The Natural Resources Curse

TEMPO.CO, Jakarta - The nickel mining permits in Raja Ampat violate the Constitution. They are concessions for party elites and tycoons supporting the government.

WHEN it comes to breaking the rules, Indonesian officials are smart at hiding behind smoke screens: they think they have covered up their crimes, but the people can clearly see them—like the revocation of the four corporate nickel mining permits in Raja Ampat, Southwest Papua last week. President Prabowo Subianto’s decision seems heroic at first glance, but it actually reveals more about the ramshackle nature of the law.

Nickel mining in Raja Ampat, a region of exotic islands at the western end of the island of Papua, has been continuing since 2023. At least this is what is apparent from the permits issued to 16 companies that own mining concessions there. The public and officials were dumbfounded when Greenpeace Indonesia activists revealed the environmentally destructive operations of five of these companies while demonstrating at a discussion at the Critical Minerals Conference and Expo in Jakarta on June 3, 2025.

The seminar was held by the Indonesian Nickel Mining Association in cooperation with Shanghai Metals Market, a metals market information platform based in China. Greenpeace used the event highlighting the economic potential of Indonesia’s mineral resources to reveal violations of the law relating to mining of the metal, which is used in the manufacture of electric vehicle batteries, in Papua.

As this magazine has repeatedly reported, nickel mining damages forests and seas and triggers social conflict and corruption because of bribes paid for permits or cover-ups by company owners. After Southeast Sulawesi and the small islands in Maluku had been shared out, business people began looking at the nickel reserves in Raja Ampat, a region that has been called “the last paradise on Earth.”

The granting of nickel mining concessions in Raja Ampat is a violation of Law No. 27/2007 on the Coastal Areas and Small Islands Management, which was revised in 2014. Both the original and revised versions have the same definition of a small island, namely a minimum area of 2,000 square kilometers. Article 35-k explicitly bans the mining of minerals in small islands because it damages their ecosystems.

So, the government has no excuse for issuing the nickel mining permits in Raja Ampat, in the past, now and in the future. Of 1,500 islands, only Waigeo and Misool are larger than 2,000 square kilometers. Therefore, President Prabowo allowing a state company to extract nickel in Gag Island using the excuse that it is outside the geopark is a violation of the Small Islands Management Law.

The uproar over the nickel mining at Raja Ampat also shows that monitoring and law enforcement are weak. Officials should not have waited for protests from Greenpeace environmental activists or for the environment to be damaged before learning about these nickel mining permit violations.

In 2024, President Joko Widodo appointed Bahlil Lahadalia as Chair of the Land Use and Investment Management Task Force, which evaluated thousands of mining, plantation and forestry permits. Bahlil revoked 2,078 mining permits, including 100 nickel concessions, because they were either unproductive or in violation of the law.

But rather than revoking all the nickel mining permits in Raja Ampat, three days before he was appointed Energy and Mineral Resources Minister, Bahlil revived the permit for one company and issued a new one for another company. Without any sense of shame, Bahlil claimed that the Raja Ampat nickel permits were issued before he became a minister.

The disarray over the Raja Ampat nickel also reveals the government’s mistaken approach to exploiting Indonesia’s natural resources. Under the pretext of reviving the economy, “downstreaming” natural resources is only a way of disguising the extraction of Indonesia’s valuable assets to benefit cronies. Those behind the Raja Ampat nickel mining concessions are party political elites and tycoons supporting the government.

For a long time, exploitation of natural resources has only served as a camouflage for the extraction of resources that benefit political elites and bosses. The poor management of the nickel mining in Raja Ampat only emphasizes the fact that Indonesia is suffering from the natural resources curse, as explained in the thesis of Richard Auty, an economist at Britain’s Lancaster University, entitled Sustaining Development in Mineral Economies: The Resource Curse Thesis in 1993: abundant natural resources, but remain poor because the environment has been damaged by corruption and greed.

Read the Complete Story in Tempo English Magazine

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