JAKARTA — Norway’s $1.6 trillion state pension fund has dropped French miner Eramet from its investment portfolio over its role in a vast Indonesian nickel mine accused of destroying rainforest and threatening one of the world’s few remaining uncontacted Indigenous groups.

The Government Pension Fund Global, the world’s largest sovereign wealth fund, held a 0.44% stake in Eramet worth $6.8 million as of June 30, according to fund data. The divestment followed a recommendation from the fund’s Council on Ethics, which cited “an unacceptable risk” of severe environmental damage and gross human rights violations from Eramet’s operations in Indonesia.

The decision comes as Indonesian authorities revealed that PT Weda Bay Nickel (WBN), the Eramet-operated mine in Halmahera, was running 148 hectares (366 acres) of unlicensed mining inside state forest. Authorities have since seized back the land.

Indonesia is the world’s top producer of nickel, is a key ingredient in electric vehicle batteries, making the mine’s output critical to the global energy transition. But the Weda Bay case highlights the mounting tension between demand for “green” minerals and the destruction of tropical ecosystems and Indigenous lands.

Biodiversity hotspot under threat

Weda Bay Nickel is the world’s largest nickel mine, located on Halmahera Island, part of the Wallacea Biodiversity Hotspot. A 2024 assessment identified the entire mining concession as critical habitat under International Finance Corporation (IFC) standards — home to endemic and threatened species such as the somber kingfisher (Todiramphus funebris), white cockatoo (Cacatua alba) and Moluccan megapode (Eulipoa wallacei).

The mining project plans to clear 4,200 hectares (10,400 acres) of forest over 25 years. But since operations began in 2019, it has already stripped about 2,700 hectares (nearly 6,700 acres) — a rate of 450 hectares (1,110 acres) per year, far faster than planned — with only 50 hectares (124 acres) replanted. The mine’s own environmental study acknowledged that forest loss will cause intense and long-term effects, with recovery expected to take more than two decades even after rehabilitation.

In its justification for divestment, the Norwegian pension fund’s ethics council warned that many species in Halmahera remain undescribed, meaning extinctions could occur before scientists even identify them. It also flagged risks from thousands of mine workers living on-site, noting the potential for poaching and illegal wildlife trade.

“Without targeted measures, this could intensify pressure on local fauna, through poaching and the illegal capture of species for the pet trade – both locally and internationally,” the council noted.

Eramet has argued that no conservation forests fall inside the concession and that WBN has a plan for “net biodiversity gain” through offsets.

However, the council cast doubt on the feasibility of this, given the forest’s high conservation value.

“In the Council’s view, it is unlikely that the measures that the company has announced will be sufficient to reduce the risk of serious and irreversible environmental damage ensuing from the development of a mine in an area of such high conservation value,” it wrote.

Uncontacted Indigenous people at risk

The council also raised alarm over the mine’s impact on the O’Hongana Manyawa, or Forest Tobelo, an Indigenous group of about 3,500 individuals.

About 500 of them live in voluntary isolation, making them among the few remaining Indigenous peoples globally with no permanent contact with outsiders.

Dependent entirely on Halmahera’s rainforest, the Forest Tobelo face the loss of their territory and culture as the forest is cleared. And as an isolated group, they have nowhere else to live, making them among the most vulnerable population groups in the world, the ethics council said.

It warned that deforestation would not only fragment their land but also raise the risk of forced contact with outsiders, which has historically caused deadly disease outbreaks among isolated groups.

A 2024 report by Indigenous rights advocacy group Survival International documented a case in which 50 to 60 Forest Tobelo died within two months of being forcibly contacted and settled.

Eramet has denied the presence of uncontacted groups in or near its concession, saying Survival International misinterpreted its data. But the council pointed to earlier environmental assessments, including one in 2010, that confirmed such groups exist in the area.

And even if the Forest Tobelo people remain exclusively outside the concession area, mining operations will still affect these groups, the council said.

“The Council cannot see how mining operations here may be undertaken without infringing indigenous peoples’ rights, particularly when no measures are being implemented to protect their living spaces,” it wrote.

In response to the divestment, Eramet said it deeply regretted the decision and was reviewing the fund’s report.

“Since 2017, Eramet has consistently exercised its role as minority shareholder with transparency and high standards, aiming to positively influence and make constructive proposals,” Eramet said as quoted by Reuters.

The Norwegian fund’s divestment signals that investors may increasingly scrutinize whether the minerals fueling the green economy can ever truly be considered ethical.

“This marks an important measure in aligning financial decision-making with environmental responsibility, particularly in the high-risk context of nickel mining in tropical forest areas,” the Rainforest Foundation Norway, an NGO that’s a founding member of the Investor Initiative on Responsible Nickel Supply Chains, said in a statement.

Banner image: Nickel mining activity in the PT IWIP industrial area in Central Halmahera. Image by Irfan Maulana/Mongabay Indonesia.

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