Why European Companies Canceled Downstream Nickel Investment in Indonesia
Jul 03, 2024
According to recent news from Asia Today, the French mining company Eramet has decided to cancel its downstream nickel investment in North Maluku, Indonesia, valued at 2.6 billion US dollars. Why? Eramet stated in its written statement that there are several major reasons behind this decision:
Eramet said that the joint project with German BASF did not successfully obtain a satisfactory execution plan, including the terms and conditions of the contract.
Eramet expressed its desire to participate in Indonesia's battery value chain, but it is also selective in terms of capital allocation. At the same time, Eramet is also exploring other opportunities in the electric vehicle (EV) value chain, such as nickel, lithium, and cobalt.
Eramet estimates that the global nickel market has changed in the past few years. Eramet is very selective in adding potential new excess capacity from battery-grade nickel.
Eramet explained: "After a thorough assessment, Eramet and BASF decided not to continue the joint investment project of the nickel-cobalt refining complex in Weida Bay, Indonesia."
Geoff Streeton, Chief Development Officer of the Eramet Group, said that Eramet will continue to focus on the sustainable optimization of the resource potential of the Weida Bay mine, providing ore to local nickel producers, and will continue to evaluate investment opportunities in the electric vehicle battery value chain in Indonesia, including nickel, lithium, and cobalt.
Geoff said: "Indonesia is ready to play an important role in the future of the global nickel market."
As a reference, as Eramet's partner in Sonic Bay, BASF also announced its withdrawal. BASF, the world's largest chemical company from Germany, stated in its official statement that since the start of the project, the global supply of battery-quality nickel has increased. Therefore, the company no longer considers it necessary to make such a large-scale investment.
Sonic Bay itself is a nickel/cobalt refining plant or smelter based on high-pressure acid leaching (HPAL), originally designed to process some ore from the Weida Bay nickel mine. The goal is to produce a product between nickel and cobalt, that is, about 60,000 tons of nickel and 6,000 tons of cobalt contained in mixed hydroxide precipitates, called mixed hydroxide precipitate (MHP), as raw materials for electric vehicle (EV) batteries. The nickel-cobalt smelter for electric vehicle battery raw materials was originally planned to start production in 2026.
Furthermore, nickel and cobalt salts will be used to produce precursors and cathode active materials (CAM) for lithium-ion batteries used in electric vehicles.
Eramet wrote on its official website: "Using low-grade ore will enable the development of new parts of the mine's geological profile, thereby optimizing the potential of natural resources."
Of course, the measures taken by these two European companies are unfortunate, as the Indonesian government takes pride in them.
In addition, the two European companies aimed to make a final investment decision (FID) on the Sonic Bay project in the first half of 2024.
Content from Asia Today, does not represent the views of 51BXG.
51BXG does not guarantee the accuracy of the software translation, for reference only, copyright belongs to the original author.
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