French mining company Eramet and German chemical giant BASF have decided to cancel their planned joint investment in a nickel-cobalt refining complex in Weda Bay, Indonesia. This decision, announced on June 24, 2024, was made after a thorough evaluation of the project's feasibility and the current market conditions.
The primary reason for the cancellation is the anticipated short-term oversupply of nickel, driven by a temporary stagnation in electric vehicle (EV) market demand, a phenomenon often referred to as the "chasm." BASF explained that with the global supply of nickel for EV batteries improving, the necessity for their investment in the Indonesian facility has diminished.
Eramet, while canceling this specific project, mentioned that it will continue to explore potential investments in the nickel EV battery value chain in Indonesia and will update the market when appropriate. The initial plan, announced in January 2023, aimed to invest $2.6 billion to build a high-pressure acid leach (HPAL) facility designed to produce 67,000 tons of nickel and 7,500 tons of cobalt annually.
Indonesian officials noted that the decision might also have been influenced by the existing and planned HPAL facilities in the country, which would make it easier to obtain mixed hydroxide precipitate (MHP) without needing substantial new capital expenditure.
This development reflects broader trends in the global nickel market, where Indonesia's share of nickel mine supply has surged from 26% in 2018 to 55% in 2023, with the production of nickel intermediates more than doubling over the same period. Despite the anticipated 8.7% increase in global nickel production this year, demand growth is expected to lag at around 4%.
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