BASF to cancel $2.6 billion nickel-cobalt refining project in Indonesia

German chemical producer BASF announced on Monday June 24 that it will exit a $2.6 billion investment in a nickel-cobalt refining project in Weda Bay, Indonesia due to significant changes in the nickel market since the inception of the project

BASF said that they are seeing growing options of battery grade nickel globally and it no longer sees the necessity for such a substantial investment, according to the company’s announcement on Monday.

In 2020, BASF and Eramet, a global mining group, signed an agreement to jointly assess the potential of nickel-cobalt refining project in Indonesia, including a High-Pressure Acid Leaching (HPAL) plant and a Base Metal Refinery (BMR).

The planned plant would have produced mixed hydroxide precipitate (MHP) from nickel through the HPAL plant. MHP is used for producing nickel sulfate, a raw material for cathode precursor production.

The plant was expected to provide BASF with an additional secure source of 42,000 metric tons of nickel and 5,000 metric tons of cobalt annually, according to BASF’s announcement.

“Canceling the investment is a strategic adjustment considering the near-term oversupply in the nickel market,” a source said.

Amid ample supply and slow demand in the electric vehicle (EV) sector, the price of nickel sulfate has been experiencing a downward trend in recent weeks.

Fastmarkets’ price assessment for nickel sulfate min 21%, max 22.5%; cobalt 10ppm max, exw China was 29,000-30,100 yuan ($3,993-4,145) per tonne on Friday June 21, down by 1,450 yuan per tonne, or 4.67%, from 32,000-33,000 yuan per tonne on May 31 and a third weekly drop.

“Despite the oversupply expectation in the market, we are still seeing increasing new projects in the region,” the source added.

The South East Asian archipelago country is becoming a pivotal country in the global electric vehicles production industry in recent years due to its abundant reserves of critical minerals, nickel in particular, with major battery-grade nickel intermediates projects backed by Chinese companies like Huayou Cobalt and Tsingshan Holding Group. 

Take Huayou for example, the company has been investing in the Indonesia nickel supply chain since 2018. By 2024, it had already built a total nickel capacity of 225,000 metric tonnes with three subsidiaries for nickel intermediates production. 

Meanwhile, it is cooperating with Vale and Ford for nickel intermediates production, according to Huayou’s annual report in 2023. 

The global investment in Indonesia’s supply chain, on the one hand, has boosted the role of Indonesia in the international energy transition sector. 

Indonesia’ s nickel mine supply increased to 55% of the world total in 2023 against 26% in 2018, while the share of nickel intermediates grew to 65% from 30% during the same period, according to Fastmarkets’ research. 

However, this could also result in supply surplus. The global nickel output in 2024 is expected grow at 8.7% on a yearly basis, higher than the demand expectation at 4% for 2024. And the supply gap will increase to 389,000 tonnes in 2024, higher than 222,000 tonnes in 2023, according to one analyst from a security firm in China.

Interested in a forward-looking view of the base metals market to boost your business strategy? Get a free sample of our base metals price forecast today.

What to read next
Rapidly expanding capacity for the recycling of lithium-ion batteries in the United States and Canada has raised worries over the supply of raw materials to feed processors in the region, sources have told Fastmarkets
Fastmarkets proposes to discontinue its weekly price assessment for steel reinforcing bar (rebar) domestic, ex-whs Northern China.
Chinese mining giant CMOC reported a 178% year-on-year increase in cobalt metal production for the first six months of 2024, according to an announcement by the company on Friday July 12
Fastmarkets has amended the name of MB-AL-0231 Aluminium P1020A all-in price, delivered Midwest US, US cents/lb as of Wednesday July 17.
Analysis by UK-based industry group ChargeUK shows that there are now more than 930,000 public, home and workplace charging points for electric vehicles (EVs) across the nation, supporting 1.1 million such vehicles
Aluminum scrap generation in Europe is expected to decrease in the current quarter due to lower demand from downstream metal producers amid the domestic seasonal summer slowdown, according to the latest market overview from the Bureau of International Recycling (BIR)