The elements of power, p.20
The Elements of Power, page 20
Sadip, a farmer in his sixties who arrived in Sulawesi from East Java in 1993, told me when we met in 2022 that it hadn’t always been like this. (Like many Indonesians, especially those from Java, Sadip uses only one name.) For Sadip’s first twenty years, life in the town was calm, unhurried. The farmers spent their time corralling wild pigs and digging irrigation tunnels between their fields. They dammed a local river. According to an article in the Chinese magazine Caijing, until 2013 “the only sign of modernity in Bahodopi was a couple of dated motorcycles.”
Since the time of Thomas Edison, who proposed nickel-iron batteries as an alternative to lead-acid ones, the battery world has been fascinated with nickel. In 1901, Edison traveled to Sudbury, a Canadian town abutting some of that country’s largest nickel deposits, to look for the metal. He had little success: In the town of Falconbridge, he dug into quicksand and missed a mother lode of the metal by a few feet. Now NMC batteries were spurring a new rush for nickel, buried deep in pits outside Bahodopi.
Much of the nickel mined in Indonesia is used in the Chinese steel industry because the ore is less pure than that from other sources, like in Russia, but NMC cathodes such as the one used in the Chevy Volt have also become a big driver of growth in the country in recent years. As a report by the Center for Strategic and International Studies, a Washington think tank, noted, “Indonesia’s nickel strategy has become part of the country’s goal to create an integrated EV supply chain.” One of the epicenters of this rush was located at the giant Indonesia Morowali Industrial Park in Bahodopi, known by locals as IMIP.
In 2019, a $4 billion battery project that included Chinese investors began construction in Morowali. Green Eco-Manufacture, or GEM, a Chinese colossus in the recycling of metal and electronic waste, said that it was planning to make battery-grade nickel chemicals there. “Indonesia will become the main player in lithium batteries,” said Luhut Binsar Pandjaitan, an Indonesian minister, as the project was unveiled. “We will control the world market.” In 2022, Pandjaitan inaugurated a hydrometallurgical nickel laterite production facility at IMIP that could produce fifty thousand tons of nickel a year.
When I visited, shortly after Pandjaitan’s inauguration of the plant, Bahodopi was still a place on the cusp of being finished, in the process of being ripped from one way of life and thrust into another. Boutiques selling streetwear that would not have looked out of place in any trendy neighborhood in any international city stood next to wooden shacks that appeared to be barely supporting their own weight. On paydays, long lines of men formed early at ATMs that were soon out of cash.
Because of Indonesia’s proximity to the Asian mainland, Chinese companies had invested heavily in Indonesia’s mines. In 2009, the year before the Volt was released, Indonesia tied with Canada, behind Russia, as the second-largest producer of nickel. By the early 2020s, Indonesia had become the largest global producer of the metal, with 292 nickel-mining permits and 1.54 million tons of mined nickel exported that year. Nickel is the fifth most abundant element on Earth, and is nowhere near as concentrated in the earth’s crust as cobalt: Russia, Australia, Canada, and the Philippines all mine large quantities of the metal’s ore.
I arrived at Bahodopi in the middle of the night after a nine-hour drive through tiny villages and jungle. Five hours in, our driver had become spooked while passing through a “haunted forest” and proceeded to drive at a jogging pace for the last three hours. At around 4:00 a.m., I noticed some bright lights through the tinted car windows, and then we turned off onto a lane and stopped at a hostel. Inside, itinerant workers snored away in the rooms next to mine.
* * *
The island of Sulawesi, if you look at it on a map, is formed of four arms, a shape that resembles a monkey, albeit a headless one, midswing. Sulawesi sits astride a shifting, buckling mess of geological fault lines that result from the Eurasian Plate moving southeast, the Philippine Plate moving westward, and the Indo-Australian Plate moving northward. Sometime between one hundred million and twenty-three million years ago, a series of collisions between the plates started to give the island the shape it has today. Beneath the island are four distinct fault lines, and earthquakes abound: In the center is a dramatic spine of mountains. In the north, plate subduction has created a series of active volcanoes that regularly belch smoke and occasionally dramatically explode.
