By 2050, the annual nickel supply will have to increase by 208%, and annual copper supply by 156% relative to 2020 production levels, if global net-zero emissions goals are to be achieved, according to a recent report produced by the World Bank's International Finance Corporation.

At least another 15 minerals and metals must be extracted at similar rates to achieve climate targets, it added.

This will be a monumental task. Some analysts reckon it simply isn't possible. Others question whether satisfying the growing demand for these critical minerals can be done sustainably. 

Speaking in April, UN Secretary-General Antonio Guterres said: "As we reshape how we power our societies and economies, we cannot replace one dirty, exploitative, extractive industry with another dirty, exploitative, extractive industry. The race to net-zero cannot trample over the poor."

EU legislation supports this aim. The recently agreed Corporate Sustainability Due Diligence Directive means that, from 2029, European companies will have to prove they are taking action to protect the environment and human rights throughout their supply chains.

"The regulations and rules coming from Brussels in connection with the EU Green Deal apply equally to European businesses and to foreign businesses seeking to sell goods or services within the EU," Chris Humphrey, executive director of the EU-ASEAN Business Council, told DW.

"It is clear that European businesses, because of the rules in place by the regulators in Europe, now need to ensure that their overseas operations are in compliance with various reporting requirements coming out from Brussels and elsewhere,” he added.

EU companies back off of Indonesian mine

In July, Germany's BASF and France's Eramet withdrew from the $2.6 billion (€2.4 billion) "Sonic Bay" nickel-and-cobalt refinery in Indonesia amid criticism that the mine supplying it threatens the forest home of an isolated Indigenous tribe.

The deal would have significantly increased the mining of these metals from the nearby Weda Bay Nickel mine, the world's largest nickel mine and part of the Indonesia Weda Bay Industrial Park (IWIP), in which Eramet holds a minority stake.

In 2022, it produced nearly half of the world's nickel, used extensively in electric vehicles and batteries, according to the US Geological Survey.

Adopted in April by the Council of the European Union, the Critical Raw Materials Act lists 34 critical and 17 strategic minerals (including nickel) essential for the green transition. The legislation makes it easier for the EU to source the necessary materials through deals with "friendly third countries."

Open-pit nickel mining has reportedly been a leading cause of deforestation in Indonesia, and the use of coal to power nickel smelters has polluted the water.

The EU companies cited commercial reasons for not participating in the venture, but a BASF spokesperson said in a statement that the company needs a "secure, responsible, and sustainable supply of critical raw materials."

"While the cancellation of the Sonic Bay project may result in less pollution for local communities, the Indonesian government should do more to minimize the impacts of nickel mining and refining on communities living near IWIP and other nickel industrial parks,"  Krista Shennum, a researcher with the Climate Rights International campaign group, wrote in The Diplomat this month.

Limits of the EU's Green Deal

Although most EU firms are not engaging in some of the more unsustainable practices involved in mining raw materials in Asia, it doesn't mean that companies from countries like China aren't willing to do so, Frederick Kliem, a research fellow at the S. Rajaratnam School of International Studies in Singapore, told DW.

Kliem said the EU's Green Deal was "largely enabled by third parties who are willing to subsidize their industries and do environmental and social damage to enable energy transitions at home and elsewhere."

"This is a conundrum we have not been able to solve yet," he added.

Similar accusations are being made against the EU's recently imposed tariffs on China-built electric vehicles, which resulted from complaints from Brussels about unfair trade practices.

"The EU is complaining about the ostensible Chinese dumping of solar PV cells, wind turbines and EVs, but, at the same time, they celebrate the ridiculously low price of solar PV-generated electricity, which is exclusively the result of Chinese production of scale coupled with subsidies," Kliem said.

"Without these Chinese products, the energy transition and electrification of the economy would not be possible," he added.

Outgoing Indonesian President Joko "Jokowi" Widodo has sought to turn Indonesia into a global hub for electric vehicle (EV) battery production by increasing the nation's mining capacity, particularly for nickel.

Banning the export of these commodities ensures they must be processed domestically. In 2014, Jakarta banned the exportof all unprocessed nickel.

Since then, China has reportedly invested over $30 billion into the Indonesian nickel supply chain, including smelting and EV battery production.

Indonesia running out of high-grade nickel

Indonesia is running out of high-grade nickel deposits, leaving only low-grade ores containing a fraction of nickel, making extraction difficult.

One way of doing this is through high-pressure acid leaching, or HPAL, which produces a lot of toxic waste.

Jakarta-based analyst Kevin O'Rourke, of the political risk consultancy Reformasi Information Services, told DW that there are "promising" alternatives to HPAL, but they face resistance from local Indonesian regulators who persist with the cheap and familiar HPAL processing.

"If developed markets such as the EU restrict imports of dirty nickel, incentives will exist for responsible developers to supply more ethically produced material," O'Rourke said.

"When Indonesian producers prove unable to penetrate lucrative developed markets in the West, they may finally begin pursuing a host of options for curbing or avoiding the emissions and waste from HPAL," he added.

Bridget Welsh, an honorary research associate at the University of Nottingham Asia Research Institute Malaysia, said the European Union's aim should be "to make the 'dirty' work less dirty across the board."

The Indonesian government has agreed to the Mineral Security Partnership with 14 countries and the European Union to accelerate the development of sustainable critical minerals supply chains, focusing on improving environmental standards.

Edited by: Wesley Rahn