China Molybdenum Co said it planned to take an indirect 30% stake in an Indonesian nickel project as it looks to increase its exposure to the growing market for battery metals.
The planned Huayue project on the island of Sulawesi is one of a series of Chinese-invested nickel smelting projects in Indonesia, which banned nickel ore exports from 2020 as it seeks to process more resources at home.
China Moly, which already operates one of the world’s biggest cobalt mines in the Democratic Republic of Congo, said it would initially acquire a 21% interest in the Huayue Nickel Cobalt joint venture, which plans to produce 60,000 tonnes a year of mixed nickel hydroxide cobalt.
Nickel and cobalt are both key ingredients in batteries for electric vehicles. High-nickel ternary materials account for more than 40% of the cost of a battery, China Moly said in a statement to the Hong Kong stock exchange late on Friday.
China Moly will pay about $5 million for the stake, but it will also take over investment commitments in the $1.28 billion project from the sellers, Hong Kong-based private investment firm Newstride Ltd and Indonesia Morowali Industrial Park.
After a capital injection of $69.1 million in the Huayue venture, China Moly’s indirect stake will rise to 30%. Zhejiang Huayou will hold 57% through a wholly-owned unit, while Chinese nickel and stainless steel giant Tsingshan Holding Group will have 10% through a subsidiary.
The plant is one of a number of high-pressure acid leach (HPAL) projects being built in Indonesia that have drawn industry attention due to their low budget projections and short delivery times.
Huayou President Chen Hongliang said last Tuesday he expected the Huayue project to start up within two years.
(By Tom Daly, Cheng Leng and Shivani Singh; Editing by Richard Pullin)