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A call for a decisive transition to a green economy
Switching to cleaner sources of energy is not likely to solve pollution problems in mining areas, as the nickel downstreaming process still produces tailings that can contaminate waters.
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A nickel smelting plants at the Indonesia Weda Bay Industrial Park (IWIP) in Lelilef, North Maluku, operates on July 7, 2024. (AFP/Azzam Risqullah)
P
resident-elect Prabowo Subianto’s economic programs will still rely on mining and associated downstream industries to spearhead economic growth. This will follow in the footsteps of the preceding administration, which enacted various policies, from nickel downstreaming to allowing religious organizations to mine coal, that favored extractive industries.
However, this adherence to what might look like a surefire strategy carries some risks.
Despite the government’s claim about prosperity promised by mining and downstreaming, their effect on people’s well-being remains questionable. Job creation is one of the oft-cited benefits of mining and downstream industries, yet the number of people they have employed is insignificant to compared to Indonesia’s workforce of 149 million people, with more than 7 million of them unemployed.
From the macroeconomic perspective, these mining and downstreaming initiatives have been unable to create enough jobs to offset the wave of lay-offs that happened this year. The initiatives’ trickle-down effects are feeble in helping the shrinking middle-class regain its purchasing power, or even maintain it, as the deflation in the past five months has indicated.
Even at the lower level, the job creation promise rang hollow. At the heart of Indonesia’s nickel mining and processing industry in Morowali, Central Sulawesi, and Konawe, Southeast Sulawesi, last year’s unemployment rate increased by 15.4 percent and 24.8 percent, respectively. This happened while the mining and related-processing industry sectors’ gross domestic product (GDP) grew 7.7 percent in Morowali and a staggering 51.64 percent in Konawe.
Clearly, there is a disconnect between the industry’s growth and job creation.
The negative externalities inflicted by mining and mineral processing are becoming more obvious. There is no shortage of stories about health and environmental impacts caused by mining operations.
