Reuters report that German chemical giant BASF and French mining company Eramet plan to invest $2.6 billion in an Indonesian facility to produce mixed hydroxide precipitate (MHP), a key component in electric vehicle batteries.
The facility, expected to start production in early 2026, will extract nickel from ore using a high-pressure acid leach (HPAL) process, with an annual output capacity of up to 67,000 tonnes of nickel and 7,000 tonnes of cobalt.
Increasing Global Interest
The collaboration between BASF and Eramet is worth noting as it constitutes one of the first significant investments in MHP production in Indonesia made by a company not from China.
The market for MHP in the country has been dominated by Chinese companies such as Zhejiang Huayou Cobalt and Tsingshan Holding Group up until now.
The move by BASF and Eramet shows increasing international interest in Indonesia's rich nickel resources and its potential as a major player in the electric vehicle industry. This interest is reflected in the fact that BASF and Eramet have made this move.
Nickel and the EV Industry
NBR data shows that Indonesia holds 22% of the world's nickel reserves. Its ban on nickel ore exports since 2020 has caused massive changes in the supply chains of strategic products such as electric vehicles and rocket engines.
Nickel is also essential in producing electric vehicle (EV) battery cathodes, which are required for the green energy transition.
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The same publication tells us that current EV battery demand consumes about 7% of global production, but expected increases in EV demand will cause an exponential growth in nickel demand. As a result, many automakers rank securing nickel for EV batteries as a top priority.
Indonesia's Position
Indonesia is making a solid push to become a world-class EV player. According to reports, the country is nearing the completion of agreements with Chinese automaker BYD Group and Tesla to invest in EV manufacturing facilities.
The move is intended to capitalize on the country's vast nickel resources, which are among the world's largest. The country has recently set ambitious goals for increasing electric vehicle production and reducing its reliance on fossil fuels.
BASF and Eramet's facility are expected to play a critical role in this effort. MHP is a crucial component in manufacturing electric vehicle batteries, and the facility will produce large amounts of this material for use in the global EV market.
The facility's HPAL process is also highly efficient, making it an appealing option for large-scale MHP production.
It is anticipated that Indonesia will reap significant economic benefits directly from the collaboration between BASF and Eramet.
The facility will lead to the creation of jobs as well as a boost to regional economic growth. Because MHP is in high demand across international markets, which will also help increase the country's export revenues.
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