(Bloomberg) -- Never miss an episode. Follow The Big Take Asia podcast today.

Indonesia’s nickel business is booming. The metal is a key component in electric car batteries, but its success has a dark side. The country’s nickel mines and processing plants have a history of fatal accidents, with workers being run over by forklifts and burnt to death in smelter fires. 

Today on The Big Take Asia, host Janet Paskin speaks with Bloomberg Businessweek editor Matt Campbell about his investigation into the mines. He found that nickel sourced from these plants are present in the supply chain that feeds virtually every major seller of EVs, and is an indispensable part of the car industry’s green revolution.

Listen and follow The Big Take Asia on Apple Podcasts, Spotify or wherever you get your podcasts

Here is a lightly edited transcript of the conversation:

Janet Paskin: If you drive an electric vehicle, chances are you’re relying on nickel every time you get behind the wheel. The metal is a crucial ingredient in EV batteries – and these days a lot of that nickel comes from Indonesia – specifically – the island of Sulawesi.

Matt Campbell: So the island of Sulawesi is gigantic. And it's in the eastern half of Indonesia. It's kind of shaped like a claw. It has several peninsulas that all shoot off from the central landmass with amazing beaches, huge mountains, volcanoes, this pretty amazing place from a geographical perspective.

Paskin: Matt Campbell is Asia editor of Bloomberg Businessweek. He went to Sulawesi last winter. Because despite being rugged and remote, the island is now in a central role in the global economy. 

Campbell: It is just about the most important place in the world for the nickel industry. There are huge nickel deposits in Sulawesi, and the nickel is being processed there. It's being refined into more usable form so that it can be put into, among other things, electric vehicle batteries.

Paskin: The nickel industry has brought rapid economic growth and tons of jobs to Indonesia. But according to reporting from Matt and his colleague Annie Lee, the processing of this nickel has real consequences for the workers in the factories and for the people who live nearby. 

Campbell: We found evidence of really horrific industrial accidents that have been occurring repeatedly over and over again for years now. 

Paskin: Many of these incidents involved what’s called slag – the waste left over from smelting nickel. 

Campbell: Almost anything you can think of, it's happened. So people buried under landslides of slag, people falling into pools of molten slag, which are incredibly hot and burning to death, people being run over by forklifts.

Safety standards that would not be accepted anywhere in the developed world. And this is something that the EV industry, battery manufacturers, battery materials suppliers, and ultimately car companies, have collectively turned a blind eye to and certainly not acted to stop.

Paskin: Welcome to the Big Take Asia from Bloomberg News. I’m Janet Paskin. Every week, we take you inside some of the world's biggest and most powerful economies, and the markets, tycoons and businesses that drive this ever-shifting region. Today on the show – the dirty, dangerous and sometimes deadly cost of the EV revolution.

Paskin: Indonesia has far and away the world’s largest nickel reserves. The Indonesian government has made it a national priority to develop the nickel industry. 

Campbell:  The big policy change was in 2014 when the government actually banned the export of raw nickel ore. So they said, if you want to mine Indonesian nickel, you have to do the smelting and refining here rather than overseas because we want to generate employment. Since then, there have been things like tax incentives, help with infrastructure, help with security. 

Paskin: Last year, Indonesia accounted for almost half of the world’s nickel supply. By 2030, it’s estimated to reach two-thirds. But all this success comes at a cost. We heard about the experience of one family who had a relative in the industry, from a woman named Niluh Novi Barniarthi.

Niluh Novi Barniarthi: Good afternoon. My name is Niluh Novi Barniarthi, I am 28 years old, and I am a housewife. 

Campbell: So Niluh Novi Barniarthi is the sister of a young man named I Made Defri Hari Jonathan, who was 20 years old. He was working as a trainee at a place called Gunbuster Nickel Industry, which is a large nickel smelting facility.

Paskin: Tell me just a little bit about Gunbuster.

Campbell: So Gunbuster is owned by a Chinese company called Jiangsu DeLong, they have set up this big industrial park. It’s in a, really, a valley between a bunch of mountains with the water on the other side. And it looks just like Mordor from the Lord of the Rings when you go up and look at it. It is just this dark, smoky, dirty place. There's dust, there's pollution erupting from this verdant green tropical landscape. It's really astounding.

