Jakarta, 9 October 2024
The government’s downstream nickel industry policy and its vision of becoming a global hub for electric vehicle (EV) battery production are viewed as key strategies to increase the added value of Indonesia’s mineral sector. Amid Indonesia’s ambition to become a global leader in the nickel industry, the report released by the U.S. Department of State on 5 September 2024, entitled Global State of Child and Forced Labor, which added nickel to the 2024 list of products and commodities produced through forced labor, represents a serious wake-up call for both the government and the business community.
Responding to these allegations of human rights violations, the government, through Minister of Energy and Mineral Resources Bahlil Lahadalia (7 October 2024), adopted a position of denial, arguing that the report was part of a foreign agenda aimed at damaging Indonesia’s reputation. In reality, however, Indonesia’s nickel industry has repeatedly come under scrutiny over inadequate labor protection and environmental degradation affecting surrounding communities, particularly in the country’s two main nickel-producing regions, Morowali and North Halmahera.
SETARA Institute emphasizes the importance of fulfilling human rights and environmental obligations as fundamental elements of responsible business practices.
As the world’s largest nickel producer, accounting for 40.2% of global nickel production, concerns over the industry’s poor compliance with Environmental, Social, and Governance (ESG) standards should be treated as an urgent call to improve the governance of Indonesia’s nickel industry in a sustainable and responsible manner. ESG commitments that have often been implemented merely as a formality for public relations purposes must be strengthened and measured against meaningful and precise performance indicators.
Indonesia’s ambition to achieve Net Zero Emissions by 2060 through the development of the electric vehicle industry must go hand in hand with the promotion and protection of human rights and the environment.
The report alleges that nickel industry operations established through partnerships between Indonesia and China have engaged in arbitrary wage deductions, violence, excessive overtime, and constant surveillance of workers from both countries. Chinese workers have also reportedly been subjected to passport confiscation and restrictions on their freedom of movement. Furthermore, occupational health and safety protections remain inadequate, as reflected in the high number of workplace accidents, including fatal incidents. Based on the report, at least six of the eleven forced labor indicators established by the International Labour Organization (ILO) have been identified within Indonesia’s nickel industry.
To address these findings and prevent similar incidents, the implementation of the UN Guiding Principles on Business and Human Rights (UNGPs)—the globally recognized authoritative framework for the protection, respect, and remedy of human rights by business enterprises—must become a government priority. These alleged human rights violations should serve as a catalyst for accelerating the integration of Business and Human Rights (BHR) principles throughout the mining sector.
The global trend toward legislating mandatory human rights and environmental due diligence is increasingly moving toward legally binding obligations that require companies to adopt a risk-based approach by integrating human rights into their overall management systems and risk management processes in order to prevent and address adverse human rights impacts.
Therefore, as part of a global framework collectively adopted by states, including Indonesia, allegations of human rights violations in the nickel industry cannot be adequately addressed through symbolic expressions of nationalism alone. Compliance with human rights and environmental standards by businesses is an essential prerequisite for achieving responsible business transformation and a just transition.
Media Contact:
Nabhan Aiqani, Business and Human Rights Researcher, SETARA Institute, +62 813 6772 1163