The decision of two giant smelter investors BASF and Eramet to cancel their nickel refining investment plan at Sonic Bay Project in North Maluku will not reduce the interest of foreign investors to invest in Indonesia downstream sector, a senior government official said.
Deputy for Investment Promotion at the Ministry of Investment/Investment Coordinating Board, Nurul Ichwan, said that BASF and Eramet’s decision to cancel their investment was a business decision obtained after conducting various evaluations.
“We have continuously overseen the Sonic Bay Project investment plan since the beginning. But along the way, the companied changed their focus, so in the end they decided to cancel the investment plan for the project,” Nurul said in a statement on Thursday, June 27, 2024.
Germany’s BASF and French’s Eramet, which already have business legality under the name PT Eramet Halmahera Nikel (PT EHN) planned to develop the US$ 2.6 billion Sonic Bay project in Weda Bay Industrial Estate, North Maluku. The project is the construction of a nickel refining plant with High Pressure Acid Leach (HPAL) technology that produces Mixed Hydroxide Precipitates (MHP).
BASF and Eramet’s decision not to proceed with the investment plan was based on consideration of significant changes in nickel market conditions, especially in the choice of nickel which supplies raw materials for electric vehicle batteries. Thus, BASF decided that there is no longer a need to invest in the supply of electric vehicle battery materials.
“We see that downstreaming for the electric vehicle battery ecosystem is still very potential to be developed in Indonesia. Moreover, Indonesia was recently ranked 27th in the World Competitiveness Ranking (WCR) 2024. Top 3 best in the ASEAN region,” Nurul added.
Foreign investors’ interest in the downstream sector remains high and even some investment projects in the sector have reached the realization stage. For example, the world’s largest copper smelter project owned by PT Freeport Indonesia in Gresik, East Java, will officially operate today, June 27, 2024.
Another tangible evidence is the first mass production of electric vehicle batteries in Indonesia by PT Hyundai LG Indonesia (HLI) Green Power in Karawang, West Java in July 2024 and will be inaugurated by President Joko Widodo.
In a statement to Indonesia Business Post, French mining and smelter company Eramet announced that the company and Germany’s BASF have decided against a joint investment in a nickel-cobalt refining complex in Weda Bay.
Eramet will continue to evaluate potential investments in the nickel electric vehicle battery value chain in Indonesia and will keep the market informed in due course.
In 2020, Eramet and BASF signed an agreement to assess the potential of jointly developing and constructing a nickel-cobalt refining complex in Weda Bay. After thorough evaluation, including discussions about project execution strategy, both partners have decided against this investment.
Geoff Streeton, Eramet’s Group Chief Development Officer, said Indonesia is poised to play a pivotal role in the future of the overall global nickel market. “Eramet remains focused on sustainably optimizing the resource potential of Weda Bay mine to supply ore to local nickel producers, while also further investigating opportunities to participate in the nickel electric vehicle battery value chain in Indonesia,” he said.
