Chinese Name: 中国印尼综合产业园区莫罗瓦利工业园区/青山园区
Location: Fatufia Village, Bahadopi District, Morowali Regency, Central Sulawesi Province, Indonesia.
Type of Project: Extractive; industrial.
Project Developers: PT Indonesia Morowali Industrial Park is a joint venture between: Shanghai Decent Investment (Group) Company Limited (a subsidiary of Tsingshan Holding Group Company Limited), 49.7%; PT Bintang Delapan Group, 25.3%; and PT Sulawesi Mining Investment, 25%.
Processing facilities within the park: Subsidiaries of Tsingshan Holding Group Company Limited; GEM Company Limited; Contemporary Amperex Technology Company Limited (CATL); Huayou Cobalt Company Limited; China Molybdenum Company Limited; PT Sulawesi Mining Investment.
Mines: Nickel Mining Limited; PT Bintang Delapan Mineral.
Main Contractors: n/a
Financiers: China Development Bank; Export–Import Bank of China; Bank of China; Industrial and Commercial Bank of China (ICBC); HSBC China.
Cost: Indonesia Morowali Industrial Park is valued at more than 7 billion USD; the high-pressure acid leaching (HPAL) facilities of PT QMB New Energy Materials and PT Huayue Nickel and Cobalt are valued at 998 million USD and 1.28 billion USD, respectively; four of the 11 smelters in the park are valued at a total of more than 2.3 billion USD.
Project Status: The nickel mine and nickel smelters are operational; the HPAL facilities are under construction. A proposal for deep-sea tailings disposal at the HPAL facilities has been cancelled.
The Indonesia Morowali Industrial Park (IMIP) is in Fatufia Village, in the Bahadopi District of Morowali Regency, Central Sulawesi Province. This province is one of the nickel hotspots in a country with the richest nickel deposits in the world. However, despite massive growth in nickel-based industrialisation in the region since the mid-2010s, many people in Morowali are still engaged in traditional farming and fishing activities.
The IMIP was initially a joint venture between Indonesia-based mining conglomerates PT Bintang Delapan Investment and PT Sulawesi Mining Investment (itself a joint venture between Bintang and the private Chinese company Tsingshan Holding Group), with strong backing from Shanghai Decent Investment Company Limited, which is also a subsidiary of Tsingshan Holding Group. In October 2013, Chinese President Xi Jinping and then Indonesian President Susilo Bambang Yudhoyono, oversaw the signing of a cooperation agreement to establish the industrial park.
The concept for the park dates to 2009, before the official launch of China’s Belt and Road Initiative (BRI) in 2013. However, on the same trip to Indonesia when President Xi first announced the Twenty-First Century Maritime Silk Road, he also witnessed the signing of the cooperation agreement for the project, alongside Indonesia’s president. This was followed by an injection of 1.22 billion USD from the China Development Bank in 2018.
Many companies from Indonesia, China, and elsewhere are involved in the project, including subsidiaries of major private Chinese firms Tsingshan Holding Group, GEM Company Limited, Chinese Amperex Technology (CATL), Zhejiang Huayou Cobalt Company Limited, and China Molybdenum Company Limited. They are backed by Chinese banks, including the Export–Import Bank of China (China Eximbank) and the China Development Bank, which is currently the largest lender to the park. Tsingshan Holding Group is the most important investor in the project and holds significant shares in all aspects of the IMIP, from infrastructure and mines, to rotary kiln–electric furnace (RKEF) plants and HPAL facilities.
Today, the IMIP compound spans 2,000 hectares and contains worker housing and a hotel for executive visitors; lime, coke, and acid plants; seaports; an airport with a 1,800-metre runway; and its own telecommunications network. The park has two HPAL facilities under construction and 11 smelters consisting of 40 lines, producing nickel pig iron (NPI), ferrochrome, and stainless steel. There are also at least two nearby nickel mines supplying the project, including the Hengjaya mine.
