OPINION: Overcoming mining waste issues will be key to Indonesia’s nickel ambitions

Benchmark recently travelled to several nickel operations across Indonesia to improve our understanding of the developments in this critical part of the battery supply chain and generate insights to support our analysis of the nickel and cobalt raw material markets.

The country has ambitious plans to capture a greater share of value in the battery supply chain and benefit from the wave of nickel demand from batteries.

In 2015 Indonesia only produced 2% of the global supply of refined nickel. But by 2023, Benchmark’s forecasts show Indonesia to account for half of global nickel output. By 2030, Indonesia’s share of supply has the potential to rise to more than 60%.

Yet how Indonesian nickel projects dispose of their waste products will be key to how large the industry can grow. Waste disposal costs will also add to the cost of production.

Tonny Gultom, director of HSE and Sustainability at Indonesia’s Harita Nickel, told Benchmark that the placement and re-use of tailings requires special permits from the Indonesian Ministry of Environment and Forestry, which “may impact the growth of the nickel industry in Indonesia.”

The rise of MHP

A key part of Indonesia’s nickel expansion, particularly for the battery value chain, is the construction of high pressure acid leaching (HPAL) refining capacity, producing mixed hydroxide precipitate (MHP), containing both nickel and cobalt.

MHP has already become, and will remain, the key feedstock to produce nickel sulphate for lithium-ion batteries and is therefore the focal point of Indonesia’s role in the value chain.

Production of MHP has started at two locations in Indonesia since late 2021 – Obi Island in North Maluku province in eastern Indonesia and the Indonesia Morowali Industrial Park (IMIP), Morowali Regency in Central Sulawesi.

As well as HPAL, both Obi Island and Morowali host a number of existing nickel mining and refining facilities, as well as stainless steel production. Benchmark visited both of these locations during the research trip.

Dealing with mining waste

Given its location in an area prone to earthquakes and with high levels of rainfall, companies in Indonesia currently use a method called “dry stack” tailings, where waste is dried and compacted into a mound.

While there are environmental and safety concerns from dry-stack tailings, including risks from earthquakes and runoff into the sea, the tailings can be managed through neutralisation, toxicity treatment and effluent monitoring.

They are also looking at a number of ways of reusing tailings, particularly waste with high iron content, which could be used in construction or within the stainless steel production process.

But even by backfilling old open pits, space could quickly become an issue. And haulage distances will increase as mining sites become further from processing sites.

Trucking mining waste

Some companies run their own mining operations enabling them to carefully manage the backfill of old pits and subsequent rehabilitation, but those that purchase third party ore have very little control on mine planning, waste and water disposal process, and they will need to agree with the third party mine to dispose of tailings.

This will remain a key operational and cost risk for these companies.

If this issue cannot be overcome, or if arrangements change over time, then these companies will be forced to construct tailings storage facilities.

This will require significant capital expenditure, high management costs and large areas of deforestation.

This is a particular advantage of the dry-stack tailings process being applied at present as old open pits are refilled, supporting the rehabilitation process and reducing the need for additional land impacts as well as the secondary impacts common with deforestation.

Traveling to Obi Island

On Obi Island, Benchmark visited several parts of Harita Nickel and PT Lygend’s operations including the HPAL operation and expansion that is in progress, existing and under construction power plants and ferronickel (FeNi) plant.

In addition to nickel mining and refining, the full operation currently has capacity for up to 60 kt/yr of nickel in MHP, via HPAL, with a further expansion underway to increase total output to 120 kt.

Benchmark also attended a ceremony for the first production of nickel sulphate. The sulphate, once ramped up, will produce up to 60 kt/yr of nickel sulphate and 6 kt/yr of cobalt sulphate.

The operations produce large amounts of waste. PT Lygend’s operations will produce approximately 1.2 tonnes of waste for each tonne of ore consumed.

This equates to approximately 11 million tonnes of waste each year, even before any expansions.

And the 20% additional volume will pose problems over time as space becomes limited and old pits become further away. Pits could be filled to higher elevations than the original topography, but this poses runoff risks.

