A nickel processing hub in eastern Indonesia backed by Chinese companies is stoking deforestation and harming the rights of locals, an NGO has found, as Beijing bets big on the metal used in electric vehicle batteries.

With EVs surging in popularity, there has been a huge rush to world-leading nickel producer Indonesia in recent years by domestic and foreign companies looking to mine the critical component.

The Weda Bay Industrial Park on Halmahera island in the Maluku region is “causing significant deforestation, air and water pollution, and emitting massive amounts of greenhouse gases from captive coal plants”, US-based NGO Climate Rights International said in a report on Wednesday.

“At least 5,331 hectares of tropical forests have been cut within nickel mining concessions on Halmahera, totaling a loss of approximately 2.04 metric tons of greenhouse gases (CO2e) previously stored as carbon.”

The operator of the park is a joint venture of three China-based companies — Tsingshan, Huayou Cobalt and Zhenshi Holding Group. France’s Eramet is also an investor.

Locals interviewed by the NGO said the companies, with the help of police, had also engaged in land grabbing and intimidation of Indigenous people.

The industrial park has built five coal-powered plants to run its smelting facilities since 2018 and plans to add 12 more, which would burn more coal than Spain or Brazil use annually, the group said.

The NGO called on the three Chinese companies to “take immediate steps to remedy water and air pollution caused by their operations” and urged nickel companies to “properly dispose of mine tailings” to minimize environmental damage.

Tsingshan, Huayou, Zhenshi and Eramet, as well as the industrial park itself, did not immediately respond to AFP requests for comment.

China’s growing investment in the nickel sector has stoked unrest over pay and working conditions, hidden costs of Jakarta’s ambition to become a major player in the EV supply chain.

Last month hundreds of Indonesian workers protested against conditions at a China-funded nickel plant on Sulawesi island after an explosion killed at least 19 people and injured dozens more.

Indonesia has the world’s largest nickel reserves at roughly 21 million tons, accounting for more than a fifth of the global total.