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Indonesia’s Nickel Industry: Job Creation and Environmental Pollution

For most of his 57 years on the island of Sulawesi, Jamal was accustomed to scarcity, modest expectations, and a grim shortage of jobs. People mined sand, caught fish, and grew crops. But then, a smelter was built next to his home by a Chinese mining company called PT Dragon Virtue Nickel Industry. This was part of Indonesia’s effort to ban exports of raw nickel and attract Chinese investment in processing plants. The goal was to move the pollution associated with the nickel industry away from Chinese cities.

Jamal found a job building dormitory blocks for laborers who were migrating to Sulawesi for work at the smelter. He also benefited financially by constructing rental units at his own home. His son-in-law even got a job at the smelter.

While Jamal and his family enjoy a higher standard of living, they cannot escape the negative effects of the nickel industry. They complain about the dust, pollution, and trucks carrying fresh ore passing through their area. On the worst days, they have to wear masks to protect themselves from the polluted air. Despite these issues, they believe the trade-offs are worth it for the better economic opportunities.

Indonesia’s vast reserves of nickel are at the heart of the trade-off. In places like the Cinta Jaya mine, excavators dig up the reddish soil, which is then transported to smelters for processing. One major destination for the nickel is the Morowali Industrial Park, a massive complex with 50 factories spread across 10,000 acres. The park was established in 2013 through a partnership between Indonesia and China, with China Development Bank providing a significant loan.

Within the park, thousands of Chinese workers live in dormitories, and Chinese executives stay at a luxurious hotel. The park operates like a self-contained city, even boasting its own airport and seaport. The nickel ore stockpiled there is on a massive scale, and a sizable coal stockpile fuels the park’s power plant.

The development of smelters in places like Morosi has transformed the local community. For some, like Wang Lidan, a Chinese immigrant who set up a restaurant in Sulawesi, the nickel boom has opened up new opportunities. However, there are also negative consequences. Farmers like Rosmini Bado have experienced changes to their livelihoods due to pollution and infrastructure. A concrete wall built near her rice paddies prevents her from draining water and destroyed her crops during a major storm.

Although the nickel industry has brought jobs to Sulawesi, there is a sense of inequality among workers. Indonesian employees earn significantly less than their Chinese counterparts, who often hold supervisory roles. This has led to protests and tensions between the two groups. In response, Chinese workers have been confined to their workplace to avoid potential conflicts.

While the nickel industry has brought economic development to parts of Indonesia, it has also caused environmental pollution and social issues. The Indonesian government’s decision to attract Chinese investment in processing plants has come with significant trade-offs, and local communities are experiencing the consequences.

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