PT Vale Indonesia Tbk (IDX: INCO) has plans to invest US$5 billion in nickel projects with its partners in the coming years - Photo by the Company

JAKARTA (TheInsiderStories) – Publicly listed nickel miner, PT Vale Indonesia Tbk (IDX: INCO), has planned to invest US$5 billion in nickel projects with its partners in the coming years, including $2.5 billion in battery-grade nickel plant projects with Sumitomo Metal Mining Co. Ltd.

While with China’ Qingshan Holding Group have teamed up to build a battery-grade nickel plant in Indonesia at a cost of $700 million with an annual nickel production capacity of 50,000 tons. Construction of the plant began in January and is expected to be completed within 16 to 18 months.

At the se second quarter of 2019 (2Q), Vale has produced 17,631 metric tons of nickel in matte (t), 35 percent higher than production in 1Q, when planned maintenance activities were completed, said Nico Kanter, the company’ CEO and President Director.

“We are optimistic of meeting our 2019 full year production target of approximately 73,000 t,” he said in an official statement.

On a year-on-year basis, production in the 2Q of 2019 was about 7 percent lower than production in the same period in 2018. And, the production in 1H of 2019 was 15 percent lower than production in 1H of 201818.

This was basically due to a combination of planned maintenance activities related to the Larona Canal Relining, plant shutdowns and unplanned electric furnace issues in 2019.

Several miners has anticipate the huge demand from China for its electric vehicle market and to develop iron and steel market. At the same time, the low global inventory of nickel is also become the reason.

Although the battery industry does not currently account for a large share of nickel consumption, one report said that demand for nickel for lithium batteries will increase by as much as nine times between 2020 and 2030.

Now, this vast market is in front of Indonesia. Indonesia is rich in nickel deposits, about 3.5 billion wet tons, of which about 60 percent are low-grade laterite nickel deposits, the report said. There are currently six new high-pressure acid leaching (HPAL) plants around the world that can produce 220000 tons of battery-grade nickel a year, 70 percent of which are deployed in Indonesia.

Chinese companies have also seized the opportunity to develop the Indonesian nickel market, the report said.

PT Aneka Tambang Tbk (IDX: ANTM), an Indonesian state-owned mining company, will also cooperate with two Chinese enterprises in Shandong Xinhai and Huayou Cobalt to develop nickel projects.

In partnership with Huayu Cobalt, ANTM will develop nickel as a catalyst for battery raw materials to produce grade I nickel for EV batteries, a project that will require an investment of approximately $60 billion to $12 billion.

At the same time, ANTM will cooperate with Shandong Xinhai to build a nickel-iron plant with an investment of $1.2 billion, with an annual output of 40, 000 tons of nickel-iron and 600000 tons of stainless steel.

Furthermore, Budi Gunadi Sadikin, president of Indonesia’s state-owned enterprise PT Indonesia Asahan aluminum (Inalum), said recently that the company will allocate about $10 billion in the next five years for the development of refineries and smelters.

The company will also invest $850 million to build a 1 million-ton alumina smelter in West Kalimantan province. The refinery, which is expected to be completed in 2022, will help reduce Indonesia’ annual imports of 500000 tons of alumina.

Sadikin said it aims to increase the refinery’s capacity to 2 million tons and export half of its production. And as demand for nickel from electric car battery makers soars, the company may reach an agreement with Vale Indonesia to buy a 20 percent stake in it to strengthen control over nickel production.

These cooperation are based on Indonesia’s policy of encouraging the development of the nickel industry. President Joko Widodo’ government is planning to spend billions of dollars building aluminum and nickel smelters at home as it seeks to reshape the domestic mining industry and curb exports of raw materials while reducing its dependence on imports of finished metals.

This is because Indonesia’ own mining raw materials have been exported for decades, forcing the Southeast Asia biggest economy to rely on costly imports to meet demand.

Indonesia is likely to impose a ban on raw ore exports in 2022, pushing miners to process minerals at home. Under the 2017 mining regulations, Indonesia plans to suspend exports of raw ore on January 12, 2022, after giving miners five years to build smelters in the country.

It is expected that 41 smelters will operate in 2022, including 22 nickel smelters, 6 bauxite smelters, 4 iron ore smelters, 4 zinc smelters, 2 copper smelters, 2 anode slime smelters, and 1 manganese ore smelter.

Written by Lexy Nantu, Email: lexy@theinsiderstories.com