Tracking Financing Footprints: Environmental and Social Impacts of the Nickel Industry in Indonesia

Indonesia is the country with the largest nickel reserves and nickel ore production globally, reaching 42,3 percent of the total global nickel reserves. This high potential also has an impact on improving the country's economy, such as Non-Tax State Revenue (PNBP) from nickel royalties which has increased 8-fold in May 2022 with a value of IDR 4,18 trillion compared to 2015 nickel royalty PNBP of IDR 531 billion. However, this is not comparable to the negative externalities created by nickel industry activities, such as environmental damage, human rights violations, potential corruption, land disputes, and eviction of community land.

The research report "Tracking the Footprint of Financing: Environmental and Social Impacts of the Nickel Industry in Indonesia" is the result of in-depth research that reviews media reports related to nickel industry activities through media content analysis methods, as well as the flow of financing for the nickel industry in Indonesia during 2009 - 2015 (before the Agreement Paris) and 2016 – 2023 (after the Paris Agreement) using the financing flow tracing method (Follow the Money).

This research found that media coverage in the nickel industry sector was mostly dominated by news from the economic side, namely electric vehicle batteries and downstream nickel industry. Unfortunately, the negative impacts caused by this industry have not received the attention of mainstream media, such as the issue of fulfilling the rights of indigenous peoples, women's rights, and FPIC. These issues are mostly reported by investigative media, such as Tirto, Mongabay, Tempo, and Project Multatuli.

On the other hand, actors at the government or policy-making level express more discourse related to economic issues, such as state revenues, downstream nickel industry, and even electric vehicle batteries, while issues regarding human rights and the environment from this industrial activity In fact, it was echoed more by actors from civil society organizations.

In terms of financing flows, the results of this research show that investment flows in the upstream nickel sector are dominated by investors from China. This investment is carried out centrally in provinces that are rich in nickel reserves, namely in Sulawesi and Halmahera Island (North Maluku). Interestingly, the profits from this financing flow return to the investor's country of origin, namely China, so that the nickel multiplier effect in Indonesia is actually only artificial.

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