Paskin: Jonathan’s sister told us that they knew working at Gunbuster could be dangerous.

Barniarthi: Yes, we knew the risk of working in a mine is higher than working in a village like here. When he went to work there, he was warned to avoid working in the furnace and he was not assigned to the furnace. Our family relatives said he was very lucky to get assigned to the hoist crane because the location was nice with air conditioning and not in the furnace.

Paskin: His sister said Jonathan was happy with his salary. He was making more than he had at a motorbike repair shop in the village, and he talked about wanting to build a house for their parents. But less than two months after Jonathan started working at Gunbuster, something went wrong.

Campbell: He was working in what's called a hoist crane. So if you can imagine a big industrial space, not a crane in the sense of a crane that builds a building, but a crane that is sort of on a railing on the ceiling. And he was in the cab of this crane with a co-worker, Nirwana Selle, who was actually a bit of a social media celebrity.

She had a big following on TikTok with these cheerful videos about working at a nickel smelter, which a lot of people watched and a lot of people liked. 

And there was coal dust in this space where they were. Something, a spark or something, happened that caused the coal dust to catch fire. There was a really severe fire and Jonathan and Nirwana, were in the cab of this crane, could not escape, and they burned to death.

Paskin: When you talked to Jonathan's family, how are they holding up?

Campbell: They were not as angry as I expected them to be, actually. They were, in this case, resigned or fatalistic to some extent, in a “this happened and it's nobody's fault” kind of way.

Paskin: Gunbuster arranged to return Jonathan’s body to his family. He was laid to rest on December 26, his mom’s birthday. The company also gave the family money – Jonathan’s salary, plus compensation for his death. In total, it was about 13 million rupiah, or 824 US dollars. 

Campbell: For them, it is not a tiny amount of money, but Jonathan's father said to me that they haven't spent it, that they've just kept it in the bank because, and I asked why, why wouldn't you spend it? And he said, because the money is like Jonathan's body, how could we spend it? 

Paskin: After Jonathan and Selle died – workers at Gunbuster held a one-day strike to protest the conditions there. Protesters and security officers clashed during the demonstration; two workers were killed.

In a statement, Gunbuster said that employee welfare is the company’s “utmost concern”, that it complies with safety rules and is seeking to improve conditions. But it also says that “work accidents are a risk that can occur in various industries and work situations, without exception”.

Paskin: Trend Asia, a nongovernmental organization based in Jakarta, keeps track of deaths in Indonesian nickel facilities. From 2015 to 2022, the group recorded about eight fatalities a year on average. In 2023 alone, there were at least 17.

A few hours drive from Gunbuster, at a massive nickel industrial complex called the Indonesia Morowali Industrial Park, or IMIP, a group of Chinese and Indonesian workers were killed in an explosion in the early morning of last Christmas Eve.

Sky News anchor: Thirteen people have died and dozens more are injured after an explosion at a nickel plant in Indonesia.

ANC 24/7 anchor: The blast occurred early Saturday but the fire was extinguished only on Sunday.  

Campbell: Twenty-one people dead, 13 Indonesians, eight Chinese, which, even by the standards of industrial accidents in developing countries, is an astounding death toll and indicative that something went really horribly wrong.

Paskin: Representatives for IMIP, the industrial complex where the deadly explosion happened, said they are working on making improvements. In a statement on behalf of itself and its owner Tsingshan, IMIP said “safety is always our priority”, and that it “quickly required all enterprises to carry out safety risk screening and rectification” after the accident. On top of the fatalities and injuries to workers, Matt notes that nickel processing can also wreak havoc on the environment and create health hazards for local communities.  

Campbell: So when you do go to these places, one of the first things you notice is air pollution of a kind I have not seen anywhere other than Beijing before things were cleaned up a bit there. I mean, it's a kind of pea soup haze that weirdly changes color through the day. There is also dust everywhere which is from coal and from mine sites.  I actually spoke to the medical clinic in the town next to IMIP, and they talked about the alarming number of respiratory illnesses they see.

