Written by: Jonathan Jordan Staff of Research and Development

Everybody is familiar with this phrase: “money is the root of all evil”. In Indonesia, this could not be more true. News regarding Indonesia’s environmentally destructive nickel industry in Raja Ampat shows how greed can blind those in power. 

Image 1. Nickel mining in Indonesia
Source: National Public Radio (NPR)

Nickel mining in the Raja Ampat Regency, dubbed the “Last Heaven on Earth”, has become a controversial topic due to the harm it causes to the environment. The tiny island off the coast of Papua is a home to many local animals and vegetations. However, ground sediments, which are byproducts of nickel mining, may cause water pollution, harming said biodiversity. 

Moreover, the widespread environmental damage is also pernicious to local communities, affecting their way of life. In Kawe Island, for example, fishing, the locals’ source of life, has become much more difficult due to water pollution. This provoked locals and activists to rally in protest when Bahlil Lahadalia, Minister of Energy and Mineral Resources, arrived at Sorong to inspect the damages of the nickel mining in Raja Ampat.

The virality of the adverse effects of nickel exploration in Raja Ampat pushed the government to revoke the mining rights of four out of the five companies operating there, including PT Mulia Raymond Perkasa, PT Anugerah Surya Pratama, PT Nurham, and PT Kawei Sejahtera Mining. It decided to keep one company afloat, PT Gag Nikel, in Gag Island, citing that the company hasn’t caused any environmental damage and is operating outside of the UNESCO-recognized geopark zone. However, the real reason for its continued nickel mining in the small island is profit, which is estimated to reach around Rp1,43 trillion, according to Tempo. Besides, the retainment of mining activity in Gag Island constitutes a violation of the Law on Coastal Area and Small Islands.

There have also been reports of corruption, collusion, and nepotism (KKN) in the management of Raja Ampat nickel mines. There have been speculations that PT Gag Nikel had a hand in the creation of the geopark zone, leading to its mining area’s exclusion from the UNESCO-recognized territory. In addition, Bahlil Lahadalia is also under fire for alleged nepotism in the establishment of a nickel smelter in Sorong. The consortium planning on building the smelter was created by Adriana Imelda Daat, daughter of Daniel Daat, Bahlil’s friend. The companies in the consortium also housed shareholders from Bahlil’s party, Golkar.

Unfortunately, this is not only a problem in Raja Ampat or Papua, but in Eastern Indonesia as a whole, where nickel mining has proliferated. As a result, 45,588 hectares of forests have been lost in the name of nickel, according to Greenpeace. Indigenous communities which rely on nature for survival too are affected by the ecological destruction of their homeland. Many have called for the government to end these ruinous practices.

The nickel industry is a blatant example of the domination of oligarchs, a few wealthy people who influence public policies in their favour, in Indonesia. These oligarchs manage to influence public affairs due to their profound wealth, which can be easily translated into other forms of power, such as public office. They bend laws, use powerful networks, and create policies for their own benefit. All of this is done to maintain and expand their wealth and in turn, their power. They rely on extractive economic practices without any care for the environment to secure material power. Consequently, their unmitigated presence is automatically a threat to the environment.

These oligarchs’ power can be measured through the material power index (MPI), an indicator that calculates inequality through a comparison of the average wealth of the 40 richest individuals in the country and the gross domestic product (GDP) per capita. In Indonesia, the MPI has only risen since the past decade. In 2014, Indonesia’s MPI score was 691,646, which means that on average, the richest 40 people have 691,646 times more wealth than the average Indonesian. That number has significantly increased to 1,263,381 in 2024, the highest among all countries measured using MPI.

The nickel industry was portrayed by the government of Joko “Jokowi” Widodo as a right step towards sustainable environmental practices and economic growth through electric vehicles (EVs), which use nickel for its battery, for Indonesia, which houses 21% of worldwide nickel deposits. The rapid increase of electric vehicles sales, which rose 26,1% from 2023—2024 to 17,29 million units, drove this planned transition. However, behind the facade of green technology, nickel comes with a considerable price and little benefits, at least for the majority of Indonesians. The true motivator of Indonesian nickel mining is the greed of oligarchic elites, motivated by the growing importance of nickel.

In fact, the main benefactors of the nickel industry are those who already control significant material or political power. Through shares in mining companies, individuals, such as Nadiem Makarim, Luhut Pandjaitan, Haji Isam, and Sugianto “Aguan” Kusuma are able to take advantage of nickel’s newfound value. Bahlil Lahadalia too—notoriously considered responsible for ecological damages through the issuing of mining permits—owns nickel mines via Rifah Capital. Apart from this monopoly by the oligarchs, the dominance of Chinese entities in Indonesia’s nickel industry is also the product of oligarchic hunger for wealth. Unlike Western companies, Chinese companies do not concern themselves with environmental regulations, much like the Indonesian oligarchy. Therefore, due to these harmoniously intertwined interests, Chinese entities have been willing to make investments and lendings and to divide the spoils with the oligarchs in exchange for export and corporate domination. Indonesia has been drawn into the Chinese supply chain via large investments, lendings, and exports of nickel products.

What of the World?
The case of the extractive economic practice in Indonesia is a warning to the world. Greed for money has caused inequality within many nations, which, in turn, fuels the formation of an oligarchic elite. This often leads to environmental destruction. 

The rising inequality worldwide is worrisome. The MPI in other nations, like China and the U.S., has increased as well. In 2011, for example, The U.S.’ MPI was 347,141. More than a decade later, in 2023, it has more than doubled to 731,806. Data from the World Inequality Database also highlight rising wealth and income inequality within many nations, particularly in comparison to the top 1%.

Already, oligarchy is dominating the ecological landscape in many nations. In the U.S., former President Joe Biden claimed that an oligarchy is taking shape during his farewell address. The prevalence of some of the richest people in America, such as Mark Zuckerberg, Elon Musk, and Tim Cook in domestic politics appears to illustrate this fact quite well. The executive orders Trump signed in his first days of his second term also showed a disregard for green initiatives. Trump withdrew the U.S. from the Paris Agreement, vowed to halt wind farms, relaxed emission standards, and planned on drilling more of the nation’s oil and gas reserves.

In Russia, where an oligarchy has formed after the fall of the Soviet Union, per capita emission is the highest in the world. The country is reliant on natural gas and oil, areas where the oligarchy has strong commercial interest. Renewable energy only made up 0,1% of Russia’s energy share in 2020, even though it has immense potential there.

Indonesia’s case is not unique: the thirst for wealth has become an international phenomenon. Wealth inequality and greed leads to ecological disaster.

References
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