Indonesia's Supreme Court Revoked This High-Grade Zinc Mine's Permit, But the $245 Million Project Isn't Stopping

What happened

One of the highest-grade zinc deposits ever identified is still not a producing mine, and Indonesia's top court just made that harder to change. On August 12, 2024, Indonesia's Supreme Court ordered the revocation of the environmental permit for the Dairi Prima Mineral project, an underground zinc-lead mine in North Sumatra's Dairi Regency. The court found that the Ministry of Environment and Forestry had failed to implement good governance in approving the permit, that consultation with affected communities had been inadequate, and that the mine's location on an active tectonic fault -- a region that experiences roughly 41 earthquakes a year -- posed unacceptable disaster risk.

The deposit itself is why the project has kept moving despite that history. Discovered in the late 1990s during exploration for gold and other base metals, Dairi was estimated by 2011 to hold approximately 25 million tonnes of ore grading 10.1% zinc, with some zones running as high as 11.5% -- figures that put it among the richest zinc deposits found anywhere in the world. A collapse in global metal prices in 2013 slowed the project's economics, but by 2017 Indonesia had granted a production permit, and the project's ownership had settled into its current structure: China Nonferrous Metal Mining, through its NFC subsidiary, holds 51%, with Indonesian coal miner Bumi Resources' subsidiary, Bumi Resources Minerals, holding the remaining 49%.

The legal fight over the environmental permit only began after Indonesia issued a fresh one in August 2022. Eleven residents near the mine challenged it in February 2023; the Jakarta State Administrative Court sided with them that August, ordering it revoked; a higher administrative court reversed that decision in November 2023; and the Supreme Court then restored the original revocation in August 2024. NFC's response, according to reporting from the Business & Human Rights Resource Centre, was that the ruling "might affect the project's progress" but that the project would continue nonetheless -- and there is no confirmed indication Indonesia's environment ministry has enforced the revocation since.

The details

A 10-to-11.5% zinc grade is the kind of number that gets a deposit built almost anywhere else. Most zinc mines operating today process ore running in the low single digits to perhaps 8% or 9%; a deposit consistently above 10%, confirmed across roughly 25 million tonnes, represents an unusually concentrated and economically attractive resource. That grade is exactly why Dairi has stayed alive through a metals-price collapse, a change in Indonesian permitting requirements, and now a decade of litigation -- the underlying rock is rich enough that its backers keep finding it worth pursuing regardless of the above-ground obstacles.

Those obstacles center on a single piece of infrastructure: the tailings dam that would store the mine's waste rock and processing residue. Tailings dams fail when the material holding them together loses structural integrity, and earthquakes are one of the most common triggers -- shaking can liquefy the packed waste behind a dam wall, turning a solid structure into a slurry that breaches its containment and flows downhill. In a region recording roughly 41 tremors a year, the World Bank Group's Compliance Advisor Ombudsman -- an independent watchdog that investigates complaints against World Bank Group-linked private-sector lending -- did not treat this as a remote risk. Its July 2022 appraisal concluded a failure was "almost certain" and could produce irreversible harm to thousands of villagers living downstream, people who hold no equity stake in the mine and would absorb the disaster's cost regardless of who owns the project when it happens.

What happened next is itself a lesson in how little a single ruling settles in a live permitting dispute. Indonesia issued the project a fresh environmental permit in August 2022, weeks after the CAO's warning. Residents challenged it, won at the state administrative court, lost that win on appeal, and then won again -- decisively, at the Supreme Court -- two years later. Four reversals across two years, ending in the country's highest court, is not a sign of a settled legal question; it is a sign of how much institutional friction even a clear-cut disaster-risk finding has to survive before it translates into an enforced outcome. NFC's own public response -- that the ruling "might affect the project's progress" rather than that it would halt the project -- suggests the company itself is treating the Supreme Court's order as one more obstacle to manage rather than a final word.

The financing side of the story reinforces that reading. CNIC Corporation, a state-owned investment vehicle controlled by China Reform Holdings Corporation, delivered $245 million to the project around the same month residents were demonstrating outside the Chinese embassy over exactly the risks the CAO had documented two years earlier. When a human rights research group sought comment from CNIC, NFC and China Reform Holdings Corporation about the community's concerns, all three declined to respond. Capital continuing to flow into a project with an active, top-court-level legal cloud and a documented catastrophic-risk warning is itself informative for anyone assessing how mining-investment risk actually gets priced in practice -- geological wealth and legal jeopardy are evidently not treated as mutually exclusive by the parties who stand to profit if the mine is eventually built.

Why it matters

For anyone tracking global zinc and lead supply, Dairi is a reminder that a rich deposit on paper is not the same as tonnage that will actually reach a smelter -- one of the highest-grade zinc discoveries in the world has now spent close to three decades moving between exploration, permitting and litigation without producing a single tonne. For India, which is pursuing its own aggressive push into critical-minerals mining and has its own experience balancing foreign investment against community and environmental review, Dairi is also a case study in a subtler risk: even a country's highest court ruling against a project does not automatically mean the project stops, if the ministries responsible for enforcement and the companies bankrolling it are not aligned with that ruling.