Global Auto and Battery Makers Eye Nickel from New Indonesian Plant

Nickel Industries, an Australia-listed company, is drawing significant attention from global automobile and battery manufacturers for its nickel supply from a new plant under construction in Indonesia. CEO Justin Werner revealed on Tuesday that over 25 companies have shown interest in purchasing 70,000-80,000 metric tons of nickel annually from the high-pressure acid leach (HPAL) plant in Sulawesi, expected to be operational in the second half of 2025.Indonesia, known for its low production costs, currently dominates the nickel market, producing over half of the world's supply.

This dominance is anticipated to grow, with projections suggesting Indonesia will contribute nearly three-quarters of the global nickel supply by decade's end. Nickel Industries' new facility will produce nickel in various forms, including cathode, mixed hydroxide precipitate (MHP), and nickel sulfate, which are essential for manufacturing electric vehicle batteries.

In a strategic move to bolster investment, Nickel Industries is seeking investors for up to a 25% stake in the plant. This opportunity arises as its Chinese partner Tsingshan, responsible for constructing the plant, plans to divest part of its 45% share.

The global nickel market has been grappling with an oversupply issue, leading to a 45% price drop last year and affecting high-cost producers, including BHP and other Australian miners. These producers have advocated for a "green premium" for nickel produced with low carbon emissions. The London Metal Exchange (LME) sets the low carbon nickel threshold at 20 tonnes of carbon dioxide (CO2) per tonne of nickel, whereas Nickel Industries' new plant is poised to produce nickel with about eight tonnes of CO2 per tonne.

Despite the environmental benefits, Werner notes a lack of willingness among automakers and battery manufacturers to pay a premium for green nickel, expressing a preference for lower costs instead.

This development comes as Australian mining tycoon Andrew Forrest calls for the LME to categorize its contracts based on environmental impact, offering consumers a choice between clean and dirty nickel. This proposal coincides with Forrest's company Wyloo's decision to shut down nickel mines acquired for $504 million last year, highlighting the ongoing debate and challenges within the nickel industry concerning sustainability and pricing.