A Tipping Point for Indonesia’s Nickel Boom
One of Indonesia’s largest nickel refineries has trimmed production as waste builds up to the limits of on site storage. PT QMB New Energy Materials, a key producer at the Indonesia Morowali Industrial Park (IMIP) in Central Sulawesi, will operate at lower rates for at least two weeks because its tailings area is close to full and approvals for an additional site are still pending. The park’s management confirmed the cutback. QMB is backed by two major Chinese metals players, GEM and Tsingshan, and is a central supplier of intermediate nickel products to the battery supply chain.
The slowdown puts a spotlight on the industry’s waste bottleneck. Indonesia supplies more than half of the world’s nickel, a metal used in electric vehicle batteries and stainless steel. Investment, often led by Chinese companies, has fueled rapid growth in refining projects that use high pressure acid leaching (HPAL). HPAL can process lower grade laterite ore and deliver mixed hydroxide precipitate (MHP), a nickel and cobalt intermediate favored by battery makers. The tradeoff is volume. HPAL produces large quantities of tailings, a toxic slurry that must be dried and contained behind engineered barriers. QMB’s site endured a deadly landslide at a tailings area earlier this year, underscoring how storage is being stretched in a wet and seismic region. Operators have also faced higher input costs for sulfur, used to make the acid that powers HPAL, while demand for MHP has received support from new export controls on cobalt in the Democratic Republic of Congo.
IMIP has become the core of Indonesia’s nickel strategy, hosting scores of plants and more than one hundred thousand workers. The scale is transforming the nation’s position in clean energy materials. It is also drawing tougher questions from local communities and investors about how hazardous waste is stored, how air and water are protected, and whether worker safety keeps pace with expansion.
Why Tailings Are Piling Up
Tailings are the leftovers after valuable metals are extracted. In HPAL, laterite ore is pressure cooked in sulfuric acid. The metals move into solution, while a mix of crushed rock and chemical residues is left behind. That waste has a high moisture content and can contain harmful substances. It is often pumped to storage cells, allowed to settle, then compacted, and eventually stacked behind embankments. The engineering is complex in a tropical setting, where intense rain is common and where earthquakes are part of the natural landscape. Drying and compaction can be slow during rainy spells, so storage space fills faster when production ramps up.
The volumes involved are daunting. Civil society assessments estimate IMIP currently generates more than 11 million tons of tailings each year, with potential to rise to several times that level as more lines come online in the next few years. Indonesian rules classify tailings as hazardous waste (B3) because of their persistent risks to people and ecosystems, including exposure to sulfuric acid and hexavalent chromium. IMIP has a limited number of tailings storage facilities inside the park. With active cells nearing capacity, approvals for additional sites become the immediate chokepoint for continued smooth operations. Some miners in Indonesia have explored deep sea tailings disposal (DSTD), which pipes waste into the ocean at depth. While DSTD can be cheaper than building large storage dams, scientists and environmental groups warn it could damage a marine region with exceptional biodiversity, known as the Coral Triangle, and hurt fishing communities. Alternatives, such as paste thickening, returning tailings to mined pits, or dry stacking, exist but demand capital, strict controls, and a strong record of maintenance.
HPAL in plain terms
Think of HPAL as a pressure cooker for ore. Crushed laterite is heated with sulfuric acid at high temperature and pressure inside autoclaves. Nickel and cobalt dissolve into the liquid and get precipitated later as MHP. What remains is a wet mass of fine particles and chemical compounds that can outweigh the metal many times over. Some operations can generate up to 100 tons of tailings for every ton of nickel produced. That scale explains why storage areas at busy parks can fill quickly, especially in long wet seasons.
Safety Record and Recent Incidents
Trouble at tailings sites has already had human costs. In late March, a landslide struck a tailings area inside IMIP managed for two HPAL producers, including QMB. At least two workers died and another was reported missing. Park officials cited several hours of heavy rain as the trigger. Local groups pointed to weaknesses in tailings design and operations, warning that repeated storms increase the odds of failure when storage cells hold a wet, unstable mass. Days before the landslide, the region saw floodwater mixed with mud that activists suspected came from a breach at a neighboring HPAL plant. Satellite images had shown damage at a containment structure earlier in the year.
These events added to a difficult safety record. The country’s nickel expansion has coincided with a string of serious accidents, including a 2023 smelter blast at IMIP that killed 21 workers and injured many others. From 2015 to mid 2024, dozens of workers lost their lives at the park in separate incidents. The pattern raises a central question for the sector: can plants run flat out without stronger controls on hazardous waste and more resilient infrastructure in a region where landslides and earthquakes are regular features?
Environmental and Community Fallout
Communities around IMIP say the costs of rapid growth are visible on their coastlines and in the air. Near Kurisa village, residents described the sea turning red and fish farms failing. Many fishers have given up their trade or travel much farther to find clean water. Coal fired power plants that run the complex contribute to respiratory problems, with studies in nearby villages finding particulate matter and sulfur dioxide above national safety standards. Local schools reported coal ash dust, and students complained of coughs and fevers. Tailings remain the other major stressor. With millions of tons of hazardous waste generated each year, heavy rain has caused containment structures to burst in several cases, exposing people and waterways to toxic material. Earthquakes add another layer of risk for dams that hold back saturated waste.
