China’s Nickel Plants in Indonesia Created Needed Jobs, Plus Pollution

For most of his 57 years on the island of Sulawesi, Jamal was accustomed to scarcity, modest expectations and a grim shortage of jobs. People mined sand, caught fish and coaxed crops from the soil. Chickens frequently disappeared from front yards, stolen by hungry neighbors.

Mr. Jamal, who like many Indonesians goes by one name, regularly rode his motorbike to construction jobs in the city of Kendari, a half-hour away.

Then, six years ago, a towering smelter rose next to his home. The factory was built by a company called PT Dragon Virtue Nickel Industry, a subsidiary of a Chinese mining giant, Jiangsu Delong Nickel.

Indonesia had recently banned exports of raw nickel to attract investment into processing plants. Chinese companies arrived in force, erecting scores of smelters. They were eager to secure nickel for factories at home that needed the mineral to make batteries for electric vehicles. They were intent on moving the pollution involved in the nickel industry away from Chinese cities.

Mr. Jamal got a job building dormitory blocks for laborers who were arriving from other parts of Sulawesi. He increased his income by constructing seven rental units at his own home, where he was born and raised. His son-in-law got hired at the smelter.

Inside Mr. Jamal’s home, a new air-conditioner eases the muggy tropical air. Formerly bare concrete floors now glisten with ceramic tiles.

He and his family complain about the dust pouring off piles of waste, the belching smokestacks, and trucks rumbling past at all hours bearing fresh ore. On the worst days, residents don masks and struggle to breathe. People go to clinics with lung problems.

“What can we do?” Mr. Jamal said. “The air is not good, but we have better living standards.”

Here is the crux of the deal that Indonesian officials have cut with deep-pocketed Chinese companies now dominating the nickel industry: pollution and social strife in exchange for upward mobility.

At the heart of the trade-off are Indonesia’s unrivaled stocks of nickel.

On a recent morning at the Cinta Jaya mine on Sulawesi’s southeast coast, dozens of excavators tore at the reddish soil, loading the earth onto dump trucks that carried it down to the edge of the Banda Sea. There, they dropped the ore onto barges that ferried it to smelters up and down the island.

Much of the nickel was headed north to the Morowali Industrial Park, an empire of 50 factories sprawling across nearly 10,000 acres that operates like a gated city, complete with a private airport, a dedicated seaport and a central kitchen that churns out 70,000 meals a day.

The park was officially created in 2013 through an agreement announced by Indonesia’s then-president, Susilo Bambang Yudhoyono, and President Xi Jinping of China. China Development Bank provided a loan of more than $1.2 billion.

Roughly 6,000 workers from China live in dormitory blocks, their laundry drying from railings. Visiting Chinese executives sleep at a five-star hotel run by Tsingshan, a Chinese company invested in a smelter that makes elements for electric vehicle batteries. Its restaurant, which serves dim sum and rice porridge, looks out over trucks disgorging cargo on the pier.

Five million metric tons of nickel ore is spread on a hillside above the port — a stockpile on a cosmic scale. A structure the size of several airplane hangars holds mountains of coal waiting to be fed into the park’s power plant to generate electricity.

Some of the barges leaving the nickel mine were destined south, to the district of Morosi, where Mr. Jamal lives, and where two Chinese-invested smelters have — for better and worse — comprehensively altered local life.

The Obsidian Stainless Steel factory, another subsidiary of the Delong group, looms over the surrounding rice paddies. As a recent afternoon shift ended, workers poured out of the gates on motorbikes, headed to surrounding dormitories. Many of those from mainland China stopped at a strip of shops and restaurants festooned with signs displaying Chinese characters.

Wang Lidan stood vigil over a charcoal grill in front of her shop, fanning skewers of squid while hawking her other wares — scallion pancakes, fried dumplings, ice cream bars and jars of pickled radishes.

Raised in the southern Chinese city of Xiamen, she had been in Indonesia for nearly 30 years, selling jewelry imported from China to tourists on the resort island of Bali, and operating a modest restaurant in Jakarta, the capital.

She had arrived in Sulawesi five years earlier, having heard that thousands of Chinese laborers were on their way to a lonely stretch of Sulawesi to work in the new smelters. She rented a shack topped by plastic tarps and sheets of corrugated aluminum, setting up a restaurant. She slept on a wooden bench in front of the kitchen.

She hired a local cook, Eno Priyanto, who recently opened his own restaurant, preparing seafood and satay.

“This used to be an empty swamp,” he said. “It’s way better now.”

On the other side of the road, a smelter worker from the central Chinese province of Henan examined crabs and fish arrayed at a makeshift stall set on the edge of the road.

Another from Liaoning Province, in China’s northeast, enjoyed a bowl of noodles inside a rare air-conditioned restaurant. Then he stopped at a produce stand, buying corn on the cob and a pineapple to bring back to his dorm.

He chatted in Mandarin with the woman behind the counter, Ernianti Salim, 20, the daughter of the proprietor. She has been studying Chinese in a nearby classroom — first, to help her mother sell fruits and vegetables, and then to burnish her chances of landing a job at a nearby factory. She was earning about 150,000 rupiah per month (about $10) doing laundry, but hoped to multiply her pay 25-fold with an entry-level factory job.

“I have more hope now,” Ms. Ernianti said.

But behind the smelter, farmers complained that their hopes had been extinguished.

Rosmini Bado, 43, a mother of four, lives in a stilt house that looks directly down on her rice paddies. Her view is now dominated by smokestacks and a concrete wall that abuts her land — the only barrier separating her livelihood from piles of steaming waste dumped there after the smelting process.

Early this year, just after she planted her crop, her land was swamped by a major storm. Before the factory was built, she could have drained the water. Not anymore. The concrete wall directed the flow back to her parcel, destroying a crop worth 18 million rupiah (about $1,200).

The fish she and her family raise in pools no longer grow large, she said, as local people speculate about toxins washing into everything.

Her husband and son have been unable to secure work at the factory.

Throughout the nickel belt of Sulawesi, local employees are aware that they earn far less than their Chinese counterparts, many of them supervisors.

As workers course through surrounding roads on their motorbikes, they wear construction helmets whose colors denote their rank — yellow for entry level, red for the next tier, followed by blue and white. It does not escape notice that Indonesians are almost wholly clad in yellow, while blue and white are the preserve of Chinese workers.

“It’s unfair,” said Mr. Jamal. “Indonesian workers work harder, while Chinese workers just point and tell them what to do.”

Sometimes-violent protests mounted by local workers have prompted crackdowns by the police and an Indonesian military unit.

At the Morowali industrial park, Chinese workers are now confined to the premises, barred by their employers from venturing out into surrounding communities for fear of encountering hostility.

In the Morosi district, Chinese workers continue to frequent local shops and restaurants, but proprietors fret that their business may not last.

“I’m afraid,” said Mr. Eno, the restaurant operator. “The more that Indonesian workers protest, the less Chinese workers will come out.”