Tens of thousands of workers and I were sleeping in Bahodopi’s concrete rooms that night because of events that took place around about the time that dogs, deer, and camels began to roam the earth—around twenty-three million years ago, give or take ten million years. In the Sturm und Drang of the period’s plate collisions, a chunk of oceanic crust a little bit larger than Connecticut was grafted onto the Eurasian Plate as the Indo-Australian Plate submerged beneath it. This chunk, or ophiolite, as it is known to geologists, was partially formed from igneous rock—dried magma—which was rich in iron and magnesium. Over thousands of years, this rock was weathered into a red laterite soil a little like that of Katanga and formed the gentle slope of southeast Sulawesi’s coastline. As Indonesia’s tropical rains fell on this soil, minerals, dissolved in the rainwater, percolated downward, slowly forming limonites, orange rocks streaked with black. Deeper, they formed garnierites, rocks that ranged in color from creamy yellow to grass green.
As in Congo, geological flukes have made Indonesia rich, at least in terms of mineral resources. In the last decade, particularly, Indonesia’s mining industry has boomed, and investment has poured in. The limonite can be worked for cobalt and nickel, and the creamy-yellow and grass-green garnierite is rich in nickel. In such deposits, the metal is dispersed in the rock and nickel extracted from such laterites was long deemed to be uneconomical for use in batteries, as it contained excessive impurities.
In the 2010s and ’20s, Chinese firms began to use various energy-intensive processes in Indonesia to produce the kinds of high-grade nickel and cobalt needed for batteries: In one, known as high-pressure acid leaching (HPAL), the ore was fed into a purpose-made vessel called an autoclave, superheated, and mixed with sulfuric acid to create a substance called mixed hydroxide precipitate, and in another, nickel ores were baked in a rotary kiln to produce a nickel-rich matte. These are both highly energy-intensive processes, and produce an acidic slurry of waste that needs to be disposed of properly, but thanks to the development of processes like these and deposits like the ones under Bahodopi, in 2022, politicians in Jakarta could boast that their country was now the world’s largest nickel miner, and in 2023, Indonesia overtook Australia to become the world’s second-largest producer of cobalt after Congo.
* * *
Although there are clearly many differences between Indonesia and Congo, the colonial histories of both countries exhibit some striking similarities, even as both countries are once again the subjects of contemporary jockeying for resources among wealthy and powerful outsiders. On Sulawesi, there’s evidence that the island’s metal deposits, like Congo’s ore, have been exploited for at least a thousand years. From the seventeenth century onward, Indonesia was colonized by the Dutch, who, like the Belgians in Congo, were searching for a resource—this time spices—to sell on European and international markets. Colonialism in Indonesia was often marked by significant brutality, as in Congo, a fact that the Netherlands, like Belgium, has only recently come to acknowledge.
Dutch geologists realized that Sulawesi had rich nickel deposits in the early twentieth century, and Holland began mining the metal in 1934. When the Japanese invaded in 1942, they used the metal in their war effort. Indonesia became independent in 1949. In the 1960s, the U.S. helped extremist groups exterminate between five hundred thousand and a million suspected Communists.
In 1967, the dictator Suharto came to power, and he made mining a centerpiece of his industrial policy, offering a 6.6-million-hectare plot to a consortium headed by INCO, which included a Japanese company, Sumitomo Metal Mining. In 1968, the company began working on the area that included Bahodopi’s nickel laterite deposit, which researchers later estimated held some 180 million tons of nickel. By the 2020s, according to its website, Sumitomo Metal Mining had become fully involved in the supply chain of lithium-ion batteries, “a top producer of cathode material for secondary batteries used in products such as electric vehicles, for which an increase in demand is anticipated going forward.” (Sumitomo representatives did not respond to my queries.)
