Ford in $4.5 billion deal for EV battery materials plant

US car manufacturer, Ford, has partnered with PT Vale Indonesia and China’s Zhejiang Huayou Cobalt to invest in a $4.5 billion nickel processing plant in Indonesia, the companies announced on Thursday. This is Ford’s first investment in the Indonesian market and reflects the growing interest among carmakers in the raw materials used in the manufacture of electric vehicle (EV) batteries, which can account for 40% of a vehicle’s final cost. The move is aimed at reducing costs and closing the gap with EV market leader, Tesla.

Volkswagen, Europe’s largest carmaker, has also announced that it plans to invest €180 billion ($196 billion) over the next five years in the production of batteries and in sourcing raw materials.

Indonesia, which holds the world’s largest nickel reserves, has been looking to develop its downstream industries for the metal with an eye to producing batteries and EVs. The planned high-pressure acid leaching (HPAL) plant will be situated in Pomalaa in southeast Sulawesi, where Vale operates a nickel mine.

The plant is expected to have an annual output of 120,000 tonnes of mixed hydroxide precipitate, which is a material that is extracted from nickel ore and is used in EV batteries. Vale and Huayou began building the plant in November 2019 with commercial operations set to start in 2026. Vale Indonesia’s CEO, Febriany Eddy, said the deal is unique because it brings in a US carmaker to an upstream nickel business. Vale will hold a 30% stake, while a majority of the rest will be controlled by Ford and Huayou. It has not been disclosed how much Ford is investing in the plant.

Christopher Smith, Ford’s chief government affairs officer, said that the partnership with Vale and Huayou will help ensure that the nickel used in EV batteries is mined and produced according to the same environmental, social, and governance standards that Ford adheres to globally. Indonesia’s government banned the export of unprocessed nickel ore in 2020 to ensure supply for existing and potential investors, while it courts global EV manufacturers such as Tesla and China’s BYD Group to invest in the country. ($1 = 0.9205 euros)

by Gayatri Suroyo, editing by Martin Petty and David Goodman

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