After Raja Ampat, Can Indonesia Lead on Responsible Mining?

Indonesia’s Law No. 1/2014 on the Management of Coastal Areas and Small Islands article 23 prohibits mining activities on islands with the total land area of 2000 km2 or less. The public called for an immediate halt to mining operations in Raja Ampat, an ecologically sensitive and popular tourist destination, especially among divers. Five mining concessions were identified within the Raja Ampat islands. Within a week, four mining permits were revoked, while the PT Gag mining concession was placed under review on legal grounds for alleged violations of the law preventing seawater pollution, sedimentation and deforestation.

The government’s rapid intervention drew national attention to how mining rules are applied in Indonesia. But, by early September, PT Gag had resumed its mining operations while the ongoing environmental audit continues. This decision drew sharp criticism from several environmental NGOs, including Greenpeace Indonesia and Auriga Nusantara, and from environmental experts who argued that PT Gag’s operations also violate the law that prohibits mining on small islands.

This incident illustrates a reactive rather than proactive approach to enforcing environmental rules in Indonesia, one driven by public outrage rather than systematic oversight. It underscores Indonesia’s need for a more robust environmental, social and governance (ESG) compliance system: not merely as a reputational safeguard, but as the structural foundation for long-term social acceptance, economic stability and environmental resilience.

Why stronger ESG systems are now essential

Strong mechanisms for public transparency and regular consultations with impacted communities are essential to ensure environmental rules are applied consistently, and that people living near mining projects have the tools necessary to identify and address risks before they become crises. Indonesia can learn and build on internationally recognized ESG frameworks such as the Extractive Industries Transparency Initiative (EITI), the Initiative for Responsible Mining Assurance (IRMA) and the Responsible Minerals Initiative (RMI), to name a few. Together, these initiatives provide a blueprint for balancing economic development with environmental stewardship and social justice.

Indonesia is currently among the world’s top producers of nickel, a critical input for electric vehicle batteries and other low-carbon technologies. The government's value addition policy (known as “downstreaming”) requires in-country processing of raw minerals. This has successfully attracted foreign investment and boosted export value. However, this strategy must be paired with credible ESG performance to ensure economic benefits do not come at the expense of environmental degradation or social conflict. Aligning national frameworks with international standards can enhance responsible investor confidence, improve market access and reduce reputational risks, while building durable social acceptance.

How international standards can strengthen Indonesia’s governance

Take EITI, for example. Beyond transparency, it provides a governance framework that fosters accountability through multi-stakeholder dialogue, where representatives from government, civil society, and extractive industries sit together. Indonesia has implemented EITI since 2010, but its potential remains underused. Rather than duplicating ESG guidelines, the government could deepen its EITI engagement by expanding disclosures on environmental impacts, community consultations and benefit-sharing mechanisms, to name a few. EITI’s multi-stakeholder group could make better use of this information, feeding it directly into public debate and policy decisions. While EITI itself can’t enforce corporate ESG compliance, it can provide a collaborative platform for shaping stronger policies.

IRMA on the other hand provides more detailed metrics for assessing site-level environmental, labor and governance performance, including respect for free, prior and informed consent (FPIC) of Indigenous Peoples—a critical issue in the context of Raja Ampat. Currently, there are only two mining companies operating in Indonesia that have been voluntarily submit to IRMA audit, which still ongoing for both of them.

Furthermore, the RMI provides due diligence tools that major global manufacturers use to ensure ethical sourcing of minerals. Adopting such tools within Indonesia’s own regulations would align domestic mining practices with global supply chain requirements. It would also strengthen Indonesia’s position as a reliable partner in the global energy transition. With the European Union introducing legislation mandating supply chain due diligence for imported transition minerals, alignment with established international standards has become not just good practice, but a competitive advantage.

From wake-up call to lasting reform

The Greenpeace protest and subsequent license revocations should serve as a wake-up call. They reflect a civil society that is increasingly informed, organized and influential in shaping policy outcomes. While industry actors lauded the economic gains of nickel mining, the lack of robust safeguards in environmentally sensitive areas like Raja Ampat weakens the integrity of Indonesia’s policy around mining as well as value addition. Establishing a credible ESG framework, grounded in international standards, is not just a technical necessity, but a strategic imperative.

Institutionalizing ESG compliance must go beyond box-ticking. It requires a cultural shift in governance, where transparency, accountability and stakeholder engagement are central to decision-making. Regulatory agencies must be empowered and better resourced to conduct rigorous environmental and social impact assessments, monitor compliance and enforce penalties for violations. Integrating ESG metrics into licensing and permitting processes—with independent verification—can further institutionalize best practices.

The events of early June offered both a warning and an opportunity. Indonesia can either treat ESG as a public relations tool to manage reputational risks, or as a transformative framework to guide its critical mineral development. The latter approach would not only strengthen its international standing but also ensures that economic growth does not undermine the environmental and social foundations on which it depends.

Indonesia stands at a crossroads. It can assert global leadership not only through its mineral reserves or smelting capacity, but by demonstrating that resource governance in the energy transition era is rooted in integrity, inclusion and international cooperation. The revocation of the Raja Ampat mining licenses was a welcome reactive measure. The next step must be proactive: embedding internationally recognized ESG standards into the very fabric of Indonesia’s mineral governance system. Indonesia now has the chance to show the world that responsible mining and economic development can go hand.