Ford, Vale Indonesia, Huayou sign deal for $4.5 billion EV battery material plant

SOROWAKO, Indonesia (Reuters) -  U.S. carmaker Ford Motor Co signed a final investment agreement with PT Vale Indonesia, and China’s Zhejiang Huayou Cobalt on Thursday to build a $4.5 billion nickel processing plant in Indonesia’s Southeast Sulawesi. 

The high-pressure acid leaching (HPAL), located in Pomalaa where Vale operates a nickel mine, is expected to produce 120,000 tonnes a year of mixed hydroxide precipitate, material extracted from nickel ore that is used in batteries for electric vehicles.

Indonesia, which has the biggest nickel reserves in the world, has been trying to develop downstream industries for the metal, with ambitions to eventually produce batteries and electric vehicles.

Vale and Huayou commenced construction of the plant in November and commercial operation is expected to start in 2026.

Febriany Eddy, chief executive of Vale Indonesia, said the deal is unique as it brings the U.S. automaker into an upstream nickel business. 

She said Vale has a 30% stake in the project with the remainder being controlled by Ford and Huayou.

"Ford can help ensure that the nickel that we use in electric vehicle batteries is mined, produced within the same ESG standards as part of our business around the world," Christopher Smith, Ford’s chief government affairs officer, said at the signing.

The investment is Ford’s first in the Southeast Asian country.

Indonesia’s government has since 2020 banned exports of unprocessed nickel ore to ensure supply for existing and potential investors.

The government is currently courting global EV makers such as Tesla and China’s BYD Group to invest in the country.

(Reporting by Gayatri Suroyo; Editing by Martin Petty)