INDONESIA

From Captive Coal To Credible Nickel: Reframing State–Corporate Responsibilities – Analysis

January 9, 2026

By Adrian Law and Kam-yee Law

Indonesia’s nickel boom powers EV supply chains but also reveals how permissive policy, lenient permitting and coercive enforcement combine with corporate strategies. A state–corporate crime lens shows why accountability must shift to governance design, clean energy inputs and enforceable community rights.

Framing the Issue

Indonesia’s nickel programme is often reported through incidents and controversies. A criminological perspective helps us see the structure behind those events. State–corporate crime refers to serious harms produced by the interaction of public authorities and private enterprises. It invites readers to look at how rules are written, how permits are granted and how force is used, and to ask whose goals are served.

This lens, associated with the work of Michalowski and Kramer, encourages analysis of enabling conditions rather than isolated wrongdoers. It is therefore suited to a sector where rapid downstreaming, industrial parks and export competitiveness have become organising principles for policy and investment.

Disaggregating the State

The state that shapes nickel production is layered. At the national level, resource nationalism bans ore exports and concentrates smelting inside industrial parks. In those parks, captive power is allowed for projects labelled as of national strategic importance. Where grid access and renewable integration are weak, coal becomes the practical default. At the administrative level, environmental impact assessment system (the Indonesian one is AMDAL) often functions as a facilitative gate rather than a decisive check, especially on small islands and conservation landscapes. Licences can be issued, suspended and reactivated with limited attention to cumulative impacts. At the local level, policing and security practices deter protest and narrow civic space. Documentation around Halmahera’s Indonesia Weda Bay Industrial Park (IWIP) records weak Free, Prior and Informed Consent (FPIC), intimidation and criminalisation of organisers. The three layers do not act in isolation. Together they create a structure in which corporate targets can be met at low energy cost, while harms fall on coastal and indigenous communities.

Energy and Emissions

Captive coal remains the backbone of the nickel complex. Independent tracking shows about 15.2 gigawatts of captive coal already operating by late 2024. Proposals in the pipeline could lift the total to roughly 26.2 gigawatts by 2026. Most additions serve metals parks, with nickel dominant. A complementary dataset estimates total industrial captive power at around 22.9 gigawatts in 2024, of which about 81 percent is coal. Within that figure, nickel uses about 13.94 gigawatts and aluminium about 1.0 gigawatt. These numbers explain why energy inputs, not only output volumes, drive risk.

Scenario analysis by IEEFA for four major companies—Antam, Harita, MBMA and Vale—projects a rise from roughly 15.0 million tonnes of CO2 in 2023 to about 38.5 million tonnes in 2028 if current carbon intensity persists. If others matched Vale’s practice of hydro and biodiesel inputs, the 2028 total could fall to about 22.3 million tonnes, a reduction of around 43 percent.

Traceability is improving, although uneven. The University of Maryland’s Center for Global Sustainability maps smelter ownership, energy sources and siting hotspots across Sulawesi and Maluku. The data point to slow movement away from captive coal. Turning datasets into governance requires procurement gates that reward verifiable low‑carbon power rather than declarations.

Communities and Remedy

Where the three layers of the state align with corporate imperatives, harms concentrate at project perimeters. Residents report loss of access to clean water, sedimentation and coastal decline, respiratory illness and disrupted livelihoods for fishers and smallholders. Field reporting from Sulawesi’s Kabaena island describes waters turning reddish brown from runoff, falling catches and health complaints. Governance therefore needs enforceable FPIC, recognition of customary rights and independent grievance mechanisms with protection for defenders, otherwise remedy drifts toward corporate philanthropy and administrative routines that do not address structural harm.

Complicity, Defined Carefully

A useful caution is to avoid framing complicity so widely that responsibility blurs into collective blame. The analysis is sharper when roles and mechanisms are specified. One practical approach is to distinguish state‑initiated harms, state‑facilitated harms and corporate‑initiated harms. Another is to identify enabling devices such as captive‑power exemptions, permit reactivations or policing contracts, and to calibrate remedies in proportion to those roles. Such specificity keeps the architecture of harm in view without moral overreach.

Upstream Supply‑Chain Mechanisms

Resilience depends on credible institutions, as the Philippines’ ghost flood‑control scandals remind us. For critical minerals, leverage sits upstream. Automakers, battery firms and financiers can write procurement gates that condition offtake or lending on non‑coal smelting, independent emissions baselines, enforceable FPIC and verifiable community‑benefit agreements. Border instruments such as the EU Carbon Border Adjustment Mechanism can reinforce domestic governance by taxing carbon‑intensive nickel.

Policy Pathways

Energy inputs can change. Industrial parks can adopt verifiable renewable mixes through hybrid systems, embedded metering and third‑party audits. Offtake contracts and concessional finance can be aligned to reward low‑carbon power. Indonesia’s 2025 decarbonisation roadmap for nickel sets a target of cutting sectoral emissions by 81 percent by 2045. That ambition will depend on closing captive‑coal exemptions and strengthening grid access.

Permitting can be rewritten to centre irreversible thresholds. Mining on designated small islands should be barred. Cumulative‑impact modelling should be mandatory for industrial clusters. FPIC needs legal force, not only guidance. Grievance bodies should be independent and include protections for whistleblowers. A firewall between public order and corporate schedules would clarify the boundaries of police engagement and improve trust. (Greenpeace SE Asia licence analysis; Auriga/Earth Insight evidence)
Conclusion

Case material from Halmahera, Kabaena and Raja Ampat is essential because it reveals how rules, permits and policing combine with corporate strategies. A state–corporate crime lens recentres analysis on that intersection and on the design points that can prevent harm before it occurs. Similar oversight cultures and enabling architectures are visible elsewhere. Japan has wrestled with soft corporate governance and nuclear restart anxieties. The Philippines has faced ghost infrastructure scandals. Laos has pushed hydropower while under debt stress. The framework therefore travels beyond Indonesia. Nickel can be credibly green when governance subtracts harm at the source.

About the authors:

Adrian Law is an early career criminologist, trained at the University of London. He is currently teaching at the University of Wollongong College Hong Kong and at Hong Kong Chu Hai College.

Kam-yee Law is an Associate Professor in the Department of Social Sciences & Policy Studies at The Education University of Hong Kong. His work focuses on the political sociology of East and Southeast Asia. He also writes critiques on media and culture issues.