Nickel Mining in Sulawesi Fuels Battery Supply Chains for Major EV Makers

An investigation traced nickel ore from the Cahaya and Hengjaya mines on Sulawesi to battery cathodes used by Volkswagen, Ford, Tesla and other automakers. The two concessions, covering roughly 21,000 ha of primary rainforest, have been linked to extensive tree loss. Spatial analysis by The TreeMap shows mining accounts for about two-thirds of forest loss in Cahaya and over half in Hengjaya. A 2023 Nature Communications study estimated the carbon footprint of nickel from the most destructive sites may be up to 500 times higher than previously reported.

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Ore from the mines is shipped to a smelter in Morowali, operated by Zhejiang Huayou Cobalt’s Indonesian subsidiary, where limonite is refined into mixed-hydroxide precipitate (MHP). In 2024, $606 million worth of MHP left the plant for China; shipments valued at $470 million followed in 2025. The material moves to Huayou cathode factories in Quzhou and Yulin before reaching CATL and downstream to car manufacturers. Volkswagen received a shipment of 24 tonnes of cell modules worth about $390 000 in October 2024.

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Global demand for nickel is projected by the International Energy Agency to double to 5.5 million tonnes by 2040, much of it sourced from Indonesia. The TreeMap analysis notes that SCM, the operator of the Cahaya mine, cleared an additional 330 ha of forest in 2024 and delivered 11 million tonnes of limonite ore that year, rising to nearly 12.5 million tonnes in 2025.

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Several automakers acknowledge the risk but limit disclosure. Volkswagen said it takes potential supply-chain risks seriously but cannot reveal specific supplier details due to contractual obligations. Ford announced a review of the allegations and pledged to determine appropriate next steps. Mercedes-Benz, Renault Group, Volvo Cars, General Motors, Stellantis and Hyundai each affirmed awareness of environmental and human-rights challenges in Indonesian nickel production and described ongoing due-diligence or audit activities. CATL, Huayou, SCM and Tesla declined comment.

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Environmental groups warn that the surge in nickel mining, driven by demand for high-capacity EVs, intensifies deforestation and threatens the Tolaki people who inhabit the forested concessions. An elder, Wadimula, described the cultural loss: “We used to ask the forest for protection in return for our offerings.” Groups note that successive Indonesian governments have weakened safeguards, allowing mining to expand into lands designated as production forest.

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• “We used to ask the forest for protection in return for our offerings,” — Wadimula

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• “We take potential risks in our supply chain very seriously. However, due to contractual obligations with our business partners, we cannot disclose specific details on our supplier relationships or their supply chain.” — Ford

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• “We are committed to protecting human rights and the environment. We are reviewing the allegations and will determine any appropriate next steps based on that review.” — Hyundai, Mercedes-Benz

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• “We have identified a nickel mining site in Sulawesi, Indonesia, as being a tier-n supplier (eg. indirect) in our battery supply chain. We have engaged with the relevant business partners to verify some ESG information concerning Sulawesi Cahaya Mineral.” — Volvo Cars

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• “During 2025, we conducted […] onsite audits […] on suppliers [who are] part of our battery supply chains, two of them located in Indonesia […] with further battery supply chain partners during 2026 and onward.” — General Motors

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• “We are aware that nickel mining in Indonesia presents significant environmental, human-rights and community-related risks.” — Stellantis

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