DEPOK (eNBe Indonesia) - Nickel miner Vale Indonesia (INCO), which holds one of the largest nickel concessions in the world, is clearly a company to watch because it has kicked off two of the US$8.5 billion expansion projects in Sulawesi Island.
Vale will welcome a new investor from Singapore to develop a smelter in the Pomalaa Block, Kolaka, Southeast Sulawesi.
The Company has signed the deed of amendment and restatement in connection with the definitive cooperation agreement (DCA) with Zhejiang Huayou Cobalt Co. Ltd. on Monday (February 27).
INCO Corporate Secretary Filia Alanda said, along with the signing of the DCA, the Company also signed a joint venture agreement and an acquisition of shares agreement with Huaqi (Singapore) Pte. Ltd. and PT Kolaka Nickel Indonesia (KNI).
“This cooperation agreement was implemented on February 27, 2023, in connection with the planned investment of Huaqi (Singapore) Pte. Ltd. at KNI,” explained Filia in an information disclosure, Tuesday (February 28).
However, INCO did not specify the transaction value, claimed as not a material transaction. Previously, Vale and Huayou had started the construction of a HPAL factory or smelter to process nickel ore in the Pomalaa Block starting last November 2022.
The project will have an annual production capacity of 120,000 tons of nickel in the form of mixed hydroxide precipitate (MHP).
Meanwhile, the investment value of mines, factories and other facilities in this project is projected to reach US$ 4.5 billion and the Pomalaa smelter is intended to produce electric vehicle battery materials.
For this year, INCO has budgeted capital expenditure (capex) of US$110 million, equivalent to Rp1.71 trillion, used to maximizing the completion of projects in Pomalaa and Bahodopi.
In Pomalaa, INCO is collaborating with Zhejiang Huayou Cobalt Co., Ltd (Huayou) to work on the High-Pressure Acid Leach (HPAL) Project. Our understanding, Ford Motor Co Ltd (USA) will join the project.
There is also a project with Taiyuan Iron & Steel Co. Ltd (TISCO) and Shandong Xinhai Technology Co. Ltd. in Bahodopi, Central Sulawesi for the development of a ferronickel plant with a capacity of 73,000 tons per year with an investment value of US$2.3 billion.
This project is also expected to be completed in 2025.
INCO has set a production growth target of up to 70,000 tons with the resumption of Furnace 4 operations. This number is slightly higher than the 2022 target of 64,000 tons.
Previously, INCO’s management hoped that by resuming Furnace 4, the company could produce up to 90,000 tons of nickel in matte per year.
Nickel has indeed dropped from its peak to trade below US$25,000 per ton. Still, this price gives huge EBITDA margin to Indonesian nickel producers because of their relatively low costs combined with expected higher volumes going forward.***