INCO’s work in Sulawesi would be problematic from the very start. In the Sorowako mine area, around a hundred kilometers inland from Bahodopi, the company displaced locals, paying them two cents per square meter for their land, and mining activity began to interfere with agriculture. “They have had a very long saga with INCO,” said Richard Kent, a human-rights researcher who investigated displacement and other abuses on Sulawesi in early 2024. When INCO built a dam, the rice fields around Sorowako were flooded. “People lost their livelihoods, and rice farming became untenable,” Kent told me. Local and national officials complained as well. What’s more, the contract that Suharto’s government had struck with the miners didn’t seem to be generating much revenue: The royalty payments on the ore that INCO was exporting were very low. Such arrangements weren’t unusual at the time. As a popular protest slogan went, Suharto’s government was rife with “corruption, cronyism, and nepotism.”
In Bahodopi, the company continued to conduct sampling of the minerals beneath the soil, and there were concerns that the land INCO had won in its concession overlapped with farmland. Suharto revived an old Dutch tactic to populate remote parts of Indonesia with people who lived on overpopulated islands like Java. Known as transmigrasi, or transmigration, Suharto’s policy moved millions, perhaps tens of millions, of Indonesians to remote places like Sulawesi, where the government allotted them farmland.
Industry alongside shanties in Bahodopi, 2022
Bahodopi was one of the destinations for the transmigrants. Among them was Sadip, the farmer, who came from an area of East Java that the government thought overcrowded. He was allocated two acres of land for a rice field and a residence. “At first it was difficult in those days,” he told me when we met on Sulawesi in 2022. “Wild pigs would come out of the forest and destroy the fields.” His face was worn, etched with the kind of wrinkles that come from being out in the sun all day. We spoke on the mats of his front room, after darkness had fallen in Bahodopi. Above us hung a framed sheet of Arabic calligraphy proclaiming that there was “no god but God.” Sadip’s wife hurried in and out of the kitchen, bringing us boxed iced tea and fried bananas with sweet, chocolaty flesh that she had grown in her garden. “That is the advantage of being a farmer,” Sadip said. “You can grow all your own fruits and vegetables.”
The serenity he felt on his farm, however, was not to last. “I get nostalgic,” he told me, his small dark eyes shining in the buzz of the electric light overhead. “Farming was just really, really peaceful. I don’t care about the income, or what I made. I was just at peace farming. But after IMIP came, everything changed.”
Chapter 27
Crossing the River by Feeling for the Stones
Peter Chao Zhou came of age in the 2000s, a time China was consuming more and more raw materials—from Congo, from Indonesia, from all over the world. A graduate of the University of British Columbia, in Canada, Zhou had maintained a laserlike focus on finance from an early age. At college, he took part in competitions related to investment banking and venture capital, and he was a member of his university’s finance club. He got his degree, naturally, in finance and mathematics. He had grown up in China. “I was born and raised in China, so I am one hundred percent made of China, put it that way,” he told me when we spoke in 2020.
During Zhou’s youth, China had fully embraced the dizzying economic growth that had sprung from its opening to global financial markets. The country began to officially implement a policy dubbed “Going Out,” which was announced by President Jiang Zemin in 1999. Under the policy, Chinese businesses were encouraged to make overseas investments, and Chinese citizens were prompted to travel and set up shop abroad. Zhou’s generation was keen to prosper in the new environment of banking and transnational finance. They wanted to learn how Capitalism with a capital C worked.
Zhou, who was bespectacled and had sideswept dark hair, looked up to Ray Dalio, the swashbuckling U.S. hedge-fund billionaire who was famous for being able to turn a profit in even the rockiest of market downturns. Dalio has written admiringly of how China achieved growth abroad through schemes like the Belt and Road Initiative. “China,” he wrote in 2021, “has become a rival power to the United States in most ways and is becoming stronger in the most important ways that an empire becomes dominant.” And it was only inevitable that industrial power would lead to political power.
* * *
China’s great rush for profit—and for minerals—in the 2000s created what was known as a commodities “supercycle,” an economic term that meant demand for minerals was outstripping supply. Zhou had been assigned to grease the wheels of this cycle, which was largely fueled by a construction boom and newfound prosperity in China. Prices for metals shot sky-high.