Beyond Sulawesi, events on Obi Island in North Maluku show how fragile waste infrastructure can be under stress. In June 2025, heavy rain triggered muddy floods that swamped three villages near a large nickel complex. A sediment pond built to collect runoff was breached, sending contaminated water into the Todoku River and then into homes and fields. Local groups documented years of water samples that exceeded legal limits for hexavalent chromium. After the breach, community leaders said seawater turned red and demanded repairs, clean water, and electricity. Residents who protested reported intimidation and a lack of support as they tried to recover.
In Central Halmahera, a different form of waste is reshaping the coast. At Weda Bay, slag from nickel smelters has been used to reclaim land and expand an airport runway. Environmental organizations reported heavy metals in seawater and fish. Blood tests on residents found elevated mercury and arsenic in some samples. The government removed nickel slag from the hazardous waste list after tests showed levels below thresholds for certain uses, and said monitoring would continue. The industrial park said it followed official guidance and highlighted the reuse of slag in construction as part of circular economy goals. Critics say the project buried coral and seagrass and urged tighter oversight of any slag placed in the sea.
Can Indonesia Store Nickel Waste Safely?
Industry and civil society agree on the risk factors. The Nickel Institute has flagged several challenges in Indonesia’s nickel belt: intense rainfall that saturates waste, steep terrain that accelerates erosion, exposure to earthquakes, and a setting rich in biodiversity. The sector also runs largely on coal power, which increases air pollution and carbon emissions. Indonesia’s government has acknowledged that regulation needs to keep pace with the speed and scale of growth. Some producers have started land rehabilitation, decarbonization projects, and community engagement, but the country’s shift from ore exporter to processing giant has outpaced many of the systems that protect people and nature.
DSTD remains a flashpoint. Proponents argue that piping tailings to deep water reduces the risk of dam failure on land. Marine scientists and environmental groups counter that deep trenches are not a safe sink. They warn of currents that resuspend particles, chemical reactions that harm marine life, and long term damage in a region that supports some of the richest reefs on Earth. Enforcement is also a hurdle. Even strict rules mean little without capacity to audit designs, monitor performance, and sanction violations. Safer options exist. Thickened paste, backfilling of mined out pits, and dry stacking can reduce the water content and improve stability. Those methods demand money, engineering skill, and discipline over decades. With investors, automakers, and regulators raising the bar on environmental and social performance, the cost of cutting corners is rising too.
Government Actions and Industry Response
Indonesia’s Environment Ministry has signaled a tougher stance at IMIP. Inspectors found operations outside the scope of the park’s environmental approvals, problems in wastewater and air pollution control, and large volumes of unmanaged mining residue near the complex. The ministry said unauthorized activities must stop, ordered an environmental audit, and prepared fines and legal steps for hazardous waste violations. Authorities also revoked several nickel mining licenses in Raja Ampat for environmental damage, after public outcry over mining in protected waters. The message is that compliance now sits at the center of the country’s plan to be a responsible supplier of energy transition minerals.
IMIP’s operator has defended its approach, saying it is improving standards in line with ministry requirements, including land reclamation, leveling, and reforestation to reduce disaster risks. The park says its topography makes a central wastewater plant difficult and that individual companies run their own systems. Managers have also argued that heavy rain, not structural failure, caused the March landslide, and that flooding earlier in the month was a separate event. For QMB, the immediate problem is space. With tailings cells close to capacity, approvals for a new site will decide how quickly production can return to normal levels.
What It Means for EV Supply Chains and Prices
Nickel demand is expected to rise with the growth of electric vehicles. Batteries will claim a larger share of use by 2040 compared with the start of this decade. The market has seen periods of surplus, yet the concentration of new supply in Indonesia creates a different kind of risk: interruptions tied to waste storage, flooding, or safety investigations. That risk can ripple through MHP supplies to battery makers. MHP demand, in turn, has found support from cobalt export restrictions in the Democratic Republic of Congo. For buyers, reliability now hinges on how well producers in Indonesia handle tailings.
Automakers and cell makers are responding in several ways. Some are diversifying sources to countries with strong oversight, such as Australia, Brazil, and Canada. Others are increasing the use of lithium iron phosphate batteries, which do not require nickel or cobalt, especially in standard range models. Many are tightening audits and assigning a premium to material with strong environmental and social records. Plants that show credible waste management and transparent performance will have an advantage as procurement teams weigh cost, availability, and risk.
What to Know
- QMB cut output for at least two weeks at IMIP because tailings storage is near capacity and a new site is awaiting approval.
- The park confirmed lower run rates, highlighting a waste bottleneck across Indonesia’s fast growing nickel sector.
- HPAL refineries produce very large volumes of tailings that are difficult to store safely in a rainy, earthquake prone setting.
- Recent incidents include a deadly landslide at a tailings area in IMIP and flood events linked to suspected containment failures.
- Villages near IMIP report red water, declining fisheries, and respiratory illness tied to emissions from coal power and industry.
- Indonesia’s Environment Ministry ordered audits and penalties for environmental violations at IMIP and revoked other nickel licenses for damage elsewhere.
- MHP demand has support from new cobalt export controls in the DRC, but waste issues in Indonesia pose supply risks.
- Buyers are diversifying supply and expanding use of chemistries like LFP that do not use nickel, while raising sustainability requirements for Indonesian material.
