Powering

electric vehicles
HUMAN RIGHTS AND ENVIRONMENTAL ABUSES
IN SOUTHEAST ASIA’S NICKEL SUPPLY CHAINS

MAY 2023
 Powering EVs: Human rights and environmental abuses in Southeast Asia’s nickel supply chains May 2023  2

Contents
Executive summary ������������������������������������������������������������������������������� 3

Key findings�������������������������������������������������������������������������������������������������3

Key recommendations�������������������������������������������������������������������������� 4

Introduction������������������������������������������������������������������������������������������������� 5

Philippines ��������������������������������������������������������������������������������������������������� 6

Policy landscape���������������������������������������������������������������������������������������� 6

Rio Tuba nickel mine �������������������������������������������������������������������������������7

Philippines supply chains�����������������������������������������������������������������������7

Human rights and environmental impacts ���������������������������������9

Indonesia������������������������������������������������������������������������������������������������������11

Policy landscape���������������������������������������������������������������������������������������11

EV supply chain from Indonesia�������������������������������������������������������13

Human rights and environmental impacts�������������������������������� 15

Conclusion��������������������������������������������������������������������������������������������������� 18

Recommendations�������������������������������������������������������������������������������� 19
 Powering EVs: Human rights and environmental abuses in Southeast Asia’s nickel supply chains May 2023   3

Executive summary
As the urgency to respond to the climate crisis grows, shifting to renewable forms of energy is imperative.
However, to realise a just, global transition to renewable energy, this process must be human rights centred.
The extraction of nickel, one of the essential components of electric vehicle (EV) batteries, is a particular
area of concern.

This briefing provides an overview of two critical nickel supply chains in Southeast Asia which feed into the
production of EVs: the Rio Tuba Nickel Mining Corporation (Rio Tuba) in the Philippines and two Chinese
companies, Zhejiang Huayou Cobalt (ZHC) and CNGR Advanced Materials (CNGR) operating in Indonesia.
These examples illustrate the rising incidents of human and environmental rights violations associated with
these supply chains, as well as the need for increased government regulation and more robust human rights
due diligence and engagement by mining companies, the EV companies depending on these minerals and the
investors in both types of firms.

Key findings
Philippines

Nickel ore is extracted at the Rio Tuba mine on the island of Palawan, Philippines and is processed locally at the
Coral Bay Nickel Corporation (Coral Bay) processing plant. The processed nickel from Coral Bay is shipped to
Japan for further refining. Ultimately, high quality nickel hydroxide, used in the manufacturing of cathodes, will
come out of the Isoura Plant owned by Sumitomo Metal Mining (Sumitomo MM). Sumitomo MM produces
battery materials which are sold to Panasonic Corporation (Panasonic), which in turn manufactures
EV batteries used by EV companies such as Tesla and Toyota.

Rio Tuba’s mining operations reportedly have direct negative effects on the health and welfare of local
communities. Critically, groups have raised concerns over lack of free, prior and informed consent (FPIC) of local
communities and Indigenous Peoples, loss of food security and destruction of the surrounding rainforests.
Environmental groups have also raised concerns regarding water contamination due to mining in the area.

Indonesia

Nickel ore is processed in two main industrial parks in Indonesia: the Indonesia Morowali Industrial Park
(PT IMIP) in Central Sulawesi province and the Indonesia Weda Bay Industrial Park (PT IWIP) on Halmahera
Island in North Maluku province. Nickel ore is processed to make battery-grade nickel for Chinese suppliers
Zhejiang Huayou Cobalt (ZHC) and CNGR Advanced Materials (CNGR), which have entered into purchasing
contracts with EV companies.

CNGR’s business agreements in PT IMIP have allegedly indirectly affected the lives, health and environment of
residents in Morowali, Central Sulawesi. Residents of a fishing village often complain of respiratory problems,
while their means of livelihood have become increasingly constrained. The mining operations have also caused
environmental problems, such as the destruction of forests, water pollution and detrimental effects on marine life.
 Powering EVs: Human rights and environmental abuses in Southeast Asia’s nickel supply chains May 2023   4

ZHC’s business operations are also purported to have put lives at risk in East Luwu, South Sulawesi and
Pomalaa, Southeast Sulawesi. This includes several instances of water pollution, alleged taking of agricultural
land and Indigenous land and criminalisation of activists and Indigenous Peoples. ZHC’s investment in PT IWIP
has reportedly caused similar human rights and environmental impacts, such as the pollution of four rivers and
coastal areas, severe flooding and the taking over of residents’ land.

Key recommendations
Recommendations to mining companies:

Ĺ Set a clear and urgent goal to implement human rights and environmental due diligence in operations and
supply chains, alongside access to remedy, with special emphasis on land and Indigenous rights risks.

Ĺ Respect Indigenous Peoples’ land and forest rights and the right to Free, Prior, and Informed Consent (FPIC),
including their right to define the process by which FPIC is achieved and to withhold consent.

Recommendations to EV companies:

Ĺ Implement human rights due diligence processes throughout the business cycle, built on worker
and community engagement that is safe and inclusive. This must include adopting and effectively
communicating zero-tolerance policies for the abuse of communities, workers and human rights
defenders, including labour rights activists and Indigenous land and environmental defenders.
Guarantees of protection and non-retaliation for participants in these processes must be provided.

Ĺ Respect and publicly report on implementation of principles of FPIC to obtain community consent prior
to taking investment and operational decisions; and ensure communities and workers are well-advised
of these processes and they are accessible, culturally appropriate, safe and effective.