Paskin: Nickel industry managers say they’re mitigating, and compensating for, their environmental impact. IMIP, where the Christmas Eve explosion happened, said it monitors air pollution to ensure compliance with Indonesian rules. IMIP’s managing director told Matt and Annie that ultimately, it’s a simple question.

Campbell: As he put it, “do you want to pay twice as much for a car?” This all has a cost and that cost gets fed through. If you want to zoom out and make a bigger argument, is it better that the world gets onto EVs or not? And the world is only going to get onto EVs if they're affordable. So we need to make sure the nickel is as cheap as possible. You know, I think that's a totally legitimate argument. I'm not sure what the right answer is.

Paskin: After the break, what do the big automakers have to say about the conditions in the nickel industry. And is there a better way to get the nickel that EVs need?

Paskin: Bloomberg’s Matt Campbell says that in most cases, auto manufacturers don’t source battery materials directly. It’s difficult if not impossible to trace the metal in any given car to any specific nickel facility. Our reporting indicates that car companies like Tesla, BMW, Ford, General Motors, Hyundai, Stellantis and Toyota are probably relying on Indonesian nickel – or if they aren’t yet, they will soon.

Matt and his colleagues asked about 10 major car companies to comment for this story. Tesla and Hyundai didn’t respond. Of the ones who did, most said they don’t have direct relationships with IMIP, the major nickel supplier. But they do require or expect their suppliers to uphold standards around human rights and environmental concerns. 

Campbell: When we are talking about supply chain relationships that go through five or six steps between the nickel mine, and the battery, or six or seven steps between the nickel mine and the car, obviously, an ESG policy that gets formulated, in the US or in Germany or Japan, is probably not going to filter down that far.

Paskin: There are other places EV battery makers could source nickel, Australia and Canada have huge deposits. But in Indonesia, labor is cheap, and so is coal. So much so, Matt says, it just doesn't make economic sense to look elsewhere. 

Campbell: So actually in Australia, we've seen nickel mines literally shutting down. You know, in a country where a mine worker is easily making a hundred thousand dollars a year, they just are never going to be able to compete on cost with Indonesia. And in Tesla's sustainability report, which they just published a new edition of a few weeks ago. There is a line in there that says quite simply, “the EV transition will not be possible by relying only on non-Indonesian nickel”. People in the electric vehicle industry, people who want to see the electric vehicle industry succeed have concluded that there's just no alternative.

Paskin: But there are other alternatives that don’t use nickel at all. China’s BYD uses lithium iron-phosphate batteries in its cars. They don’t get as much out of a charge though, and Western carmakers have preferred nickel, especially in higher-end vehicles. Overall the nickel industry in Indonesia has helped deliver rapid growth to the country’s economy, and jobs to people in places that really need them. But those markers of progress do come at a cost. So I asked Matt about this very fraught trade-off.  

Campbell: I don't think it's futile to hope that car companies will demand higher standards and that those higher standards get enforced down the chain. There may indeed be a cost impact. And I think that's worth considering. And it's also worth considering whether things like government subsidies, tax credits, rebates, whatever, which are not unfamiliar with EVs, can be deployed to make up for some of those cost impacts if needed. But also you need the Indonesian government to take more action here. They are the ones who have the power to regulate, who have the power to improve infrastructure.  

But where I get very anxious is the idea, “Oh, it would be so much better if none of this had happened because these people need jobs, they need to eat, they need to send their kids to school”. We just collectively have to find a way to, to allow them to do those things in better conditions and in jobs that don't risk getting them killed.

Paskin: Indonesia’s Ministry of Energy and Mineral Resources said it “diligently supervises” safety at nickel sites and is working to address health concerns. As for Jonathan’s family, we asked his sister what she thought about Gunbuster’s response after he died in the fire at the plant. 

Barniarthi: “The company covered the medical cost, and the autopsy and repatriated the body and gave us 824 US dollars. I’m satisfied, because they were willing to take the responsibility and did not wash their hands off the incident”.

©2024 Bloomberg L.P.