.
UN Secretary-General António Guterres said in April: “As we reshape our societies and economic dynamics, we cannot replace one dirty, exploitative extractive industry with another dirty, exploitative extractive industry. We cannot let the poor get trampled in the race to net zero.”
EU law supports this goal: the recently agreed Corporate Sustainability Due Diligence Directive means that from 2029, European companies will have to demonstrate that they are taking measures to protect the environment and human rights throughout their supply chains.
“The regulations and rules coming out of Brussels in relation to the EU Green Deal will apply equally to European and foreign companies seeking to sell goods and services in the EU,” Chris Humphrey, secretary general of the EU-ASEAN Business Council, told DW.
“It’s clear that rules set out by European regulators mean that European companies need to ensure that their overseas operations comply with the various reporting requirements coming from Brussels and elsewhere,” he added.
EU companies pull out of Indonesian mine
In July, Germany’s BASF and France’s Eramet pulled out of Sonic Bay, a $2.6 billion (€2.4 billion) nickel-cobalt smelter in Indonesia, following criticism that mines supplying the smelter were threatening the livelihoods of isolated indigenous forest communities.
The deal was supposed to significantly increase production of these metals from the nearby Wedda Bay Nickel Mine, the world’s largest nickel mine and part of the Indonesia Wedda Bay Industrial Park (IWIP), in which Eramet holds a minority stake.
In 2022, it produced nearly half of the world’s nickel, a material widely used in electric vehicles and batteries, according to the U.S. Geological Survey.
The Critical Raw Materials Act, adopted by the Council of the European Union in April, lists 34 critical minerals and 17 strategic minerals (including nickel) that are essential for the green transition and makes it easier for the EU to source needed raw materials through trade with “friendly third countries.”
Open-cut nickel mining is reported to be a major driver of deforestation in Indonesia, and the use of coal to fuel nickel smelters pollutes water quality.
The EU companies said they were not taking part in the venture for commercial reasons, but a BASF spokesman said in a statement that the company needed a “safe, responsible and sustainable supply of critical raw materials”.
“While canceling the Sonic Bay project may reduce pollution for local communities, the Indonesian government should do more to minimize the impacts of nickel mining and smelting on people living near IWIP and other nickel industrial parks,” wrote Krista Shenam, a researcher at the Climate Rights International campaign group. Diplomat this month.
The limits of the EU Green Deal
Most EU companies don’t engage in unsustainable practices related to raw material extraction in Asia, but that doesn’t mean that companies in countries like China aren’t willing to do so, Frederick Klim, a research fellow at Singapore’s S. Rajaratnam School of International Studies, told DW.
Klim said the EU’s Green Deal was “largely delivered by third parties willing to subsidise their own industry, at the expense of the environment and society, to enable the energy transition at home and abroad.”
“This is a conundrum we have yet to solve,” he added.
Similar accusations have been made about recent tariffs the EU imposed on Chinese-made electric vehicles following complaints from Brussels about unfair trade practices.
“The EU complains about Chinese dumping of solar cells, wind turbines and EVs, but at the same time praises the ridiculously low prices for solar power that are the result of large-scale Chinese production combined with subsidies,” Klim said.
“Without these Chinese products, the energy transition and the electrification of the economy would not be possible,” he added.
Indonesia’s outgoing President Joko “Jokowi” Widodo wants to position the country as a global hub for electric vehicle battery production by boosting the country’s mining capacity, particularly of nickel.
Banning the export of these goods ensures that they have to be processed domestically. In 2014, Jakarta imposed a total ban on the export of raw nickel.
Since then, China has reportedly invested more than $30 billion in Indonesia’s nickel supply chain, including smelting and EV battery production.
Indonesia runs out of high-grade nickel
Indonesia’s high-grade nickel deposits are being depleted, leaving only low-grade ore containing traces of nickel, which is becoming more difficult to extract.
One way to achieve this is through high pressure acid leaching (HPAL), but this produces large amounts of toxic waste.
Kevin O’Rourke, a Jakarta-based analyst at political risk consultancy Reformasi Information Services, told DW that there are “promising” alternatives to HPAL but they face resistance from local Indonesian regulators who are sticking to the cheaper and more familiar HPAL process.
“If developed markets like the EU were to restrict imports of tainted nickel, there would be an incentive for responsible developers to supply greater amounts of ethically produced material,” O’Rourke said.
“If Indonesian producers find they cannot access lucrative developed Western markets, they may eventually start pursuing different options to curb or avoid emissions and waste from HPAL,” he added.
Bridget Welsh, honorary research fellow at the University of Nottingham’s Malaysian and Asian Studies Institute, said the EU’s aim should be “to make ‘dirty’ jobs less dirty overall”.
The Indonesian government has agreed to a Mineral Security Partnership with 14 countries and the European Union to accelerate the development of a sustainable critical minerals supply chain, with a focus on improving environmental standards.
Editor: Wesley Rahn