Recommendations to investors:

Ĺ Commit to rights-respecting investments by undertaking and promoting analysis consistent with the
UN Guiding Principles for Business and Human Rights (UNGPs) for all transition minerals mining and
renewable energy investments.

Ĺ Evaluate impacts of investee companies on people and the planet, rather than solely focusing on
financial materiality.

Recommendation to governments:

Ĺ Adopt national laws to implement the UNGPs, including legislation mandating rigorous human rights
and environmental due diligence throughout the transition mineral lifecycle and subsequent supply chain,
and based on effective community consultation.
 Powering EVs: Human rights and environmental abuses in Southeast Asia’s nickel supply chains May 2023  5

Introduction
As the urgency to respond to the climate crisis grows, shifting to renewable forms of energy is imperative.
Climate change is the ultimate risk to human rights. “Going green” is therefore non-negotiable. But it is
essential this process is human rights-centred, from mineral extraction right through the renewable energy
supply chain, to realise a just, global transition to renewable energy. Closer examination of carbon neutral
solutions and the renewable energy supply chains - in particular, the procurement of material components for
renewable energy products - reveals endemic and highly damaging impacts on ecosystems and communities.
These must be interrogated and mitigated if a just transition to renewable energy is to be achieved.

Analysis of electric vehicle (EV) supply chains provides an instructive lens on this issue. Massive investments
in decarbonised public transportation are critical to decreasing global carbon emissions: 8% comes from
individual fuel-powered cars. Part of this shift will also require replacing them with fewer EVs. EV supply chains
are not exempt from human rights and environmental risks, impacts and emissions. Extraction of nickel, one of
the essential components of EV batteries, is a particular area of concern.

Given the exponential increase in the automobile market share of EVs as a result of incentives introduced
in the United States, European Union (EU) and China, as well as rising oil prices, demand for EVs is set to
continue to rise over the coming years. In fact, the market for their core component — the battery — is
expected to grow from US$17 billion to more than US$95 billion between 2019 and 2028 globally. Vehicle and
battery manufacturers will both drive and benefit from this expansion. Their responsibility to respect human
rights, as set out in the United Nations Guiding Principles on Business and Human Rights (UNGPs), therefore
extends to their entire value chains. Mapping and scrutinising their mineral supply chains should be at the
heart of their due diligence: they need to understand the conditions in which key minerals used in EV batteries
are extracted – and then use their leverage and engage with the companies behind the extraction to ensure
robust respect for human rights.

This briefing provides an overview of two critical nickel supply chains in Southeast Asia which feed into the
production of EVs: the Rio Tuba Nickel Mining Corporation (Rio Tuba) in the Philippines and two Chinese
companies, Zhejiang Huayou Cobalt (ZHC) and CNGR Advanced Materials (CNGR) operating in Indonesia.

These examples and the policy frameworks in which they operate, illustrate the rising incidents of
human and environmental rights violations associated with these supply chains, as well as the need for
increased government regulation and more robust human rights due diligence and engagement by mining
companies, the EV companies which depend on these minerals, and the investors in both types of firms.
Analysis of these examples provides a useful lens through which to view the risks and opportunities of the
energy transition globally.
 Powering EVs: Human rights and environmental abuses in Southeast Asia’s nickel supply chains May 2023   6

Philippines
Policy landscape
Mining in the Philippines is governed by the Mining Act of 1995, which contains incentives to support the
mining industry. It also limits mining operations to qualified persons or companies with at least 60% of its
capital owned by citizens of the Philippines. However, foreign companies can be granted exploration and
mineral processing permits, as well as financial or technical assistance agreements.

On the 28th anniversary of the Philippine Mining Act, farmers and environmental groups held a protest
against the law in front of the Department of Environment and Natural Resources. Groups expressed concern
about the law allowing the plunder of the country’s natural resources, destruction of the environment
and displacement farmers and Indigenous peoples. Sixty percent of the country’s mineral deposits and
49% of its mining projects are found in ancestral domains, which are areas protected by the Philippines’
Indigenous Peoples Rights Act (IPRA). The law requires the FPIC of Indigenous Peoples before approval of any
project or activity affecting their ancestral domains.

Civil society groups are calling for the passage of the Alternative Minerals Management Bill (AMMB), which
will balance the need for minerals with environmental, social and economic considerations. The AMBB
features an exhaustive list of no-go mining zones, as well as places power in the hands of communities and
local government units to approve projects affecting their areas.

With the global demand for nickel growing, exports of the mineral from the Philippines are expected to
surge. In general, the value of the country’s metallic mineral production rose by nearly a third last year. Nickel
took the lion’s share (49%) of the total production value with US$2.12 billion. Minerals from the Philippines are
mostly exported without processing. Hence, the Philippine Government is considering taxes on nickel exports
to encourage investment in domestic processing plants and add value to the mineral product.
 Powering EVs: Human rights and environmental abuses in Southeast Asia’s nickel supply chains May 2023  7

Rio Tuba nickel mine

Rio Tuba is a Filipino and Japanese mining project producing nickel and cobalt sulphite ores extracted from
open pit mines. The mine produced more than 46,000 tonnes of nickel in 2021.

