Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Stellantis is in talks with Vale and China’s Huayou Cobalt to invest in a nickel smelter in Indonesia and secure supplies of the battery metal critical to its electric vehicle expansion plans, in a deal that if finalised would bring a rare western investor into Indonesia’s nickel industry.
Stellantis, owner of the Peugeot, Fiat and Jeep brands, is in discussions with Vale Indonesia to invest in a high-pressure acid leaching plant that converts low-grade nickel ore to battery-grade metal, three people familiar with the matter said.
Huayou, one of the world’s top producers of nickel and cobalt, will hold a stake in the project alongside Stellantis and Vale, with the size of the companies’ investment yet to be determined, they said.
The investment by Stellantis would be a crucial win for Indonesia, which has been trying to attract western carmakers to its nickel industry. The domestic sector so far has been dominated by Chinese companies, which have poured in billions of dollars to process the metal used for stainless steel and EV batteries.
For Stellantis, a potential Indonesian investment comes even as carmakers around the world scale back electrification plans because of slow adoption of EVs, underscoring its ambitions.
Stellantis plans to invest €50bn in electrification over the next decade, with a goal to achieve net zero carbon emissions by 2038. The carmaker has signed offtake deals with suppliers of battery materials around the world in recent years.
Stellantis declined to comment. Huayou Indonesia did not respond to a request for comment.
Vale Indonesia said it did not comment on commercial discussions. “We are confident that our continued investments in Indonesia will remain attractive to our investors and international partners, further driving foreign direct investment and helping to accelerate the country’s EV hub and mineral downstreaming ambitions,” a spokesperson said.
Indonesia dominates the nickel market, thanks not only to the world’s largest reserves but also to Chinese technology and investments that have lowered the cost of production. The country accounts for more than 50 per cent of global nickel supplies, and its market share is expected to increase as a slide in nickel prices has forced miners elsewhere to scale back production.
But Indonesia has been looking for ways to reduce its dependence on Beijing to cushion the impact from any slowdown in Chinese demand and as it seeks more market access for its nickel in the US and Europe.
Indonesia is in talks with other European carmakers, according to people familiar with the discussions. Some European companies “are assessing the option to set up a smelter”, said one of the people.
Indonesia is aiming to leverage its nickel to establish an EV supply chain in the country. President Joko Widodo banned exports of nickel ore in 2020 to lure foreign companies to invest in smelters, battery manufacturing and eventually EV production.
Chinese companies, including Tsingshan and CATL, responded promptly, becoming the biggest investors in Indonesian nickel.
Globally, US and European companies have lagged behind their Chinese counterparts in securing supplies of critical minerals. In Indonesia’s case, accusations that its mining and refining practices cause environmental harm have kept western companies at bay.
A deal with Stellantis could help Indonesia’s image as it battles mounting accusations that it produces “dirty” nickel due to its use of coal-fired power plants for mineral processing.
Last year, Ford agreed to invest with Vale and Huayou in a $4.5bn high-pressure acid leaching plant in south-east Sulawesi, gaining direct access to the nickel needed for its EVs.
At the time, Ford said the three-way partnership would allow it to “ensure the nickel is mined in line with our company’s sustainability targets, setting the right ESG standards as we scale”.
Eramet and BASF are among other western investors in Indonesia.
Read the full article here
