China expands nickel investment in Indonesia to meet demand for electric vehicles

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  • • Each project includes an investment of 420 million dollars for the production of matte nickel material
  • • Matte nickel is an intermediate product that can be processed into battery grade nickel
  • • The projects aim to increase the annual nickel production capacity by 120,000 tons per year
  • • Indonesia is taking advantage of nickel reserves to attract investment in the battery supply chain

China Battery Materials Manufacturer CNGR has signed agreements to expand its investment in the nickel industry, through 3 of its Hong Kong units, with Singapore-based Rigquesa International Pvt. Ltd., to jointly invest in the 3 projects in Weda Bay Industrial Estate.

This came in the company’s application to the Shenzhen Stock Exchange (Shenzhen) in China, on Wednesday, May 18, as reported by Reuters, today, Wednesday, May 18.

Each project includes an investment of 420 million dollars, and aims to produce matte nickel, and produces 40,000 tons of nickel annually through 4 production lines, and matte nickel is an intermediate product that can be processed into battery-grade nickel.

China’s CNGR Advanced Materials Corporation (CNGR) will invest in 3 new projects in Indonesia to produce matte nickel, with the aim of increasing annual capacity by 120,000 tons; To meet the increasing demand for the product used in the manufacture of electric car batteries.

nickel investment expansion

nickel
Nickel metal is prepared for manufacturing – Image from the “Investing” website

China CNGR Advanced Materials (CNGR) invested in two matte nickel projects with Rigquesa International Pvt. Ltd., last year, on the Indonesian island of Sulawesi, with a total annual capacity of 60,000 tons.

The company also reached an agreement with nickel giant Tsingshan Holding Group, which will supply it with 40,000 tons of the product.

CNGR stated that both parties are consistently optimistic about the matte nickel industry, adding that the investments are expected to further secure the company’s resources and reduce production costs for battery materials.

The company, registered in Singapore, explained that Rigquesa International will own a 30% stake in each of the three new projects, noting that Rigquesa International’s main responsibilities include coordination with the Indonesian government, which helps secure local approvals and financing.

Nickel prices on the London Metal Exchange doubled to a record high of more than $100,000 a ton within an hour in March, as the conflict between Russia and Ukraine fueled the surging market.

Nickel prices fell to about $26,365 per ton, on Tuesday, May 17th.

nickel industry strategy in indonesia

The demand for nickel for batteries, especially the type used in electric vehicles, is growing rapidly.

Indonesia has the largest nickel reserves in the world, and is taking advantage of those reserves to attract investment in the battery supply chain, according to the website of the Center for Strategic and International Studies last December.

Indonesia banned the export of nickel ore in 2014, to force miners to process the ore locally, thus adding value to its nickel production.

In turn, Chinese investment has developed an integrated steel industry, and Indonesia is now on the right track to replicate this success in the electric car battery supply chain.

The first plant in Indonesia to process nickel for use in batteries was commissioned in May 2021, with at least 7 other projects in the pipeline.

Advances in High Pressure Acid Filtration (HPAL) projects will pave the way for battery-grade nickel supplies in the future, at least in the near term.

Battery Industry Growth

nickel
Electric vehicle battery – Image via Irish EV website

Although steel production dominates nickel demand today (by about 70%), it is expected that batteries for decarbonization of transport will represent the largest single growth sector, and that 2030 will see a third of total nickel demand.

As the world’s largest nickel producer, and the country with the largest nickel reserves, Indonesia recognizes the economic opportunities offered by this development, and is focused on attracting investments in production capacity along the electric vehicle supply chain.

Indonesia’s nickel strategy is part of the country’s commodity-led development strategy. Indonesia aims to attract investment in smelters and processing plants, thus adding value to its nickel reserves compared to simply exporting nickel ore.

Moreover, over the past years, Indonesia has developed an integrated steel supply chain, and now wants to become a battery production hub.

China and investment in nickel

China does not have many nickel reserves, and produced 120,000 tons of nickel at home in 2020, with the country’s reserves accounting for less than 3% of the world’s total, according to a report from the US Geological Survey.

On the other hand, Indonesia, which has 23.7 percent of the world’s nickel ore reserves, produced 853,000 tons, which represents nearly a third of global production, Nikkei Asia reported in February.

The experience of Tsingshan Group Holdings in Indonesia paved the way for nickel-hungry Chinese battery material producers, in large part due to their ambitions to access a growing battery material business.

With more money pouring into Indonesia, Chinese companies face increased risks from frequent and intermittent export bans, as well as persistent supply concerns, which raise the question of whether they have overcommitted to Indonesia.

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