In 2009, China hit a major industrial milestone: It surpassed the United States as the world’s largest automaker. And, much like U.S. cities in the 1970s, the country’s major urban hubs had become polluted with thick, acrid smog.
Politicians were under pressure to reverse the environmental consequences of the country’s unchecked growth spurt. During the 2008 Olympics, Beijing had experimented with curbs on cars, allowing only vehicles with odd- or even-numbered license plates to be on the road on certain days, and air quality improved. In the year after the Games, the city’s Traffic Management Bureau announced that only 20 percent of the city’s 3.6 million privately owned vehicles, and only a third of official cars, would be allowed to drive on the city’s roads on any given weekday. Drivers in the city, who saw this as a massive inconvenience, grumbled that the government ought to find another way to limit pollution.
It was time for China to look for a new technology, and it didn’t have to look far: Wan Gang, who had served as the minister of science and technology since 2007, was a former auto engineer who had a fascination for electric vehicles, especially the lithium-ion-powered Tesla. He decided to go all in on electric vehicles. Luckily for Wan, Chinese companies like BYD were already ramping up production of electric cars.
* * *
Though BYD had become a major battery supplier in the 2000s, the company’s car division was still not doing particularly well. In 2009, fewer than five hundred electric vehicles were purchased across China. The Chinese government had already decided to use the economic powers it had accrued in the past decade and a half to spur the making of electric cars, but at the end of the aughts, under Wan, it went into overdrive. Starting in 2009, the government began to provide individual subsidies for electric cars and buses. “They had the foresight to know that this will be a factor, that they can gain leverage, and they made the investments needed to build those facilities,” said Ryan Melsert, the former Tesla Gigafactory design team member. “I guess I would call it a strategic decision.”
It wasn’t as if Washington didn’t see what was happening. At a D.C. launch party for the Tesla Model S in 2009, Senator Maria Cantwell told The New Yorker’s Tad Friend how concerned she was about the state of the U.S. auto industry, which was flailing in the wake of the 2008 economic crisis. She then noted that China had 250 companies working on building batteries and electric vehicles. “Getting denser, more affordable batteries built here is the whole game,” Cantwell said. “Otherwise, we’re soon going to be as dependent on Chinese batteries as we are now on Middle East oil.”
Cantwell also mentioned that there was no political will in the U.S. to prod consumers toward electric vehicles using high gas taxes, as was being done in Europe at the time. Earlier that year, the Obama administration’s American Recovery and Reinvestment Act had earmarked $2.4 billion for electric vehicles and the creation of a battery infrastructure, but the policy seemed scattershot and unbuilt upon. Highly publicized failures in the States had led to increased skepticism.
While further funding for innovative electric-vehicle projects became tighter in the U.S., Europe’s battery ecosystem began to thrive. In Britain, the government encouraged the construction of charging points for electric vehicles and, in 2009, set aside £25 million ($40 million in U.S. dollars) for electric-car research and another £20 million ($32 million in U.S. dollars) for public-sector firms to buy low-carbon vehicles. Other European countries provided subsidies worth €5,000 (about $6,600 in U.S. dollars) to buyers of electric vehicles between 2011 and 2015. Norway and Denmark also agreed to exempt electric vehicles from the vehicle purchase tax, which could be as high as €10,000 (some $13,000 in U.S. dollars).
* * *
But nowhere was the battery industry thriving like it was in China. Companies such as BYD were remarkably successful at churning out devices to store power. What’s more, by the end of the aughts, China already had a developed electric-vehicle market, albeit not an automobile industry. The decade had seen a huge surge in the country’s production of electric bicycles and scooters. Two-wheelers had been a symbol of China’s industrialization in the years after Chairman Mao’s Great Leap Forward. In the 1990s, millions of people had started to migrate to their electric cousins, which were originally powered by lead-acid batteries. When Chinese manufacturers started using the same 18650 cells that were being used to power Tesla’s Roadster, they found that they could make bikes go farther and faster.