Solutions

Many solutions have been proposed, with dry stack tailings disposal currently being implemented as the best option. Tailings are neutralised and a filter press is used to reduce the water content.

FeNi slag is used to line the old pits before they are filled with the tailings and compressed by machines. Proper drainage is necessary to collect water from rainfall water contaminated by the tailings.

Separately, drained water passes through a canal to be treated with ferrous sulphate, which transforms chromium VI, which can cause health problems for humans, into the more benign chromium III.

After treatment, the drained water goes to sediment ponds, where the sediment slowly settles in the bottom of the pond. When the pond is filled with water, this is tested and, if it passes the quality control, it is pumped and disposed into the sea. Water quality criteria are set by the Indonesian government.

The company is conducting research alongside universities into using tailings for the production of roof tiles (post-treatment) and could also add bacteria to produce material for post-mine rehabilitation. In addition, the iron could be used for stainless steel production.

They plan to cover the MHP tailings with top soil and plant vegetation once the pit has been filled. After five years and further testing, the land can be reused, with the potential for solar farms to power the operations and reduce the requirement on coal-fired power plants.

We visited one of the dry stack tailings facilities on Obi Island and found it closely controlled by the company. The workers explained that monitoring was in place to ensure that the final disposal met the environmental thresholds set by the Indonesian government. The tailings management process was robust, unlike some suggestions from other reports on this process in Indonesia.

Morowali Industrial Park

The IMIP (Indonesia Morowali Industrial Park) site, operated by Tsingshan, covers more than 3,000 hectares on the east coast of Central Sulawesi and is the location for the production of a number of nickel products, including refined nickel (FeNi, NPI and metal), stainless steel and MHP via newly installed HPAL capacity – Benchmark met with both of these producers at IMIP.

PT Huayue (a joint venture between Tsingshan, Huayou and CMOC) started HPAL production in January 2022 and has fully ramped up MHP capacity for up to 65 kt/yr of nickel, 6 kt/yr of cobalt and 12 kt/yr of manganese. They are also considering nickel and cobalt sulphate production, similarly to PT Lygend, although space restrictions at IMIP will likely mean this is constructed elsewhere in the region.

The tailings are sent to a dry stack site – which is 7.5 kilometres away, increasing the costs of the operation. PT Huayue also source third party ore, which means they are exposed to changes in haulage distances and tailings disposal.

PT QMB (a joint venture between Tsingshan, GEM, CATL, EcoPro & Hanwa) started two of their HPAL lines in September 2022, which are now ramped up, with the third line starting in May 2023. Upon full ramp up, PT QMB will have three HPAL lines, each with 10 kt/yr of Ni capacity, totalling 30 kt. They have a further three HPAL lines under construction, with an additional 30-60 kt/yr of potential.

Their dry stack tailings site is even further than for PT Huayue, at around 10 to 15 kilometres from the HPAL operation.

Other environmental considerations

Yet by flying over Morowali, it was possible to see one of the most devastating impacts of mining near to the coast.

Without proper drainage systems, mine runoff reaches the sea and the previous sky blue waters are now brown. The local government is responsible for enforcing controls and closing operations when necessary. However, many factors delay this action such as numerous operators mining in the same area, local and federal government remits, bribes, illegal operations, among others.

The toxicity of elements in the runoff can impact marine ecosystems. The runoff can darken the sea water and block the sunlight, necessary for the coral reefs and its biosystem. Indonesia is known for its unique coral reef ecosystems.

Some villagers have moved to other more remote parts of the island, according to local workers, to not be impacted by the nickel operations.

On the other hand, there are also improvements in the livelihood of local people. Communities now have access to electricity, treated water and education.

There was a significant decrease in infant mortality as mothers now have access to more nutritious food and vitamin supplements because of the commercial routes opened by such operations. It is clear that community engagement is essential to preserve the local rights to freshwater water, to fresh food and fish, and to ensure that development does not deprive them of the local cultural heritage.

Harry Fisher is a project manager in the consultancy division of Benchmark; Bruna Grossl is a senior LCA practitioner.

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