Nickel, Cobalt: GEM moves to boost stake in Indonesian HPAL project

EV batteries

Chinese battery materials producer GEM has announced plans to double its stake in the Indonesian HPAL (high pressure acid leach) project, PT QMB New Energy Materials, located at the Indonesia Morowali Industrial Park (IMIP). The company has signed a memorandum of understanding (MoU) for the Jingmen unit to increase its share from 36% to 72%. This will be achieved by other stakeholders, Tsingshan and Contemporary Amperex Technology Ltd (CATL), decreasing their respective shares by a reported 21% and 15% respectively. No date has been provided as to when the MoU might be implemented. At the same time, GEM confirmed that production at the project would be delayed until 2022.

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The PT QMB New Energy Materials project was the first concrete announcement of Chinese investment in Indonesian nickel and cobalt intermediates destined for use in EV batteries back in September 2018. A reported US$700M investment by joint venture partners Tsingshan, GEM, Brunp (a subsidiary of CATL), Japan’s Hanwa, and IMIP was aimed at constructing a 50ktpy nickel-in-mixed-hydroxide product (MHP) and a 4ktpy cobalt-in-MHP operation. More recently, the JV is targeting a fully integrated mine-to-refined facility where nickel and cobalt sulphate will be produced. Following implementation of the MoU, the ownership structure will change to GEM (72%), Brunp/CATL (10%), IMIP (10%), and Hanwa (8%). Tsingshan’s stake in the project would only remain as part of the IMIP JV. The Indonesian HPAL plant is being built in Morowali, close to Tsingshan’s integrated ferroalloys and stainless steel plants and is expected to supply growing nickel and cobalt demand from lithium-ion batteries.

The confirmation of a delay to the start of production is not considered surprising given the impact of COVID-19 on the ability for Chinese technical experts to travel to Indonesia. In what could be considered a pre-emptive move, in September 2020, GEM signed an 8-year supply deal with prospective nickel producer PT Halmahera Persada Lygend (PT HPL) of Indonesia. Despite also experiencing delays resulting from the pandemic, PT HPL is the most advanced of the Indonesian HPAL projects with plans to commence production in Q1 2021.

Elsewhere in Indonesia, BASF and Eramet recently confirmed ambitions to establish a JV HPAL project at Weda Bay. Production at the planned operation will also target battery-grade nickel and cobalt intermediates. Additionally, Vale/SMM are soon likely to take a final investment decision on the Pomalaa nickel-cobalt project on Sulawesi. Project developers have not been alone in their investment efforts within Indonesia. At the end of 2020, LG Chem signed a MoU for an EV battery manufacturing deal with Indonesia, reportedly worth US$9.8Bn.

With burgeoning interest from both upstream and downstream players in the lithium-ion battery supply-chain, 2021 may serve as a pivotal period in the development of Indonesia’s position within the global battery industry. Although challenges for local industry development are likely to lie ahead, what is certain is the momentum behind mass EV adoption is gaining pace.

Roskill’s Nickel: Outlook to 2029 report, 16th Edition and Nickel Sulphate: Outlook to 2029 report, 3rd Edition, both released in Q2 2020, outline their respective industry trends and forecasts for the next decade amid changes to the global macroeconomic climate and are updated regularly. Click here for the full list of Roskill commodity reports.

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Roskill’s Cobalt: Outlook to 2030, 16th Edition report was published in October 2020, and outlines industry trends and forecasts for the next decade. The report provides in-depth analysis on end-use applications and sustainability issues. For more information or to subscribe, click here.

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This article was written by Jack Anderson and Jake Fraser. Please get in touch below if you wish to discuss further:

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