The IMIP is valued at more than 7 billion USD. Seven projects within the park are discussed in this profile (see the table below).
|Project Type||Project Name||Investment|
|Smelter||Hengjaya Nickel Project||300 million USD|
|Smelter||Ranger Nickel Project||300 million USD|
|Smelter||PT Sulawesi Mining Investment||632 million USD for first smelter, 1.1 billion USD for second|
|High-Pressure Acid Leaching Facility||PT QMB New Energy Materials||998 million USD|
|High-Pressure Acid Leaching Facility||PT Huayue Nickel and Cobalt||1.28 billion USD|
|Mine||Hengjaya Nickel Mine||Unknown|
|Deep-Sea Tailings Disposal||PT Hua Pioneer Indonesia||Cancelled|
Indonesia Morowali Industrial Park
The joint-venture company, PT Indonesia Morowali Industrial Park, manages the park, providing infrastructure, security, and water. It is majority owned by Tsingshan Holding Group through Shanghai Decent Investment Group, Bintang Delapan Investment, and PT Sulawesi Mining Investment.
The International Finance Corporation (IFC), the private-sector arm of the World Bank, is indirectly linked to the project. The IFC invested 100 million USD in the China–ASEAN Investment Cooperation Fund (CAF), an equity fund set up by China Eximbank. The CAF holds a 24% stake in PT Sulawesi Mining Investment.
The initial phase of the park’s construction began in 2013 with two NPI plants that went online in 2015 and 2016. Two additional NPI plants, the Ranger Nickel Project and Hengjaya Nickel Project, both of which are two-line RKEF plants, began production in 2019. Today there are 11 smelters inside the IMIP. The Australia-based Nickel Mines Limited owns 80% of these two NPI projects. Shanghai Decent Investment, another wholly owned subsidiary of Tsingshan, is a significant shareholder in Nickel Mines Limited. Another two smelters are owned by PT Sulawesi Mining Investment, which is owned by Tsingshan Group and the Indonesian Bintang Delapan Group.
High-Pressure Acid Leaching Facility
In 2019, QMB New Energy Materials and PT Huayue Nickel and Cobalt began development of two HPAL facilities, with projected production to begin in the second quarter of 2021. However, as of October 2021, production at the facilities had not begun. Both will produce mixed hydroxide precipitate, which is one of the intermediate products of nickel processing and is later processed into cathode material for electric vehicle batteries.
The QMB New Energy Materials HPAL plant is being developed by five joint-venture partners, four of which are private Chinese companies or wholly owned subsidiaries of Chinese companies. Notably, two of the Chinese joint-venture partners are subsidiaries of Tsingshan Holding, along with GEM and Guangdong Brunp Recycling Technology Company, which is majority owned by CATL.
The PT Huayue Nickel and Cobalt HPAL plant is also being developed by five joint-venture partners. The three largest investors are private Chinese companies that are subsidiaries of major firms: Tsingshan Holding Group, China Molybdenum, and Zhejiang Huayou Cobalt. GEM has announced plans to double its stake in the project and signed a memorandum of understanding to acquire 21% and 15% of the shares currently held by Tsingshan and CATL, respectively.
In addition to Tsingshan Group’s investment in HPAL facilities to produce mixed hydroxide precipitate that will later be converted into nickel sulphate, the company also announced in March 2021 a plan to produce battery materials by converting NPI to nickel matte. This process avoids the challenge of tailings disposal encountered at the HPAL facilities. Additionally, the technology for this is already established in NPI smelters at the IMIP. However, this method is more energy intensive, thus emitting much more carbon dioxide as the majority of the energy used comes from coal-fired power plants. According to materials supply chain intelligence group Roskill, the emissions will be more than three times higher than any other battery material production method. In the same month, Tsingshan also announced plans to build 2 GW of renewable energy plants, including solar and wind power, in the IMIP in the next three to five years and a 5 GW hydropower project.