Rio Tuba operates in Bataraza, a municipal coastal town located in southernmost tip of the island of Palawan
in the Philippines. It is home to protected landscapes and animals, such as the endemic saltwater crocodile
(crocodylus porosus). The area is also home to many Pala’wan Indigenous Peoples. Palawan island is known
as the Philippines’ “last biodiversity frontier”, having the country’s few remaining old growth forests and
endemic wildlife.

Rio Tuba has been in operation for over 30 years. Exploration began in 1969 and the mining operations
commenced in 1977. The mine will continue to operate until 2028.

Philippines supply chains

The nickel in this supply chain starts on the island of Palawan in the Philippines, goes to Japan and ends with
EV companies as necessary battery components. The companies involved, especially at the extraction and
processing phases, are very much related, having common shareholders. Numerous allegations of human
rights and environmental abuses have impacted local communities and areas located around the nickel mining
and processing operations.

Nickel ore extracted at the Rio Tuba mine is processed locally at the Coral Bay processing plant. The processed
nickel from Coral Bay is shipped to Japan for further refining. Ultimately, high quality nickel hydroxide, used in
the manufacturing of cathodes, will come out of the Isoura Plant owned by Sumitomo MM, part of Japanese
industrial conglomerate Sumitomo.

Sumitomo MM produces battery materials sold to Panasonic, which in turn, manufactures EV batteries.
Panasonic had been using the mixed metal oxides to manufacture cylindrical lithium-ion rechargeable
batteries. In 2021, Sumitomo MM invested US$424 million to expand its cathode manufacturing capacity in
Japan. Panasonic remains Tesla’s longstanding and principal battery manufacturer; it was also a key investor
in the foundation of Tesla.

Sumitomo MM is also reportedly expanding its cathode production, where a portion of its capital expenditure
will be used to increase cathode materials for rechargeable batteries specifically for EVs. It projects to produce
10,000 metric tonnes by 2028 and 15,000 metric tonnes by 2031.

As recently as July 2022, Panasonic announced its intention to build a second factory in Kansas, USA. Its first
factory, known as the Gigafactory, is operated in partnership with Tesla in Sparks, Nevada. It is one of the largest
lithium-ion battery factories in the world. Panasonic has announced its development of a higher capacity EV
for Tesla, which is slated for production by March 2024. In fact, Panasonic has maintained its market share
in the lithium-ion battery market almost exclusively through its relationship with Tesla.
 Powering EVs: Human rights and environmental abuses in Southeast Asia’s nickel supply chains May 2023  8

For its part, Tesla made a plea to mining companies to

mine more nickel. According to Tesla’s 2021 Impact Report, SUPPLY CHAIN
it now applies direct sourcing of its materials from OWNERSHIP LINKS
mining companies to do away with reliance on “multiple
midstream companies”. It is reported to have sourced
over 95% of lithium hydroxide, over 50% of cobalt Sumimoto Metal Mining
and over 30% of nickel directly from nine mining and
chemicals companies, including ZHC and CNGR. However, 19%

their 2021 Impact Report notes that cobalt, nickel and

lithium go through multiple processing steps by different Nickel Asia Corporation

companies. Nickel from Rio Tuba is also used by Toyota.

Philippines
Ownership structure of companies
The companies involved in this supply chain from the Mining

Philippines are closely linked. Rio Tuba’s main shareholder

60% Rio Tuba Nickel Mine
is Nickel Asia Corporation (Nickel Asia) holding a stake
of 60%. Approximately 19% of Nickel Asia is owned by
Sumitomo MM.

Processing
Nickel Asia’s historical shipment of nickel ore has been
on a continuous upward trend since its establishment 15.6%
Coral Bay Nickel Corp.
in the 1970s. In fact, during the height of the COVID-19 54%

pandemic, when most businesses were suffering losses

in the Philippines, Nickel Asia’s profits rose by 41%.
In 2021, it reported a 168% increase in net income.
By 2022, global nickel prices went up by more than 35%. Japan

Coral Bay is also partly owned by Sumitomo MM, Mitsui Refinery

and Co, Sojitz and Nickel Asia, with Sumitomo MM
as majority shareholder. In October 2022, Nickel Asia Harima and
Nihama refineries
bought 33 million common shares of Coral Bay from
Sumitomo MM for US$25.94 million, increasing its stake
in Coral Bay from 10% to nearly 16%.
Production
The Sumitomo conglomerate and Panasonic have
intricate ties. An independent, but related, general Isoura plant
financing entity was established between the
Sumitomo Mitsui Trust Bank Ltd (85%) and the
Panasonic Holdings Corporation (15%) resulting in
the Sumitomo Mitsui Trust Panasonic Finance.

Customers
(including Panasonic)
 Powering EVs: Human rights and environmental abuses in Southeast Asia’s nickel supply chains May 2023  9

Human rights and environmental impacts

The Philippines is the most dangerous place in Southeast Asia for human rights defenders (HRDs) challenging
corporate activities, according to the Resource Centre’s database of HRD attacks. The Resource Centre has recorded
303 attacks against HRDs in the Philippines (out of 916 in Southeast Asia) from January 2015 – October 2022.
Of these attacks, 70% were against land, environmental and climate defenders. The mining sector is consistently
the most dangerous sector for HRDs raising concerns about abuse.

For the Indigenous Palawan tribe and residents, the supply of nickel extracted from the Rio Tuba mine,
which is eventually used by EV companies as battery components, has increasingly put their community and
environment at risk.

