Indonesia's nickel sector under ereater scrutiny amid graft cases

Several govt officials facing trial or probed for alleged bribery over issuance of mining permits

- Linda Yulisman

Indonesia's booming nickel industry is coming under increasing scrutiny from graft busters over alleged corruption, amid the rapid expansion of smelters and with more money pouring in from hopeful investors.

Several national and regional government officials are facing trial or being investigated for alleged bribery linked to the issuance of mining permits in major nickel ore-producing regions in Sulawesi and the North Maluku islands.

The alleged corruption has led to loss of revenue for the government, and caused large-scale environmental destruction that has jeopardised the livelihood of rural communities and resulted in frequent land disputes.

Indonesia's mining industry has been booming in the last few years as global players rush in to mine and process nickel, one of the main components used in batteries for electric vehicles (EVs). Indonesia produced an estimated 40.2 per cent of the world's nickel in 2023, according to S&P Global Market Intelligence data.

South-east Asia's largest economy is the world's biggest producer of nickel, and holds nearly a quarter of global nickel reserves.

Nickel smelting facilities have sprouted in Indonesia in recent years, and many were built by investors from China, the world's largest auto exporter and EV battery maker today.

The government expects more than US$30 billion (S$40.9 billion) in investments in the EV battery supply chain to flow in by 2026, a top investment official said in 2023.

There were 44 nickel smelters in operation as at October 2023, with another 19 under construction and feasibility studies being conducted on seven others, the Industry Ministry, which oversees standalone nickel smelters, told The Sunday Times.