Deep-Sea Tailings Disposal
In early 2019, QMB New Energy Materials and PT Huayue Nickel and Cobalt, along with two Indonesian partners, established PT Hua Pioneer Indonesia to develop and apply for permits to carry out deep-sea tailings disposal (DTSD) of waste from the HPAL facilities. The joint-venture partners are owned by four Chinese companies, as illustrated in the diagram below. The company argued that DTSD into waters off Morowali was necessary because high seismic activity and high rainfall made land-based tailings management difficult. It was proposed that about 12 million tonnes of slurry waste from battery-grade nickel smelting in the IMIP would be dumped into the sea within the Coral Triangle, which is home to some of the richest marine biodiversity in the world. Although this plan was eventually cancelled in October 2020, Indonesian law allows for submarine tailings disposal and the developers have yet to propose an alternative tailings plan.
Of the 37 mining companies operating in Morowali Regency, the authors have identified two nickel mines—one owned by PT Bintang Delapan Mineral and the Hengjaya Nickel Mine—that are supplying ore to smelters inside the IMIP. Both have links to Tsingshan, the main company behind the IMIP. The Hengjaya mine is 80% owned by Nickel Mines Limited, in which Tsingshan holds shares, as discussed above. The Bintang Delapan Mineral–owned mine is part of the Bintang Delepan Group, which, as previously mentioned, is part of the IMIP consortium. There are likely many more mines supplying the park, considering the Indonesian Government has banned nickel ore exports since January 2020. As the HPAL facilities come online, demand for ore to process at the IMIP will likely increase.
The IMIP has 1.9 GW of power generation, which is expected to expand to 2.9 GW in the coming years. Of that, 1.26 GW comes from coal-fired power stations, which consume about 6 million tonnes of domestically sourced coal annually. This capacity is bound to expand with the development of diverse factories in the park and the addition of nickel-based projects for lithium-ion battery production. Existing coal plants in the park have received financing from the China Development Bank, China Eximbank, Bank of China, and ICBC.
In September 2021, Chinese President Xi Jinping said in a speech to the UN General Assembly that China would no longer build new overseas coal plants. In the days following this speech, Tsingshan announced that it would not build any new coal plants overseas. However, just a few weeks before this, Tsingshan signed a contract with Energy China to build a coal-fired plant with three 380 MW generators at Morowali. It is unclear whether this contract will be affected by Tsingshan’s commitment to move away from coal. As mentioned earlier, Tsingshan has also announced plans to build 7 GW of solar, wind, and hydropower power plants.
The China Development Bank has been by far the largest financier of broader projects within the IMIP, financing more than 5 billion USD in different ventures, including 1.22 billion USD in a Tsingshan-owned steel mill and two 300 MW coal plants used for park projects. In 2019, the bank held talks with Tsingshan, GEM, Brunp Recycling, CATL, and Hanyou Cobalt to discuss potential financing of the HPAL projects. No official agreements came out of the meeting.
China Eximbank has confirmed involvement in the IMIP through 240 million USD in financing for a coal power plant within the park. Other sources state that the bank has helped finance other projects within the IMIP, but the connections are unclear.
HSBC China has worked closely with Tsingshang Group in the development of the park. It was the IMIP’s first source of international financing in the form of a project loan for the industrial park and trade finance working capital. It has since expanded an open credit line to Tsingshan Group to cover its business in Indonesia and beyond.
The IMIP project is closely linked to the Indonesian Government’s 2014 ban on the export of raw materials, and to Indonesia’s goal to grow its downstream mining sector. With the development of the HPAL facilities, the IMIP is poised to become a leader in nickel-based processing for lithium-ion batteries in Indonesia. The park is categorised as a NSP owing to its role in generating regional and national economic growth. It employs more than 38,000 workers, according to the Manpower and Transmigration Office of Morowali.
While the project has made a significant contribution to national gross domestic product (GDP) and has generated employment, it is also energy and pollution intensive. The IMIP, and the nickel mining associated with it, are linked to water pollution, biodiversity loss, deforestation, militarisation, and an increase in migration to the region. The key controversy surrounding the facility at present is the proposed development of HPAL facilities. The planned use of deep-sea tailings disposal generated serious concern among environmental and civil society groups, although such plans have since been cancelled. Likewise, a planned expansion of coal-generated power sparked concern but is now in doubt due to President Xi’s announcement in September 2021 that China would not build any new overseas coal power plants.