Rio Tuba’s mining operations have reportedly had direct negative effects on the health and welfare of
affected communities. Environmental groups have raised concerns regarding water contamination due to
mining in the area. Among other issues raised was the lack of FPIC of local communities and Indigenous
Peoples, loss of food security and the destruction of surrounding rainforests.

Reports of coughs and respiratory diseases, as well as skin lesions on residents, prompted water quality tests
for areas surrounding the mine site. Tests by Friends of the Earth (FoE) Japan covered the period from 2009
to 2019. Each year, the hexavalent chromium in the Togpon River, one of the sampling sites, was greater than
0.05 milligrams per litre (mg/L) – a limit set by the World Health Organization. Hexavalent chromium is a listed
human carcinogen. According to the US Occupational Safety and Health Administration, repeated exposure to
hexavalent chromium can cause a number of respiratory conditions, including asthma, bronchitis, itching, lung
cancer and physical trauma to the respiratory tract.

Togpon is the only river with tributaries flowing out from the mine development area and into the Rio Tuba inlet.
Further tests conducted by the Philippine Center for Investigative Journalism in 2021 confirmed FoE Japan’s findings.

According to Shigeru Tanaka, Director of Tokyo-based Pacific Asia Resource Center (PARC), who also works with
FoE Japan, the unsafe levels of hexavalent chromium were always detected during the rainy season. This leads
him to believe the rainwater dissolves hexavalent chromium from the ore stockpile or from the ground and
causes it to flow down the river.

A representative for Rio Tuba stated the company had been monitoring the hexavalent chromium levels
since 2012 and noted the level of hexavalent chromium in the area was historically high. Despite mitigating
measures by the company, there are still observed exceedances.

In its response to the Resource Centre, Sumitomo MM added that Coral Bay “…has also implemented sample
surveys on water quality, air quality and flora and fauna on a regular basis through a Multiple Monitoring Team
composed of government, local authorities and NGOs since it commenced operations in 2005.” Coral Bay
confirms, through these environment monitoring activities, “that construction and operation of smelting and
refining plants have no serious impacts on the ecosystem and minimises the environmental impact of effluent
and other such things.”
 Powering EVs: Human rights and environmental abuses in Southeast Asia’s nickel supply chains May 2023  10

Sumitomo MM further explained Coral Bay is working on a Social Development and Management Program,
which includes free health check-ups and treatment for residents. Sumitomo MM added that the company
has a very close relationship with the local community in terms of health and treatment and stated
there have been no local cases of residents complaining of the alleged health issues. Coral Bay has also
enacted measures which include support for agriculture and has undertaken to implement greening activities
for the surrounding areas and tailings dams.

There have also been reports of several irregularities in obtaining Indigenous Peoples’ FPIC. The memorandum
of understanding (MOU), which memorialises the principle of FPIC, was signed by a tribal chieftain who was
externally appointed by the National Commission on Indigenous Peoples. The MOU was signed without going
through the traditional decision-making process, which is led by Panglima, a hereditary leader. Moreover, the
Environmental Impact Statement submitted to the Government included a document containing signatures
of affected residents, which purportedly shows their consent. However, those signatures were allegedly lifted
from signatures provided by residents attending consultation meetings. Those residents were not informed
their signatures would be used as proof of consent.

However, Sumitomo MM maintains Rio Tuba has had continuous dialogue and engagement with the Indigenous
cultural communities of Rizal, which generated positive support towards mining activities and operations.
Sumitomo MM’s full response can be accessed here.

Panasonic, in its response to the Resource Centre, stated the company strives to conduct its business
with suppliers in a way that fulfils its social responsibility in areas such as human rights and responsible
employment, occupational health and safety, environmental conservation and information security.

The Resource Centre also invited Nickel Asia (of which Rio Tuba is a subsidiary), Toyota and Tesla to respond
to the reports alleging human rights and environmental violations of sourcing nickel in Rio Tuba, Palawan.
They did not respond.

In the Philippines, the type of nickel available is found just below vegetation and the thin topsoil. The mining
process is therefore undertaken horizontally, destroying the vegetation above the nickel. Driven by high market
demand, increase in nickel mining will translate to rapid deforestation — at a rate no reforestation programme
will be able to compensate. Deforestation will lead to adverse consequences for the food production capacity
of both Indigenous and migrant farmer communities.

Disregard of the link between supposedly “green” EVs and the ecological destruction wrought by the mining
of transition minerals, such as nickel, is negligent at best. At worst, it is active participation in greenwashing.
The Philippines’ Mines and Geosciences Bureau (MGB), under its Department of Environment and Natural
Resources, projects 190 new mining projects could be granted approval in the next four years, a third of which
will be nickel. Of the projected mining projects, 40% will be open pit, mostly those mining for nickel.

Proponents of the mining industry argue trade-offs must be made, given the needs fulfilled by the mining
industry. Figures show mining has minimal economic benefits for the Philippines, accounting for less than 1%
of the country’s GDP (PSA 2021), and in the case of Rio Tuba, most ore extracted goes overseas, contributing
nothing to national industrialisation. It is a trade-off which is seemingly at odds with the notion of a just
transition, especially considering the social and environmental costs of extraction recorded to date.
 Powering EVs: Human rights and environmental abuses in Southeast Asia’s nickel supply chains May 2023   11

Indonesia
Policy landscape
Through a series of policies implemented from 2009 to 2019, Indonesia has progressively banned the export
of nickel ore, requiring companies to process nickel domestically before export. The ban aimes to bolster
Indonesia‘s domestic processing to bring back the added value of the nickel supply chain to the local economy
and create jobs for economic development in Indonesia. The export ban was challenged by the EU at the World
Trade Organization (WTO), arguing the ban “restricts the EU access to raw materials needed for stainless steel
production and distorts world market prices of ores.” The WTO ruled in favour of the EU.

