Nickel sulphate, cobalt: GEM inks 8-year deal with PT HPL for Indonesian nickel and cobalt

EV batteries

Indonesian prospective nickel producer, PT Halmahera Persada Lygend (PT HPL), has recently signed an 8-year supply deal with GEM, the refiner and recycler in China.

According to the agreement signed on 2 September, PT HPL, which operates a high pressure acid leach (HPAL) nickel project in Obi, would supply GEM with a minimum of 74.4kt Ni to a maximum of 178.6kt Ni, and a minimum of 9.3kt Co to a maximum of 22.3kt Co contained in MHP and sulphate products, for the following 8 years from the date that the Obi project starts commercial production. For each contract year, PT HPL would supply a minimum of 9.3kt Ni to a maximum of 22.3kt Ni, and a minimum of 1.2kt Co to a maximum of 2.8kt Co to GEM. As part of the deal, PT HPL is required to take efforts to ensure that the Obi project commences commercial-scale production by 30 June 2021.

Roskill view

With construction underway, PT HPL is seen as one of the most advanced integrated HPAL projects in Indonesia, and globally by Roskill. The joint venture between Indonesian nickel miner Harita Group and Chinese mining investment company Ningbo Lygend, targets a total capacity to produce 52ktpy Ni and 6ktpy Co in sulphates from laterite ores in Obi, in two phases. The first phase is now likely to be delayed from H2 2020 to H1 2021 due to the COVID-19 pandemic.

This deal could be a milestone for both GEM and PT HPL. For PT HPL, the agreed supply volume to GEM represents roughly 20% to over 40% of the annual nickel and cobalt output from the Obi project at its full design capacity. A sizeable long-term purchase agreement, endorsed by leading battery materials producers like GEM before commissioning, could help boost confidence for the project. For GEM, this deal marks the second long-term purchase agreement on feedstocks in the past 12 months, following a five-year cobalt deal with Glencore signed in late 2019, further showing the company’s belief in NCM/NCA cathode chemistries in the longer term.

For the entire EV battery industry, this deal again highlights the strategic importance of raw material security given the growing concerns on disruption risks in cobalt and nickel supply amid the ongoing COVID-19 pandemic. Vulnerable supply chains, compounded by ESG risks, could cause more volatility in cobalt and nickel markets, at least in the short- to medium-term.

Roskill’s Nickel: Outlook to 2029, 16th Edition report was published in April 2020 and outlines industry trends and forecasts for the next decade. The report forecasts nickel mine supply used in Class I and Class II production. Click here to download the brochure for the report, or to access further information.

Roskill’s Nickel Sulphate: Outlook to 2029, 3rd Edition report was published in May 2020 and includes forecast trends in supply, demand and pricing to 2029. The report provides detailed profiles for new potential producers and analyses the availability of various feedstock types. Click here for more information.

Roskill’s NEW Cobalt: Outlook to 2030, 16th Edition report is due to be published in September 2020. The report will address the opportunities and challenges facing the cobalt market over the coming decade. For more information or to subscribe, click here.

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This article was written by Ying Lu. Please get in touch below if you wish to discuss further:

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