Indonesia nickel probe ties carmakers to deforestation in Sulawesi

A European investigative reporting consortium said Oct. 16, 2026, that nickel mined from illegally deforested tracts in Indonesia enters the battery supply chains of major Western automakers.

The findings connect open-pit laterite mines on the island of Sulawesi to Chinese chemical refiners that supply cell manufacturers in Asia and Europe.

Indonesia holds roughly 42% of global nickel reserves. It accounts for more than half of worldwide mined extraction.

The investigation centered on the Cahaya concession, operated by PT Sulawesi Cahaya Mineral across 21,000 hectares in Southeast Sulawesi. It also examined the nearby Hengjaya mine.

Both sites sit within ancestral lands of the indigenous Tolaki community. Mining operations there have expanded rapidly to feed high-pressure acid leach plants.

Nonprofit environmental group Auriga Nusantara calculated that Sulawesi Cahaya Mineral delivered 11.0 million tonnes of limonite ore in 2024. The company delivered roughly 12.5 million tonnes to processing facilities in 2025.

Those volumes went directly to the Indonesia Morowali Industrial Park in Central Sulawesi. Chinese refiner Zhejiang Huayou Cobalt processes the ore into battery-grade chemical intermediate.

The intermediate material is mixed hydroxide precipitate — a concentrated chemical compound of nickel and cobalt extracted from low-grade ore using sulfuric acid under high pressure.

Customs and maritime trade records indicate the Morowali complex exported $606 million worth of mixed hydroxide precipitate to Chinese ports in 2024. Shipments totaled $470 million in 2025.

The intermediate was delivered to Huayou chemical refineries in Quzhou and Yulin. Those plants synthesize precursor cathode active materials.

Huayou annual corporate disclosures confirm that the company ships processed cathode materials to Contemporary Amperex Technology, known as CATL, and South Korea's LG Energy Solution.

LG Energy Solution routes precursor feedstocks through international processing pipelines to supply its cell manufacturing plant in Wroclaw, Poland. CATL supplies electric vehicle packs globally.

Geospatial analysis conducted by environmental mapping firm The TreeMap established that nickel extraction caused two-thirds of all tree cover loss within the Cahaya concession since 2001.

Nickel mining also drove more than half of recorded forest destruction inside the Hengjaya boundary during the same period.

Sulawesi Cahaya Mineral cleared more than 450 hectares of forest outside its officially permitted boundaries, the report found.

Indonesia's Ministry of Environment and Forestry issued two separate administrative sanctions against Sulawesi Cahaya Mineral in 2025 for unauthorized clearing.

Western carmakers face mounting legal exposure from uncertified upstream inputs under new European environmental regulations.

Volkswagen stated that it could not exclude the named Indonesian mines and intermediate refiners from its indirect supply network.

Ford Motor said it initiated an internal compliance inquiry into mineral supply routes connected to its third-party battery suppliers.

Tesla, CATL and Zhejiang Huayou Cobalt did not respond to requests for comment regarding their raw material sourcing safeguards.

Automakers selling vehicles in Europe must prepare for the European Union Battery Regulation, designated Regulation 2023/1542. The framework introduces mandatory third-party audits.

The regulation requires companies placing industrial and electric vehicle batteries on the EU market to verify that nickel, cobalt, lithium and graphite comply with strict environmental criteria.

Mandatory verification rules under Chapter VII of the EU Battery Regulation take effect Aug. 18, 2027. Regulators will require digital battery passports detailing raw material provenance.

The broader Corporate Sustainability Due Diligence Directive also establishes civil liability for corporations that fail to prevent environmental abuses within their upstream chains.

The investigative consortium noted that customs manifests and corporate filings do not establish whether nickel from the specific Sulawesi pits reached individual vehicle identification numbers.

Industrial buyers lack public batch-level tracing records to isolate physical mineral lots once limonite ore enters shared slurry feed pipelines at the Morowali complex.