Communities in Kurisa Village in Fatufia have been experiencing degrading seawater quality in their neighbourhood and decreasing fish numbers, which have forced them to travel further out to sea to fish. This is due to submarine wastewater disposal from the IMIP, which is permitted by Decree 259/2018 of the Ministry of Environment and Forestry of Indonesia. The wastewater comes from the production process, runoff from coal stockpiles, hot water from the cooling process of coal-fired power plants, and domestic wastewater.
The proposed deep-sea tailings disposal from the HPAL facilities would have seen the dumping of an estimated 25 million tonnes per year of slurry waste from battery-grade nickel smelting into the waters off the coast of Kurisa, in the highly biodiverse Coral Triangle. This area is home to 76% of the world’s coral species, 15 of which are found nowhere else. Submarine tailings disposal has been proven to harm ocean ecosystems and fisheries. In 2020, Reuters reported that PT Hua Pioneer Indonesia, which oversees waste disposal in the IMIP, had decided to withdraw its request for deep-sea tailings disposal due to the ‘complexities of the impact of sea tailings’ and was instead ‘seeking other technological options’.
Coal-sourced electricity generation increases air pollution and poses a health threat to local communities. The IMIP has 1.9 GW of power generation, which is expected to expand to 2.9 GW in the coming years. Of that, 1.26 GW comes from coal-fired power stations, which consume about 6 million tonnes of domestically sourced coal annually. Local communities are increasingly suffering from acute respiratory infections (ARIs). Based on records from the Bahodopi District Health Centre, the number of ARI sufferers in the district increased from 1,900 in April–December 2017 to almost 2,500 throughout 2018.
Since 1990, Central Sulawesi has lost more forest cover than any other province in Indonesia, with a decline of 18.9% as of 2018. In 2001, 77% of the land area in Morowali Regency was covered by primary humid forest. According to Global Forest Watch, between 2002 and 2020, Morowali lost 8.2% of this forest, representing 58% of its total tree cover loss. Rates of deforestation rose in the years following the Indonesian Government’s resource export ban and the start of construction of the IMIP in 2013, and while there are many drivers of deforestation, the significant expansion of nickel mining and processing in the Morowali region cannot be ignored.
The IMIP has been designated an NSP by the Indonesian Government. To protect the growing investment, the Commander of the Indonesian National Army, Marshal Hady Tjahjanto, plans to establish a military base close to the park. A company of the Mobile Brigade, the special operations tactical unit of the Indonesian National Police, has also been deployed in the vicinity. In March 2014, dozens of armed personnel claimed to be guarding the construction site for a new plant in the park, but over two days they hovered around and intimidated PT SMI workers who were on strike.
Labour disputes, strikes, and protests sparked by low wages and complaints about exploitative conditions, including occupational health hazards, have marked the IMIP since its inception. In recent years, workers from South and Central Sulawesi have claimed racial discrimination based on allegations that Chinese migrant workers are hired illegally and receive higher wages. Unionised and non-unionised workers have made some gains since 2013, including a nominal increase in wages and a reduction of the workday from 11 to seven hours for striking miners at a nickel mine supplying the IMIP.
Despite massive growth in nickel-based industrialisation in the region since the mid-2010s, most working-age people in Morowali are still engaged in traditional farming activities. Many locals do not have the skills necessary to work at the park or prefer to work in the informal sector surrounding the IMIP. This has led to a large influx of migrant workers from overseas, usually China. A decline in government investment in agricultural projects, coupled with the environmental impacts of the IMIP, has caused hardship for farmers.
Investment chain details were gathered during investigations conducted by Groundworks, Aski Ekologi & Emansipasi Rakyat (AEER), and Inclusive Development International, utilising company reports, stock exchange disclosures, and media sources (detailed information about the sources is on file with the map editors).
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