On the island of Halmahera in Indonesia, covered with tropical rainforest, a project to develop one of the world's largest deposits of nickel ores are underway. (Photo quoted from Yahoo’s image)

The Weda Bay Project is being promoted by French resource company Eramet SA and others. Last December, a plan was announced to build a plant to process nickel ores at the site in order to supply materials for batteries used in electric vehicles.

According to Eramet's announcement, the company plans to build a smelting plant called HPAL (High Pressure Acid Leach) along with BASF SE, a German chemical manufacturer that deals with battery materials for EVs. Both have signed an agreement to jointly assess the development of the facilities. The plant will produce a nickel and cobalt intermediate. A production capacity is 42,000 metric tons of nickel and 5,000 metrics tons of cobalt annually. Generally speaking, it is estimated that it will cost about $500 million to build a facility with a capacity of 10,000 tons of nickel.

HPAL is a technology for extracting nickel from low-grade ores that had previously been considered economically difficult to recover. HPAL produces an intermediate material from low-grade ores that contains about 1% nickel, raising the grade to about 60%. Although the location has not yet been determined, the company plans to build a new Base Metal Refinery to raise the nickel grade from this intermediate material to 99% or higher.

The main use of nickel has been for stainless steel. However, there is growing interest in its use as a battery material for EVs, which are expected to grow in popularity.

Indonesia's nickel ores reserves are the world's largest, accounting for a quarter of the total. The government has banned the export of nickel ores from the end of October 2019. The aim is to attract foreign companies to build plants to process nickel ores in the country. It is also reported that Tesla Inc., the world's largest EVs manufacturer, has proposed to the Indonesian government to invest in its battery business. EVs-related companies from around the world are turning their attention to Indonesia's nickel resources.

In 2006, Eramet acquired a stake in the Weda Bay project from a Canadian company, and in 2009 and 2011, Japanese trading house, Mitsubishi Corp. and Pacific Metals Corp., a Japanese nickel smelting manufacturer, decided to participate in the project. They have been exploring a final investment decision, but the timing of the decision to commercialize the project was significantly delayed due to the slump in nickel prices and other factors.

Eventually, Mitsubishi and Pamco withdrew from the project in 2016. After that, China's Tsingshan Holding Group Co Ltd, the world's largest stainless steel manufacturer, joined the project and, together with an Indonesian state-owned company, began mining nickel ore in October 2019.

The key to utilizing those ores are HPAL technology. High-grade nickel is needed for battery materials. On the other hand, most of the world's nickel ore is now low-grade. In addition to the Weda Bay project, new HPAL plants are scheduled to be launched in Indonesia, Australia, and other countries. The key to supporting the spread of EVs will be the ability to utilize low-grade ores.

HPAL is a technology that Japan’s Sumitomo Metal Mining succeeded in commercializing for the first time in the world in 2005. The plant equipment is a large-scale system. It is not something that can be constructed according to the design and then operated normally at the push of a button; it requires skilled technology to operate stably. A senior executive of a company actually involved in the operation of HPAL said, "It's almost like an art," referring to the difficulty of dealing with the facilities. 

S&P Global Platts, a U.S. research firm, released a report on March 3 this month that pointed out “risky HPAL process”. The Goro project in New Caledonia, acquired by Brazil's Vale SA in 2006, has seen its initial capital investment of $1.5 billion grow to $4.5 billion. A number of companies are struggling in the HPAL including Japan’s Sumitomo Corp's project in Madagascar, which has so far posted a large impairment loss.

 

(Journalist : Yoh Sawada)