Indonesia’s first plant to produce battery-grade nickel chemicals is on track to start operations by 2020, though the project still needs an environmental permit that could take up to eight months to be approved, the developer told Reuters.
China’s Tsingshan Group and partners including GEM Co Ltd are building a $700 million high pressure acid leaching (HPAL) plant at the PT Indonesia Morowali Industrial Park (IMIP) on Indonesia’s Sulawesi island, a nickel mining hub.
Ground breaking started in January on the plant, which is due to be completed within 16 to 18 months and will allow Indonesia to export nickel sulphate, a component for lithium-ion batteries used in electric vehicles (EVs).
Nonetheless, some analysts have cast doubt on the ambitious timeline for the HPAL facilities, which are more complicated than other nickel-processing plants that Tsingshan has built.
“We are building it fast because that it is how we model our business to avoid higher costs, and we need also to catch up with the market,” Alexander Barus, coordinating executive director of IMIP, said in an interview.
IMIP is also a minor stakeholder in the plant.
He said construction was currently at the excavation stage and the company is preparing an environmental impact assessment, known locally as AMDAL, which typically takes around six to eight months.
“This is something that we cannot rush,” he said, adding construction would proceed as soon as the developer gets a green light from Indonesia’s Environment Ministry.
According to initial research, it should be possible to neutralise waste, known as tailings, and remove toxic materials so that it can be safely disposed of, Barus said.
“Whether it will be an above-ground tailings or otherwise, we have to wait for the result,” Barus said.
Ary Sudijanto, an official at Indonesia’s Environment Ministry who oversees AMDAL proposals, said the ministry had not yet received a request from the Morowali plant.
At the plant in the 2,000-hectare (4,900-acre) industrial park, Tsingshan and its partners aim to produce 131,000 tonnes of nickel sulphate crystals, 13,000 tonnes of cobalt sulphate crystals, and 27,000 tonnes of manganese sulphate crystals per year, he said.
The industrial park already has nearly 30 jetties operating, giving it a shipping capacity nearly as big as Jakarta’s main port, Tanjung Priok, he said.
The park has 1,245 megawatts (MW) of power installed and an additional two 350-MW coal power plants are currently being constructed.
Tsingshan is already a substantial miner and processor of nickel ore, converting it to nickel pig iron (NPI) to feed a stainless steel mill in Morowali. The company is also building a carbon steel plant.
Indonesia has rich nickel reserves of around 3.5 billion wet tonnes, with around 60 percent of them low-grade laterite ore, Barus said.
“This is good for Indonesia because up to now we haven’t used the low-grade ore,” he said.
Barus said he expects there to be more HPAL plants to be built at the estate once the first is “on solid ground”.
Indonesia’s nickel industry in the next decade could surpass the value of its second-biggest export earner, palm oil, as new investment boosts capacity, Thomas Lembong, head of the Indonesia Investment Coordinating Board, told Reuters in March.
Exports from the HPAL plant are expected to be worth around $800 million a year and will mainly go to China, Barus said, though the government is hoping Indonesia will eventually create its own downstream industry.
“It will be good if we can be produce (batteries) ourselves, since the only component that is not produced here is lithium,” he said.
Indonesia, the second-largest car producer in Southeast Asia after Thailand, announced plans this year to introduce a fiscal scheme that will offer tax cuts to EV battery producers and automakers.
Indonesia aims for 20 percent of vehicles produced in the country to be EVs and is anticipating investment from carmakers from South Korea, Japan, China and Europe.
(By Fransiska Nangoy, Wilda Asmarini and Bernadette Christina Munthe; Editing by Ed Davies and Christian Schmollinger)