Indonesia’s new Mining Law (an amendment to the 2009 Law on Coal and Mineral Mining), which entered into
force in June 2020, was highly criticised by civil society as it offers bigger concessions and longer contracts for
companies, while placing fewer human rights and environmental obligations on them. According to human
rights organisation WALHI, the law, particularly Article 162, has been used to criminalise human rights and
environmental defenders. WALHI found that “of the 53 people subjected to criminal charges for opposing
mining companies in 2021, at least 10 were charged with violating Article 162.”

In 2019, with the objective of accelerating its transition to renewable energy, the Indonesian Government
proposed a bill on new and renewable energy, which is currently being deliberated in Parliament. The bill, as it
stands, includes both “renewable” and “new” energy sources. Critics say the inclusion of “new energy” will prolong
the transition to clean energy as they include coal-based products, such as liquefied coal and gasified coal.

In November 2022, at the G20 Summit, the Indonesian Government launched two energy transition initiatives:
the Energy Transition Mechanism (ETM) and Just Energy Transition Partnership (JETP). Indonesia is the second
country, after South Africa, to benefit from a JETP that provides a global financing commitment of US$20 billion
over the next three to five years. The ETM, on the other hand, is expected to allocate US$ 500 million funds and
mobilise more than US$4 billion. Described as the single largest country-specific climate investment partnership
ever, this JETP will go toward developing renewable energy, such as solar and geothermal, and phasing out fossil
fuels, including shutting down coal-fired power plants, which currently account for the majority of the country’s
energy mix. Indonesia aims for 23% of its energy to come from renewable sources by 2025.
 Powering EVs: Human rights and environmental abuses in Southeast Asia’s nickel supply chains May 2023  12

The JETP also aims to improve the business climate in Indonesia by building infrastructure for renewables and
improving financing for sustainable projects. The Indonesian Government is paying attention to areas like EVs
and their batteries as new sectors for economic growth.

Launched in February 2023, the JETP Secretariat will spend the next six months developing a coal-fired power
plant early retirement roadmap that will consider support for communities affected by the energy transition.
The recent announcement by the Indonesian Ministry of Energy and Mineral Resources of its intention to
integrate fossil gas power plants into the JETP funding scheme has sparked concerns over the JETP’s ability to
assist Indonesia in accelerating its energy transition. Limited civil society participation in the JETP Secretariat
is also considered a critical shortcoming of the implementation plan.

According to the International Energy Agency, Indonesia alone will account for around half of the world’s growth
in nickel production between 2021 and 2025. Melky Nahar, coordinator of the Mining Advocacy Network (JATAM),
a local non-governmental organisation, believes foreign companies, such as those from China, are attracted to
investing in Indonesia due to its weak environmental regulations. There are no provisions in current policy which
act as deterrents for corporate crimes. He adds: “The excuse of the companies and governments in continuing
to promote electric cars as crucial to the global competition against climate change, which is supported by
many NGOs and activist groups, especially in the ‘Global North’, ignores the negative impacts of mineral and
ore extraction required to produce such a car, [which are] simply referred to as a ‘local’ impact…”
 Powering EVs: Human rights and environmental abuses in Southeast Asia’s nickel supply chains May 2023  13

EV supply chain from Indonesia

With the ban on nickel ore exports, the Indonesian Government also hoped the policy would attract foreign
investment into the domestic production and processing sector. So far, Chinese companies are leading the way,
investing around US$30 billion in the Indonesian nickel supply chain, which poured money into industrial parks
such as the Indonesia Morowali Industrial Park (IMIP) in Central Sulawesi province and the Indonesia Weda
Bay Industrial Park (IWIP) on Halmahera Island in North Maluku province.

In these industrial parks, nickel ore is processed to make

battery-grade nickel for Chinese conglomerates which, in INDUSTRIAL PARKS
turn, supply batteries to EV companies. ZHC and CNGR
are two of these nickel suppliers, which have entered Investor
into purchasing contracts with EV companies.
Tsingshan Holding Group

ZHC is engaged in the research, development and

manufacture of new energy lithium battery materials,
headquartered in Tongxiang Economic Development Industial areas
Zone, Zhejiang, China. On the other hand, CNGR is a
professional and comprehensive service provider of
Key suppliers
advanced energy materials for lithium batteries and is PT Indonesia
based in West China, Dalong Economic Development Morowali ZHC
Industrial Park
Zone, Guizhou.

