Indonesian Nickel Mine's Green Move

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by KnowESG
KnowESG_The Indonesia Morowali Industrial Park
Image courtesy of Bloomberg

The industrial park driving Indonesia's nickel production boom is implementing measures to address mounting environmental concerns over the commodity's extraction, which is vital for stainless steel and electric vehicle batteries.

Located in the Morowali town of Sulawesi, the expansive 3,000-hectare Morowali industrial park is set to flood the market with new nickel supply this year. However, it faces increasing scrutiny from environmental groups and industry consultants due to the nation's heavy reliance on coal-fired power and waste disposal practices.

PT Indonesia Morowali Industrial Park (IMIP), led by Managing Director Hamid Mina, is actively taking steps to mitigate the environmental impact of its operations, aiming for a more eco-friendly industry in the coming years while adhering to government regulations.

Indonesia is a major global nickel producer, projected to contribute over 60% of the world's supply by the end of the decade. However, the country's nickel production is notably carbon-intensive, emitting 58.6 tonnes of carbon dioxide equivalent per tonne of metal equivalent produced compared to the global average of 48 tonnes.

To reduce its carbon footprint, IMIP plans to construct up to 500 megawatts of solar panels. The initial phase, investing $63 million for 100 megawatts, is expected to generate 180 million kilowatt-hours annually, sufficient to power around 166,000 Indonesians. Yet, implementing renewable energy in Indonesia is challenging due to cloud cover and low wind potential, according to Skarn CEO Mark Fellows.

Founded in 2013 and supported by BintangDelapan Group and China's Tsingshan Holding Group, IMIP has attracted investments from over 50 companies, including GEM and Contemporary Amperex Technology, the world's largest battery manufacturer.

The complex is also working on a pipeline network to transport slurry directly from mines to the factory, reducing truck usage and considering introducing electric trucks in the park. However, Skarn's Fellows believes that truck emissions are a small concern compared to the coal-dependent nickel production process.

Morowali, once a fishing town, experienced remarkable growth after Indonesia banned nickel ore exports in 2019, leading to substantial investments in the industrial park, totalling over $22 billion as of June.

President Joko Widodo envisions Indonesia playing a significant role in the global EV battery supply chain, attracting investments from automakers. Tesla Inc. visited Morowali last year, indicating a growing interest in the region.

Regarding waste management, IMIP employs dry-stacking, dedicating nearly 600 hectares of land to treating tailings by drying, compacting, and backfilling. If the park expands to 6,000 hectares, more areas will be allocated for dry-stacking. However, challenges include Indonesia's high rainfall and seismic activity, raising concerns over the method's long-term sustainability and potential space constraints.

As the Indonesian nickel industry grows in importance for the battery supply chain, it must consider environmental, social, and governance (ESG) factors to ensure sustainable and responsible growth.

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Source: The Japan Times


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