The leader of Eramet’s operations in Indonesia, Jérôme Baudelet, has stated that for western companies, making money from nickel mining is now nearly impossible without collaboration with Chinese firms. This comes at a time when nickel prices, crucial for electric vehicle batteries, are on a decline.
In a recent interview, Baudelet highlighted the importance of Chinese technology and expertise for producing nickel competitively. He noted, “You can’t avoid working with Chinese companies if you want to stay competitive and manage your costs.”
Eramet stands out among the few western companies in Indonesia’s nickel sector, which is the largest producer of this metal, vital for both stainless steel manufacturing and electric vehicle batteries. The company operates the Weda Bay mine in partnership with China’s Tsingshan Holding Group.
Earlier this year, Eramet and Germany’s BASF scrapped plans for a $2.6 billion nickel-cobalt refinery in Weda Bay, citing sufficient market supplies of battery-grade nickel. This project would have marked a significant move as the only nickel plant in Indonesia fully owned by western interests.
Baudelet explained that the decision to halt the project stemmed from “market difficulties,” as nickel prices have remained low for two years due to reduced growth in demand, paired with increasing nickel supplies from Indonesia.
Eramet, however, is still open to new nickel processing ventures, provided they are linked to mining activities. He mentioned that western firms could still turn a profit if they rely on Chinese companies for building and operating processing plants, as the latter possess significant technical know-how.
According to Baudelet, the high-pressure acid leach (HPAL) technology from Chinese companies is vital for efficiently extracting battery-grade nickel from lower-quality ores. He emphasized their ability to offer economies of scale in manufacturing the necessary equipment.
While previous HPAL projects led by western firms in regions like New Caledonia and Australia faced challenges, recent advancements in Chinese technology have allowed for quick and cost-effective plant setups.
Chinese firms now dominate nickel processing in Indonesia, which houses the largest nickel reserves globally. Following a ban on nickel ore exports in 2020, foreign investment surged in the region, compelling firms to establish local processing facilities.
Western participation remains limited. For instance, last year, Ford partnered with Vale Indonesia and Huayou Cobalt to form a nickel smelter, while Stellantis has been in discussions with Huayou for another smelter project.
Currently, Indonesia produces 57% of the world’s refined nickel, a figure projected to increase to 69% by the decade’s end, according to Benchmark Mineral Intelligence.
The drop in nickel prices and Indonesia’s ongoing production efforts have led to mine closures in other countries. Baudelet confirmed that Eramet plans to focus on opportunities related to mining and exploration as part of its growth strategy in Indonesia, anticipating future demand for nickel.
Baudelet also expressed concern over the U.S. not entering into a critical minerals agreement with Indonesia, which would align Indonesian nickel with incentives under the Inflation Reduction Act. This act aims to lessen U.S. reliance on China within the electric vehicle supply chain.
Currently, most nickel from Indonesia does not qualify for these U.S. incentives due to the significant presence of Chinese firms. However, steps are being taken to change this situation.
He stated, “If Indonesia is about to produce 70% of the world’s nickel, and you don’t qualify them as a supplier, you’re doing yourself a disservice. That’s the most competitive nickel around.”