Tesla signed nickel purchasing agreements with Vale

ZHC and CNGR, two of its existing Chinese battery
material suppliers, worth around US$5 billion. Tesla PT Indonesia
Weda Bay CNGR
will be supplied by ZHC from 1 July 2022 to the end
Industrial Park
of 2025 and by CNGR from 2023 to 2025. These
agreements are for supplying essential materials in
electricity storage in lithium-ion batteries. Ford, on
the other hand, joined ZHC and Brazilian Pomalaa,
Southeast Sulawesi. The processing plant will
produce 120,000 tons of materials for use in EV batteries
EV companies
per year. Other vehicle companies allegedly sourcing
battery-related nickel products from Indonesia include Ford
Volkswagen, BMW and Hyundai.
Tesla

Hyundai

Volkswagen
 Powering EVs: Human rights and environmental abuses in Southeast Asia’s nickel supply chains May 2023  14

SUPPLIER RELATIONSHIPS

PT Indonesia Morowali Industrial Park PT Indonesia Weda Bay Industrial Park

50% 25% 25% 40% 30% 30%

Shanghai Decent Bintang PT Sulawesi Perlus ZHC Zhenshi
Investment Group Delapan Mining Technology Group
Group Investment

PT WBN
Operates in PT IWIP
100% 100%

Investors

Tsingshan 57% Strand 90%

10%
43%

Eramet PT Antam Tbk

Supplier Partner EV Miner

CNGR Rigqueza Ford Vale

PT IMIP is an industrial park founded by Tsingshan and Indonesian miner Bintang Delapan Group (Indonesia).
Tsingshan, through its subsidiary, Shanghai Decent Investment Group, owns 50% of PT IMIP, with
Bintang Delapan Group and PT Sulawesi Mining Investment each owning 25%.

PT IWIP is a joint venture between Tsingshan (40% shareholding through its subsidiary, Perlus Technology),
ZHC (30% shareholding) and the Zhenshi Group (30% shareholding). Tsingshan has several investments
in IWIP, including one with ZHC and another with mining company, PT Weda Bay Nickel (WBN). PT WBN is
partly owned by Indonesian state-owned company PT Antam Tbk (10% shareholdings) and Strand Minerals,
which is owned by Tsingshan (57% shareholdings) and French miner, Eramet (43% shareholdings). Eramet is
reported to have partnered with German chemical giant BASF to build a refinery in Halmahera.

ZHC has an agreement with Vale to develop a High-Pressure Acid Leaching (HPAL) processing project
in Pomalaa, Kolaka, Southeast Sulawesi, where Vale operates a nickel mine. ZHC’s projects with Vale are
estimated to cost US$6.3 billion. Ford joined both companies to produce battery-related materials.

CNGR has ties with Tsingshan to supply up to 40,000 tonnes of nickel products. CNGR also invested with
Rigqueza for two nickel matte projects in Sulawesi, with an annual capacity to supply up to 60,000 tonnes.
These two companies further agreed to jointly invest in three projects in Weda Bay to produce nickel matte
in North Maluku. To meet the increasing demand for battery-related nickel products, CNGR aims to increase
annual capacity by 120,000 tons.
 Powering EVs: Human rights and environmental abuses in Southeast Asia’s nickel supply chains May 2023  15

Human rights and environmental impacts

CNGR, PT IMIP, ZHC and Vale have been implicated in human rights and environmental abuse allegations
related to their nickel extraction and processing activities.

CNGR’s business agreements have indirectly affected the lives, health and environment of residents in
Morowali, Central Sulawesi. Residents of a fishing village often complain of respiratory problems which they
suspect are caused by inhaling dust from the coal unloaded from barges to supply PT IMIP’s power plants.
PT IMIP significantly relies on coal-fired power plants for its electricity.

Fishing, the profession of the majority of the residents, has been severely affected. In the past, it was easy for
fisherfolk to catch a variety of fish just by spreading nets behind their houses or around the area. Now, the
sea water has become too hot to the point it is “almost boiling”, driving away fish or killing them. Rising sea water
temperature is a consequence of the cooling system exhaust from coal-fired power plants in PT IMIP.

PT IMIP’s activities have also allegedly also caused other environmental problems, particularly in the coastal
district of Bahodopi, Central Sulawesi. Nickel mining operations are destroying forests. Brick-red mine
tailings spill into rivers and streams, contaminating waters that run through villages. Polluted water has also
made its way to the sea, affecting a rich diversity of coral species.

Meanwhile, ZHC and Vale’s business transactions have also allegedly risked the lives of residents in East Luwu,
South Sulawesi and Pomalaa, Southeast Sulawesi. In 2014, Vale had an oil spill which polluted the Lampia Sea.
In 2018, sedimentation of ex-mining soil also polluted Lake Mahalona. In August 2021, Vale’s operations also
polluted the waters of Mori Island. Vale was also linked to taking over agricultural land and Indigenous land in Nuha
District, East Luwu in 2016 and alleged to have criminalised seven activists and Indigenous people in March 2022
when they held a demonstration demanding Vale’s accountability for mining on Indigenous Peoples’ land. In
terms of attacks against HRDs raising concerns about business, Indonesia is the third most dangerous country
in Southeast Asia with 132 attacks recorded between January 2015 and October 2022.

ZHC and Tsingshan’s investment in PT IWIP has been reported to have caused similar human rights and
environmental impacts. PT IWIP is alleged to have taken over the land of Lelilef Sawai residents, which is
a community garden planted with nutmeg, cloves, coconut and lanzones. Their investment has also led to
the pollution of four rivers which are the main water sources for residents, namely Ake Wosia, Ake Sake,
Seslewe Sini and Kobe. Coastal and marine areas in Weda were also affected. The dam holding PT IWIP’s
waste in Lelilef Village collapsed and allegedly spilled into the sea on 30 January 2022. Fisherfolk, particularly
women, are also experiencing challenges in fishing in the Lolaro Sea as a result of the pollution from the
mining waste. PT IWIP’s mining activities in the forest area have also caused severe flooding every year, the
worst of which happened on 8 September 2021, when residents’ houses were submerged in Lelilef Woybulen
and Trans Kobe in Central Weda District.

