Toward a More Responsible Critical Minerals Supply Chain Supporting Indonesia’s Energy Transition

The document assesses the ESG landscape of Indonesia's nickel industry, which is critical to the global energy transition. While Indonesia has seen massive economic growth from nickel downstreaming, it faces significant challenges including high carbon intensity, workplace fatalities, and rising agrarian disputes. The brief maps Indonesian regulations against international standards (such as IRMA and ICMM), identifying gaps in human rights due diligence, anti-corruption mandates, and sustainability reporting. It recommends strengthening biodiversity monitoring, mandating free, prior, and informed consent (FPIC), and establishing climate governance systems to align with global best practices.

• Indonesia is a global leader in nickel production, accounting for 54% of nickel pig iron (NPI) production and hosting 74% of the world's NPI smelters. The export value of nickel downstream products grew from USD 596 million in 2016 to USD 6.82 billion in 2023.
• The rapid expansion of the nickel sector has led to severe ESG failures, including high carbon emissions, significant loss of life in the workplace, and a surge in land-related conflicts. Between 2019 and 2025, 107 deaths occurred across 104 workplace accidents at nickel smelters, and agrarian disputes tied to nickel mining doubled on average since 2021.
• There are significant gaps between Indonesian regulations and international ESG standards. Specifically, Indonesia lacks mandatory human rights due diligence, lacks mandatory anti-corruption policies and whistleblower systems, and has limited sustainability reporting compared to standards like IRMA and CMSI.
• The Indonesian government has utilized aggressive downstreaming strategies, including raw ore export bans in 2014 and 2020, and provided extensive fiscal incentives such as tax holidays and allowances for companies in special economic zones to attract investment.
• To improve the sustainability of its mining sector, Indonesia is encouraged to adopt specific safeguards: mandatory ecosystem service assessments, the promotion of free, prior, and informed consent (FPIC) for Indigenous communities, and the requirement for decarbonization plans for high-emission entities.

APA

Maulidia, M., & Bridle, R. (2025). Toward a More Responsible Critical Minerals Supply Chain Supporting Indonesia’s Energy Transition. International Institute for Sustainable Development. https://www.iisd.org/system/files/2025-12/critical-minerals-energy-transition-indonesia.pdf

Chicago

Maulidia, Martha, and Richard Bridle. Toward a More Responsible Critical Minerals Supply Chain Supporting Indonesia’s Energy Transition. International Institute for Sustainable Development, 2025. https://www.iisd.org/system/files/2025-12/critical-minerals-energy-transition-indonesia.pdf.

Wikipedia

{{cite report |last1=Maulidia |first1=Martha |last2=Bridle |first2=Richard |title=Toward a More Responsible Critical Minerals Supply Chain Supporting Indonesia’s Energy Transition |publisher=International Institute for Sustainable Development |date=December 2025 |url=https://www.iisd.org/system/files/2025-12/critical-minerals-energy-transition-indonesia.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{maulidia2025toward, author = {Maulidia, Martha and Bridle, Richard}, title = {{Toward a More Responsible Critical Minerals Supply Chain Supporting Indonesia’s Energy Transition}}, institution = {International Institute for Sustainable Development}, year = {2025}, month = dec, url = {https://www.iisd.org/system/files/2025-12/critical-minerals-energy-transition-indonesia.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }