[Press Release] Behind the Green Electric Vehicle Battery: Human Rights and Environmental Risks in the Supply Chain and Korea's Role

-Widespread Human Rights and Environmental Issues in the Global Battery Industry Supply Chain

-Korean companies, leaders in the global electric vehicle battery market, face the same challenges

-Active government and corporate action is needed to address and prevent human rights and environmental impacts in the battery supply chain.

Korea Transnational Corporation Watch(KTNC Watch) and Advocates for Public Interest Law(APIL) released a report entitled "Battery Extracted: Human Rights and Environmental Impacts in the Korean Battery Companies and Indonesian Nickel Supply Chain," which analyzes human rights and environmental risks in the electric vehicle battery supply chain and Korea's role. The report was endorsed by local Indonesian civil society groups: WALHI Southeast Sulawesi, PUSPAHAM, and INDIES.

As the electric vehicle market expands, demand for lithium-ion batteries, the core power source, is growing rapidly. Minerals such as lithium, cobalt and nickel, which are essential for battery production, are also critical to energy transition technologies and are often referred to as "transition minerals.” However, severe environmental degradation and human rights abuses often occur in the regions where these minerals are mined.

Demand for nickel, which plays a critical role in improving the energy density and lifespan of lithium-ion batteries, is expected to increase 40-fold by 2040. In Indonesia, which accounts for about 50% of the world's nickel production, there are reports of environmental damage including deforestation, large-scale carbon emissions, water and air pollution, and human rights issues including land grabbing, loss of traditional livelihoods, and violations of water rights during the mining and refining processes.

Andi Rahman, Executive Director of WALHI Southeast Sulawesi, pointed out that “the current energy transition policy for electric vehicles, which relies on batteries from nickel commodities, has exacerbated environmental damage.” He explained, “This is due to the granting of mining permits in large-scale forest areas and in people's areas, for example community agricultural land, customary areas and protected areas. As a result, the mining process has caused deforestation, pollution of river and sea waters, and damage to biodiversity.”

Kisran Makati, Director of PUSPAHAM, emphasized, "While the Indonesian government seeks to address the climate crisis through the battery and electric vehicle industry, serious human rights and environmental problems are occurring in rural villages where nickel mining is taking place. A true energy transition must address these environmental and human rights issues.”

Kurniawan Sabar, Director of INDIES, said, "Electric vehicles are promoted as green, but in the background is environmental destruction and the sacrifice of local communities. What we need for a sustainable future is not more cars, but fair use of resources and environmental protection.”

Indonesian nickel plays a critical role in the supply chains of Korean battery companies through Chinese-made precursors. Most of the nickel produced in Indonesia is exported to China to make battery precursors, which are actively imported by Korea.

Meanwhile, Korean companies are actively investing in every stage of the global battery industry value chain, leading the global market. These companies are strengthening their supply chains through vertical integration and focusing on securing raw materials to meet the country-of-origin requirements of the U.S. Inflation Reduction Act (IRA) and the European Union's Battery Regulation. However, they are encountering human rights and environmental issues as they make major investments in nickel mines and intermediary plants in Indonesia.

Recently, LX International, a Korean trading company, secured the operating rights for a nickel mine (PT. AKP) in the North Konawe region of Southeast Sulawesi, Indonesia. North Konawe is one of the most active nickel mining regions in Southeast Sulawesi, and local residents are already facing negative human rights and environmental impacts from the company's operations. Residents are struggling to maintain their traditional livelihoods of farming and fishing, and are facing water shortages and health problems.

Andi Rahman, Executive Director of WALHI Southeast Sulawesi, added, "In fact, a farmer from Langgikima District in North Konawe testified that environmental damage caused by PT. AKP's nickel mining process was one of the main reasons for the crop failure in 2020."

Since 2021, the Korean government has consistently announced policies to promote the electric vehicle battery industry. However, there has been a lack of preventative and responsive measures to address the human rights and environmental risks that arise within companies' supply chains. In addition, public enterprises for overseas resource development, once on the verge of collapse due to significant financial losses, are now pushing for policies to secure critical minerals.

Hye Lyn Kim, Secretary General of KTNC Watch, pointed out, "Public enterprises for overseas resource development are still facing serious financial difficulties due to poor past investment in overseas resources. Furthermore, the former Korea Resource Corporation has been merged into Korea Mine Rehabilitation and Mineral Resources Corporation, with its investment functions in overseas resource development now legally restricted.” She added, "In this context, it is deeply concerning that the efforts to secure critical minerals are being pushed forward without sufficient restructuring and without incorporating assessments of human rights and environmental impacts."

This report highlights the need for Korean battery and electric vehicle manufacturers to proactively address and prevent human rights and environmental issues in their supply chains. In particular, systematic due diligence for high-risk regions and transparent disclosure of information are required. Effective remediation measures should be provided to local communities affected by business activities. In addition, large-scale development in ecologically and socially valuable areas should be halted, and efforts to reduce dependence on high-risk minerals are essential.

The Korean government should prioritize strengthening public transportation policies to decarbonize the transportation sector and actively introduce measures to reduce the number of road vehicles. Policy direction should be readjusted to prevent the expansion of electric vehicles from leading to increased mineral extraction and energy demand. Recycling obligations should also be strengthened to reduce dependence on critical minerals. There is also an urgent need to enact the Human Rights and Environmental Due Diligence Law, which requires companies to respond when risks arise in supply chains.

Shin Young Chung, Director of the Public Interest Law Center APIL, emphasized the need for the enactment of the Human Rights and Environmental Due Diligence Law, stating, "Identifying and responding to human rights and environmental issues in companies' supply chains is critical to addressing the problems arising from the production of transition minerals. Stakeholder engagement is essential in this process, and the enactment of the Due Diligence Law is necessary to provide a legal basis for communicating and addressing human rights and environmental issues."