Responding to the Resource Centre, ZHC stated it was committed to reducing the impact of its operations
and supporting the local economies, communities and environments where it operates. ZHC’s full response
can be accessed here.

Vale responded by addressing the allegations point by point:

 Powering EVs: Human rights and environmental abuses in Southeast Asia’s nickel supply chains May 2023  16

Ĺ On the alleged oil spill at the Lampia Sea, Vale explained there was no major impact as the amount of oil
involved was marginal and the spill was immediately contained by oil boom.

Ĺ On the alleged pollution in Mahalona lake, Vale claimed the Ministry of Environment and Forestry carried
out an assessment into the alleged sedimentation and found no violations.

Ĺ With regard to Mori Island, Vale explained it engaged an independent and accredited third party to follow
up on the alleged sulphur spill contamination and based on results of the analysis of water and soil
samples, it was concluded there was no pollution as per data received on 20 September 2021.

Ĺ On the alleged taking of agricultural land and Indigenous land, Vale claims there are no Indigenous Peoples
in its operational area, based on the latest study conducted in Luwu Timur by a reputable institution in
Indonesia and consultation with the local government.

Ĺ Finally, on the alleged criminalisation of seven activists and Indigenous People in relation to a demonstration,
Vale explained “the demonstration in March 2022 caused injuries to PT Vale’s employee and contractor, and
destruction to assets. Police investigation was conducted as there was anarchism during the demonstration.”

Vale’s full response can be accessed here.

Lastly, nickel mining activities of Weda Bay Nickel (WBN), a joint venture partly owned by Eramet, have
affected huge areas of rainforest in Halmahera inhabited by an uncontacted tribe called the Hongana Manyawa
(which means “People of the Forest”). The Hongana Manyawa are one of the last nomadic hunter-gatherer tribes
in Indonesia. Mining in their lands is illegal under international law as uncontacted tribes cannot give FPIC to the
exploitation of their land. BASF, the German chemical firm, is looking to partner with Eramet to build a refinery
in Halmahera with unquestionable further consequences for the Indigenous rights of the Hongana Manyawa.

In its response to the Resource Centre, Eramet confirmed it currently runs the feasibility studies, in partnership
with BASF, to develop a plant to process nickel and cobalt, known as the Sonic Bay Project, which is intended
to be located on the central coastal region of Halmahera Island. Eramet also confirmed the Hongana Manyawa
people, also called the Forest Tobelo people, live on certain parts of the island. However, Eramet asserts WBN
has succeeded over the years in developing respectful interactions with Forest Tobelos. Eramet further claims
that “to date, there is no evidence suggesting that there would be uncontacted Forest Tobelo living in or
around WBN’s concession.”

BASF confirmed it is currently evaluating an investment with Eramet for the development of a nickel-cobalt
refining complex to supply the growing EV market with cathode active materials. However, BASF has not
yet decided whether this project will be implemented. BASF further states part of its evaluation process is
“…an intensive assessment of environmental, social and governance (ESG) risks against the benchmark of the
International Finance Corporation (IFC) standards, the Equator Principles and the International Responsible
Mining Assurance (IRMA) standard, as reasonably applicable to the mining and processing companies involved.”

Tesla and the Tsingshan Group were invited by the Resource Centre to respond on the issue concerning the
Hongana Manyawa along with Eramet and BASF. They did not respond.
 Powering EVs: Human rights and environmental abuses in Southeast Asia’s nickel supply chains May 2023  17

As one of the alleged buyers of nickel from Indonesia, Volkswagen expressed: “…We are concerned about the
report by Nikkei Asia on nickel sourcing in Indonesia published 19 October 2022 which we take very seriously…”
It further stated “the joint venture project of Volkswagen quoted in the Nikkei Asia article is subject to ongoing
negotiation and not approved yet. Prior to any engagement Volkswagen will make sure that our values are
upheld and that our global sustainability and compliance standards are fulfilled...”

Mercedes-Benz clarified it “…is currently not intending to source Nickel directly from Indonesia, but is
monitoring the worldwide market situation.” Mercedes-Benz added: “In the case of a potential consideration
of direct sourcing from Indonesia in the future, the Responsible Sourcing Standards would be taken into
consideration accordingly.”

BMW, on the other hand, explained it “…does not have any direct supply relationships or cooperations with
nickel suppliers in Indonesia.” BMW added: “In accordance with our purchasing conditions, as direct suppliers
they are obligated to comply with legal requirements and extensive environmental and social standards and
must also pass these on to their sub-suppliers.”

Along with Volkswagen, Mercedes-Benz and BMW, the Resource Centre invited “project owners”, Aneka Tambang,
CMOC Group Limited, GEM Co. Ltd., Harita Group, Indonesia Battery Corp., Merdeka Copper Gold,
Ningbo Lygend Mining and QMB New Energy Materials; as well as “off-takers” Hyundai Motor to respond to
environmental and human rights allegations. The companies did not respond.
 Powering EVs: Human rights and environmental abuses in Southeast Asia’s nickel supply chains May 2023   18

Conclusion
The current condition highlights the need to revamp policies
which relate to natural resources and enable their continued
exploitation. For one, biodiversity loss in Palawan has
illustrated how business as usual mining practices and levels
are no longer sustainable.

