Environmental Groups Are Demanding That Tesla Halt Its Nickel Plans in Indonesia

Environmental groups urged Tesla on Monday to reconsider its plans to invest in nickel in Indonesia, the world's largest producer of the material, as the ESG review takes place in an industry critical to the electric vehicle revolution, Bloomberg News reported.

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In an open letter to CEO Elon Musk and shareholders, dozens of organizations demanded that the electric vehicle giant end plans for direct investment in Indonesia's nickel industry and ban nickel sourced and produced in the country from being used in Tesla vehicles.

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"Indonesia's nickel industry has a record of environmental damage, threats to vulnerable populations, and repeated violations," the letter, signed by groups representing civil society in Indonesia and the United States, said the organization.

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The letter warned that nickel mining would shrink forests, pollute water and destroy the lives of indigenous communities. The groups point to Vawoni Island in Indonesia's southeastern Sulawesi region as a particularly vulnerable area - where, they write, mining has damaged coral reefs.

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Representatives for Tesla and the Indonesian government did not immediately respond to requests for comment.

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Indonesia, home to nearly a quarter of the world's nickel reserves, has attracted investors in the electric vehicle industry. Metals are a key ingredient in many batteries. Indonesian President Joko Widodo offered Musk the opportunity to invest in an end-to-end electric vehicle supply chain, CNBCreported in June.

Musk has said sourcing more nickel is a priority for Tesla as automakers ramp up production. "Please dig for more nickel," he urged producers on an earnings call two years ago. "If you extract nickel efficiently and in an environmentally sensitive way, Tesla will give you a huge, long-term contract.