How Gulf investors could turn Indonesia’s Halmahera Island into a cleaner island, and out of Israel’s reach

Halmahera is an island in Indonesia’s North Maluku province. It holds the country’s largest known reserve of nickel, a metal the world wants very much now because it is used in electric car batteries. For years, this reserve has been dug up as fast as possible, with little thought for the people who live there. Now a second problem has appeared on the same island. An Israeli-rooted company has just won a geothermal contract in Halmahera, in a country whose citizens have marched by the hundreds of thousands for Gaza, and whose government keeps saying, again and again, that it will never normalise relations with Israel. Both problems can be solved the same way. The Gulf states, not Beijing and not an Israeli firm dressed up as an American one, should be the ones building Halmahera’s future.

What is actually happening on the ground

Halmahera has become one of the biggest nickel mining and processing centres in the world, and China is the biggest player behind this growth. The island’s largest smelting complex, the Indonesia Weda Bay Industrial Park, is majority owned by the Chinese company Jiangsu Delong. A smelter is, simply put, a giant furnace that melts raw ore into usable metal. Running one at this scale has come at a real cost to the people who live nearby.

Climate Rights International has documented this cost. Its report points to large-scale deforestation, drinking water polluted by industrial runoff, air pollution serious enough to cause breathing illnesses, and fishing and farming families pushed off land they have used for generations. People in the area say they were never properly consulted. They say they were never shown the environmental studies they were legally entitled to see. They also say they were never told, in their own language, what was actually going into their air and water. The report is direct about who is responsible: the Indonesian government failed to enforce its own rules, the companies felt no duty to fill that gap, and both sides chose profit over people, even though fixing many of these problems would not have cost very much.

This is not a story about development helping people. It is a story about extraction, plain and simple. It is fair to ask why Indonesia keeps giving away pieces of such a sensitive island with so few conditions attached.

Why the Gulf makes sense

The Gulf Cooperation Council (GCC) states (Saudi Arabia, the United Arab Emirates, Qatar, Kuwait, Bahrain and Oman) are no longer just oil exporters that keep their money in safe Western bonds. More and more, their sovereign wealth funds are going into infrastructure and energy partnerships in other countries. The World Bank projects that combined GCC wealth could reach $7.6 trillion by 2030. Indonesia has already seen what this can look like. The United Arab Emirates’ Masdar partnered with the state utility, Perusahaan Listrik Negara, to build the Cirata floating solar plant, one of the largest of its kind in Southeast Asia. Saudi Arabia’s ACWA Power has signed an agreement with Indonesia’s investment fund Danantara, a deal that is expected to involve the state oil company Pertamina. ACWA Power is also working with the state utility and Pupuk Indonesia on a green hydrogen project called Garuda Hijau.

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This pattern is not an accident. There is a real and growing interest among Gulf investors in clean energy deals in Indonesia, not extractive ones. Jakarta should pay attention to this.

There is also a matter of accountability worth mentioning. In January 2023, GCC countries jointly published 29 environmental, social and governance disclosure standards for listed companies: ten on environmental practice, ten on social responsibility, and nine on governance. These were developed together with the World Federation of Exchanges and the UN Sustainable Stock Exchanges Initiative. The standards are voluntary, but they show that Gulf capital increasingly comes with expectations about how a project is run, not only how much money it makes. If Indonesia wants this kind of investment for Halmahera, it should state its own environmental, social and governance commitments clearly, so investors and local communities both know exactly what is being promised.

Israel is already in

Here is the part that makes the Gulf option feel urgent, not just nice to have. In January 2026, Indonesia’s energy ministry awarded the Telaga Ranu geothermal concession in West Halmahera to PT Ormat Geothermal Indonesia, giving it the right to develop up to 40 megawatts as part of the country’s push toward net-zero emissions.

PT Ormat Geothermal Indonesia is a subsidiary of Ormat Technologies, a company founded in 1965 in Yavne, Israel, and built on Israeli engineering and capital, even though it now trades on the New York Stock Exchange and calls itself an American company.

Ormat has worked in Indonesia’s geothermal sector since 2015, already has a role in the Ijen and Salak fields, and says it plans to invest close to $1 billion in the country by 2030.

We should call this what it is. This is Israeli-rooted capital gaining a long-term foothold on Indonesian soil, with revenue flowing back through an Israeli industrial base. This is happening in a country whose diplomats condemn the occupation at the United Nations, and whose people fill the streets of Jakarta to demand an end to the siege on Gaza. There is no gentle way to describe that gap between what Indonesia says and what Indonesia signs. It is fair to ask who really benefits when a strategic energy asset quietly enriches a company built inside the same economy that arms and funds the occupation. Ormat’s environmental record does not help its case either. At its Blawan Ijen plant in East Java, waste from a production well reportedly leaked into local drainage and polluted a spring that nearby villages depended on for drinking water, forcing some households to carry water in from other places. Halmahera does not need this on top of what nickel mining has already done to it.

Clean energy itself is not the problem here. Indonesia does not have to give up its principles to reach its climate goals, and it should not let that trade happen quietly through a contract with a company tied to Israel. Gulf states, most of which have supported Palestinian statehood for decades and funded reconstruction in Gaza, can deliver the same thing (solar, wind, ocean power) without this contradiction, and without the baggage that comes with Ormat.

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What Halmahera could become instead

Nickel is not the only resource Halmahera has. The waters around it hold real potential for wave power, tidal currents, and offshore wind. Combined with strong year-round sunlight, the island has what it needs for a genuinely clean energy economy, not just a tidier version of mining.

A Gulf-backed renewable energy zone here, built along the lines of Cirata or Garuda Hijau, could bring jobs, electricity, and export income, without the deforestation, polluted water, and breathing illness that have come to define nickel processing on the island.

Right now, Halmahera is caught between two problems that look different but come from the same root: a Chinese-backed nickel industry that has damaged its forests, water, and communities, and an Israeli-rooted geothermal investor now moving into what remains, at odds with everything Indonesia claims to stand for on Palestine. The Gulf offers a real third option, one that is not extractive and does not make Indonesia complicit in something it says it opposes.

Asking Chinese-backed smelters to pollute a little less, or hoping the Ormat project quietly avoids trouble, is not a serious plan. Declaring Halmahera a no-mining, no-smelting zone is. So is closing the door that Ormat has just walked through, and replacing this whole model with Gulf-financed renewable energy, one that treats the island’s forests, water, and people as worth protecting, and that finally brings Indonesia’s economic choices in line with the solidarity it claims to feel for Palestinians.

Indonesia has the resources. The Gulf has the capital, the environmental, social and governance standards, and no ties to an occupying power. What is missing is the political will to choose one model over the other, and to stop letting energy contracts quietly work against a foreign policy that Indonesians themselves have marched in the streets to defend.

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The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Monitor.