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A worker at an Indonesian nickel mine in South Sulawesi (Hariandi Hafid/SOPA Images/LightRocket via Getty Images)
Poor labour standards uncovered in the nickel industry should serve as a warning not to repeat past industrial mistakes.
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Critical minerals and the case for human rights in the just transitionCritical minerals and the case for human rights in the just transition
Against the backdrop of reporting on global climate negotiations, the jargon and acronyms are coming thick and fast. Some media outlets have even created jargon buster guides.
One of the expressions that has been gaining currency is “just transition”. But what does a just transition actually mean?
According to the ILO, it’s about “greening the economy in a way that is as fair and inclusive as possible to everyone concerned, creating decent work opportunities and leaving no one behind.” Central to this approach is the commitment to protecting human rights. The first Just Transition Work Program (JTWP) – which promotes pathways that achieve the decarbonisation goals set out in the Paris Agreement fairly and equitably – was only established in 2022 at COP27.
In her speech at COP29, UN Special Rapporteur on Climate Change Elisa Morgera highlighted a major issue undermining the just transition: the unexpected human rights impacts of climate change, including modern slavery and human trafficking.
One example that illustrates these human rights challenges is nickel.
Nickel is a critical mineral for energy storage systems and electric vehicles (EVs). The International Energy Agency (IEA) predicts that to meet demand for storage systems and EVs, the primary supply of nickel will need to increase by 240% between 2020 and 2040. This supply is expected to largely come from Indonesia, which is by far the world’s largest producer, accounting for 50% of the world's nickel extraction in 2023.
Since Indonesia banned the export of nickel ore in 2014 in a bid to attract foreign direct investment, China has invested more than USD$30 billion in Indonesia’s nickel supply chain. Chinese companies have constructed more than 90% of Indonesia’s nickel smelters, with three of the top five largest nickel mines being owned by Chinese companies. In 2022, Central Sulawesi's economy, which is home to most of Indonesia's nickel mining and processing, grew by 15.1%. In comparison, the overall economy of Indonesia grew by 5.3%.
Chinese companies control 75% of the world’s nickel supply (mainly from Indonesia), due to their significant ownership of mining and processing plants. In 2022, 75% of all Indonesian nickel products by value were exported to China to be made into products, such as batteries, essential to the energy transition.
While there are benefits to boosting Indonesia’s economy and cheap nickel to fuel the energy transition, the nickel industry has had serious consequences on human rights.
While nickel is central to the transition to renewable energy, much of Indonesia’s nickel production is powered by coal-fired plants built specifically to serve nickel parks, named “captive plants”.
The United States has recently added Indonesian nickel to its List of Goods Produced by Child Labor or Forced Labour based upon allegations that Chinese workers have been exploited in Chinese-owned nickel smelters. It is alleged that when Chinese migrant workers arrived, they received lower wages and longer hours than agreed, had their passports confiscated, were punished with violence and wage deductions, and were unable to leave the park's compound.
Labour abuses have also been documented involving Indonesian workers and local residents. At Morowali Industrial Park (IMIP), workers are allegedly punished for taking sick leave or being late through pay deductions, and are not provided with adequate Personal Protective Equipment. IMIP has a history of unsafe working conditions – between 2018 and 2022, records show that 15 people died due to accidents at work and 41 people were wounded.
Local residents at Weda Bay Industrial Park (IWIP) and Kalimantan Industrial Park Indonesia (KIPI) have also reported land grabbing and intimidation practices, alongside harmful water and air pollution from nickel operations.
While nickel is central to the transition to renewable energy, much of Indonesia’s nickel production is powered by coal-fired plants built specifically to serve nickel parks, named “captive plants”. Indonesia’s industrial parks currently account for 15% of the country’s coal power output, with 65% of captive power plants being located where the majority of nickel mining and processing happens (Sulawesi and Maluku Islands). It is no coincidence that when nickel exports grew by 3.5 times in 2022 compared to the previous year, Indonesia burned 33% more coal.
Indonesia has the right to economic development through its nickel industry. And it is in all of our interests that we help Indonesia build a path through which this can be achieved, while also respecting human rights and phasing out coal.
The 195 Parties to the Paris Agreement have committed to mitigate climate change, while the 193 Signatories of the Universal Declaration on Human Rights have committed to protecting human rights. A just transition combines both.
The next round of Nationally Determined Contributions (NDCs) – plans that outline how countries will cut emissions – are due in early 2025. So far, 60 countries have mentioned human rights in their NDCs, but an OHCHR report shows most provide “little information” on how they’ll actually protect those rights. Australia hasn't mentioned human rights at all in its NDC, despite growing concern around modern slavery in renewable energy supply chains.
The Just Transition Work Program, established at COP27, is meant to support knowledge-sharing and develop best practices for climate action that align with a just transition. Countries, including Australia, should engage with the JTWP and incorporate human rights into their next NDCs. This should not be a tick-box exercise, but the cornerstone of genuine efforts to combat climate change while upholding human rights.
About the authors
Fiona David
Creator of the Walk Free Global Slavery Index, Fiona David has three decades of experience working internationally with UN organisations, development projects and governments to solve complex human rights challenges, particularly human trafficking and modern slavery.
Shannon Hobbs
Shannon Hobbs is a Researcher at Fair Futures, specialising in the intersection of human rights and the environment.
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