Nickel mining operations in Indonesia that are connected to the battery supply chains of major global automobile manufacturers, including Volkswagen, Ford and Tesla, have been linked to extensive deforestation in areas inhabited by Indigenous communities, raising concerns about the environmental cost of the transition to electric mobility.
An investigation published by media found that nickel extracted from mining concessions on Sulawesi island was linked through processing facilities and international trade networks to battery manufacturers supplying automakers in Europe and the United States.
The findings highlight the challenges facing the electric vehicle industry as manufacturers seek to reduce emissions while sourcing minerals responsibly. Sulawesi, one of Indonesia’s major nickel-producing regions, contains important rainforest ecosystems and is home to the Indigenous Tolaki people.
Satellite imagery and geographical analysis indicate that mining activities have contributed to substantial forest loss in the region, threatening biodiversity and the traditional way of life of local communities. The investigation examined two mining sites, Cahaya and Hengjaya, and traced their nickel supplies through processing facilities in Indonesia and China. The metal is a key component in many electric vehicle battery cathodes because it helps improve energy density and vehicle driving range.
The supply chain analysis identified Zhejiang Huayou Cobalt, a Chinese battery-materials manufacturer, as an important link between Indonesian mining operations and global battery production. Nickel ore from the mining concessions is transported to a processing complex in Morowali, eastern Indonesia, where it is refined into mixed hydroxide precipitate, a material used in the manufacture of battery cathodes.
Trade records cited in the investigation showed that shipments of this processed material from the Morowali facility were valued at $606 million in 2024 and $470 million in 2025.
The material was subsequently transported to Huayou’s cathode manufacturing facilities in China. Corporate disclosures and trade data also helped investigators trace connections between battery producers and international automobile manufacturers. The findings do not establish that every vehicle made by the companies identified contains nickel from the two mines. However, the documented supply-chain links have raised questions about the extent to which manufacturers can identify the origins of minerals used in their products and verify that their procurement practices do not contribute to environmental damage.
The environmental impact extends beyond the loss of trees. The forests are part of the ancestral territory of the Tolaki community, whose livelihoods, cultural practices and relationship with nature are closely tied to the land. A Tolaki elder living near the Cahaya mining concession described the destruction of the forest as a direct threat to the community’s existence.
Geospatial analysis by The TreeMap suggested that nickel mining could account for around two-thirds of the forest loss recorded within the Cahaya concession since 2001 and more than half of the loss in the Hengjaya concession during the same period. Separately, an analysis by Indonesian environmental organisation Auriga found that the company operating the Cahaya mine contributed to the clearing of another 330 hectares of forest in 2024.
The operator, Sulawesi Cahaya Mineral, reportedly received two administrative sanctions in 2025 for clearing more than 450 hectares beyond its authorised boundaries. The company supplied approximately 11 million tonnes of limonite ore to Huayou’s smelting facility in 2024, with deliveries rising to nearly 12.5 million tonnes in 2025.
The growing demand for nickel is expected to intensify pressure on mining regions. The International Energy Agency estimates that global nickel demand could double to 5.5 million tonnes annually by 2040. Indonesia is expected to remain a major source of the metal, with much of its production processed in China.
Automobile manufacturers named in the investigation included Volkswagen, Ford, Tesla, Volvo, BMW, General Motors, Hyundai and Stellantis. Mercedes-Benz was also linked separately to Huayou. The report cautioned that the available records do not necessarily establish a direct connection between individual shipments of Indonesian ore and batteries installed in particular vehicles.
Several manufacturers said they had responsible-sourcing policies and procedures to assess environmental and human rights risks among suppliers. Volkswagen said it took potential supply-chain risks seriously but could not disclose specific supplier relationships because of contractual obligations. Ford said it was reviewing the allegations, while Volvo reported conducting on-site audits of suppliers in Indonesia.
Other companies acknowledged the environmental and social challenges associated with nickel production. Tesla, CATL, Huayou and Sulawesi Cahaya Mineral did not respond to requests for comment, according to the investigation. Environmental concerns surrounding nickel extraction have added to a broader debate over how the world can reduce transport emissions without shifting the environmental burden to communities in mineral-producing countries.
Experts have suggested that expanding battery recycling, improving public transport and encouraging the use of smaller vehicles could reduce demand for newly mined materials. The challenge for the automotive industry is therefore not limited to producing cleaner vehicles; it also involves ensuring that the minerals used in their manufacture are sourced with adequate safeguards for forests, biodiversity and Indigenous rights.
The findings underline the importance of greater supply-chain transparency, independent monitoring and effective enforcement of environmental regulations as the global transition towards electric mobility accelerates.