Second, often those whose habitats are destroyed are not able
to benefit from the resource exploitation. Nor do they approve
of these projects which threaten their lifeways and result in
the violation of their rights. In the case of Rio Tuba, it has
been decades since local communities have protested against
its operations. The tensions have only intensified. Indigenous
Pala’wans are worried over the looming expansion of Rio Tuba
in Mt. Bulanjao. The forest ecosystem and river network that
intersect Mt. Bulanjao link various Pala’wan communities where
people are concerned about losing their source of water, which
is the lifeline of Indigenous and farming communities.

The same worries weigh heavy on the minds of fisherfolk and

communities impacted by mining operations in Indonesia’s
industrial zones. Pollution has plagued their waters, affected
their health and changed their means of livelihood. Progress in
the supply of nickel from Indonesia, if unchecked, will increasingly
impact the lives of residents, including Indigenous Peoples.

Governments have a duty to ensure protection of rights in this

global transition to EVs. Protection can be achieved by strict
implementation of community and environmental safeguards.
On the other hand, EV companies and investors have the
responsibility to make sure rights are respected in all levels of
their supply chains, with particular emphasis on the mining
and processing levels.
 Powering EVs: Human rights and environmental abuses in Southeast Asia’s nickel supply chains May 2023   19

Recommendations
Recommendations to mining companies:

Ĺ Set a clear and urgent goal to implement human rights and environmental due diligence in operations and
supply chains, alongside access to remedy, with special emphasis on land and Indigenous rights risks.

Ĺ Respect Indigenous Peoples’ land and forest rights and the right to Free, Prior, and Informed Consent (FPIC),
including their right to define the process by which FPIC is achieved and to withhold consent.

Ĺ Work to the international standards of the United Nations Guiding Principles on Business and Human Rights
(UNGPs). Ensure the approach is proactive and consults those at risk of abuse and their representatives, in
accordance with the UN Working Group’s guidance on ensuring respect for human rights defenders (HRDs).
Reinforce related goals with a time-bound plan, resourcing commensurate to ambition, executive oversight
and board approval.

Recommendations to EV companies:

Ĺ Implement human rights due diligence processes throughout the business cycle, built on worker and community
engagement that is safe and inclusive: adopt and effectively communicate zero-tolerance policies for abuse
of communities, workers and HRDs, including labour rights activists and Indigenous, land and environmental
defenders, and provide guarantees of protection and non-retaliation for participants in these processes.

Ĺ Assign clear Board responsibility for and oversight of respect of human and environmental rights. The Board
should approve policies and regularly reviews salient human and environmental rights abuse allegations,
due diligence plans and remedy outcomes.

Ĺ Respect and publicly report on implementation of principles of FPIC to obtain community consent prior to
taking investment and operational decisions. Ensure communities and workers are well-advised of these
processes and that they are accessible, culturally appropriate, safe and effective.

Recommendations to investors:

Ĺ Commit to rights-respecting investments: undertake and promote analysis consistent with the UNGPs for
all transition minerals mining and renewable energy investments. Evaluate impacts of investee companies
on people and the planet, rather than solely focusing on financial materiality.

Ĺ Actively engage with investee companies: adopt stewardship policies and develop and implement plans
to proactively prevent and mitigate human rights and environmental risks and related costly conflict,
alongside reputational, legal and regulatory risks.

Ĺ Integrate sustainability into fiduciary duty through inclusive human rights and environmental due
diligence: throughout the business cycle, undertake due diligence and engagement with worker
organisations and communities, including reviewing potential investees’ up-to-date record of
environmental harm and human rights abuse.
 Powering EVs: Human rights and environmental abuses in Southeast Asia’s nickel supply chains May 2023   20

Recommendations to governments:

Ĺ Pass national laws to implement the UNGPs, including legislation mandating rigorous human rights and
environmental due diligence throughout the transition mineral lifecycle and based on effective community
consultation.

Ĺ Adopt ambitious green policy and regulatory frameworks to direct foreign and domestic investment
flows to responsible nickel suppliers, while protecting local communities and Indigenous Peoples’ rights –
with specific consideration given to land rights, FPIC and human rights defenders, including labour rights
activists and Indigenous, land and environmental defenders.

Recommendations to governments in Philipines:

Ĺ Investigate the alleged human rights and environmental abuse of Rio Tuba and, if evidence of abuse is
found, hold them accountable, along with other companies in their value supply chain.

Ĺ Adopt the Alternative Minerals Management Bill and legislation to establish accountability mechanisms
that cover not only mining companies, but others across the value chain.

Recommendations to governments in Indonesia:

Ĺ Enforce laws, particularly those ensuring that environmental quality standards are complied with, as well as
those imposing sanctions on abusive companies.

Ĺ Implement Indonesia’s JETP through rights-respecting programmes which aim to avoid and mitigate human
rights and environmental risks in the development of renewable energy, including mining and processing of
transition minerals for EVs and ensure meaningful participation of civil society in the implementation.

Ĺ Stop nickel mining activities in essential ecosystem areas, such as forest and coastal areas, as well as in areas
of community water sources, to prevent toxic pollution in accordance with Indonesia’s existing regulations.

Ĺ Respect and protect affected communities’ rights to health, land, food, livelihood and freedom expression.
 MAY 2023

Business & Human Rights Resource Centre is an international NGO which tracks
the human rights impacts of over 10,000 companies in over 180 countries, making
information available on our 10-language website.

With research support from The Legal Rights and Natural Resources Center (LRC)
and Wahana Lingkungan Hidup Indonesia (WALHI)