Indonesia to Punish Companies for Environmental Violations at Sulawesi Industrial Park

Indonesia’s government says it will sanction companies for alleged environmental violations it discovered at a huge nickel processing hub on the island of Sulawesi. In a statement on June 18, the Ministry of Environment said it had found “serious” environmental breaches at the sprawling Indonesia Morowali Industrial Park (IMIP) on the island of Sulawesi, Bloomberg reported.

It found that the IMIP built processing facilities and conducted other activities on 1,800 hectares of land that were not included in the company's original environmental impact assessment report. The park failed to manage wastewater and air pollution, which exceeded the permissible levels. The ministry also found an estimated 12 million metric tons of illegal tailing deposits in the vicinity of the IMIP.

“PT IMIP must stop activities that are not covered by its environmental approval,” Environment Minister Hanif Faisol Nurofiq said in the statement, Reuters reported.

The IMIP, which is controlled by the Chinese metals giant Tsingshan Holding Group Co., is located on 2,000 hectares in Central Sulawesi province, according to Bloomberg, and employs “more than 100,000 staff and contractors.” Most of its tenants are involved in the processing of raw nickel ore, of which Indonesia possesses the world’s largest reserves, for use in stainless steel and electric vehicle batteries. The park produced around one-fifth of Indonesia's nickel pig iron last year, according to mining association data cited recently by Reuters.

The Environment Ministry has now ordered the company to stop operations that are beyond the scope of its approved activities, and will fine companies that are proven to have violated the law. Rizal Irawan, the deputy for environmental law enforcement at the ministry, said in the statement that it would “order an environmental audit of the entire IMIP industrial area.” He added, “On findings of hazardous waste tailings, we will proceed with a criminal and civil legal process.”

The ministry’s announcement came a week after President Prabowo Subianto revoked the licenses of four nickel mining companies operating in the Raja Ampat archipelago in Southwest Papua province, citing multiple “environmental violations.” Greenpeace Indonesia had published a video investigation in early May showing the effects of nickel mining projects on three islands in Raja Ampat; the government’s action followed shortly thereafter.

Both of these represent rare actions against Indonesia’s nickel industry, which has grown at a rapid pace over the past decade as Jakarta seeks to transform itself into a global hub for the manufacture of EV batteries. This effort has been successful – Indonesia now accounts for more than half of global nickel production – but the industry, which is dominated by large Chinese firms, has come under scrutiny for its deleterious social and environmental impact.

In a report last year, the advocacy group Climate Rights International argued that in its urgency to establish itself as a center of EV battery production, the Indonesian government has allowed nickel mining and smelting operations to proceed at such a rapid pace that social and environmental safeguards have been either overlooked or ignored. As a result, the pursuit of nickel-led industrialization has driven deforestation, pollution, and displacement on islands across the Indonesian archipelago.

According to one environmental group, processing Indonesia’s low-quality laterite nickel into battery-grade nickel is an unusually energy-intensive process that requires “two to five times more emissions than processing sulfide nickel ore mined in temperate countries.” Indonesia-based nickel processors have also come under fire for their poor safety record. In December 2024, a fire killed 13 workers and injured 46 at a nickel smelter furnace owned by Indonesia Tsingshan Stainless Steel inside the IMIP.

In response to the Environmental Ministry’s announcement, Dedy Kurniawan, a spokesperson for the company that runs the IMIP, defended its management of wastewater and toxic tailings and said that it would “maximize coordination and supervision of the operations of all tenants in order to carry out all forms of improvement in accordance with the direction of the Indonesian Ministry of Environment.”