French Miner: Profitable Nickel Needs Chinese Technology and Equipment

Cailian Press (Editor: Shi Zhengcheng) — The head of Indonesian nickel operations at multinational mining giant Eramet said recently that in this metal, which is crucial to electric vehicle batteries, it is now impossible for Western companies to be profitable without relying on the technology, equipment and management experience of their Chinese counterparts.

It is worth noting that earlier this year Eramet cancelled its plan to jointly develop an Indonesian nickel-cobalt refinery with Germany's BASF because it was “not economically viable”. The project had a planned investment of US$2.6 billion and would have been the only nickel refinery in Indonesia 100% controlled by Western companies.

Eramet and BASF announced the cancellation of the plant plan in June

Nickel prices have been on a gradual upward trend. LME nickel futures, for example, briefly rose to US$20,000/tonne during the year.

In Indonesia, which holds the world's largest nickel reserves, Eramet is cooperating with China's Tsingshan Holding Group to jointly operate the Weda Bay nickel mine. This also makes Eramet one of the few Western companies with a foothold in Indonesia's nickel industry.

Jérôme Baudelet, CEO of Eramet Indonesia, said bluntly in a media interview that to produce nickel at competitive prices, Chinese technology, expertise and equipment are indispensable.

Baudelet said: “I don't think you can do it without (Chinese companies). The risk is being uncompetitive, and capital expenditure is much higher, so you have to be pragmatic.”

Speaking of the failure of the BASF project, Baudelet admitted that because the market was “very difficult”, that project no longer made economic sense. But he then stressed: “As a Western company, if the plant is built by (the Chinese) and the Chinese are responsible for operating it, it can actually be profitable, because the Chinese have already accumulated a great deal of expertise in this area.”

He also gave an example: China's high-pressure acid leaching (HPAL) process — a technology for extracting battery-grade nickel from low-grade ore — is crucial for building nickel processing facilities, and the related Chinese equipment also offers economies of scale. Over the past two decades, Western companies' HPAL projects in many parts of the world have failed because of cost and technical problems, but China's new technology can make plants more economical and can build them quickly.

In fact, this “Western company + Chinese” plant-building model is not uncommon in Indonesia. After the country banned nickel ore exports in 2020, building local refineries became an urgent priority for the global industry. Last year, US-based Ford and Vale Indonesia cooperated with China's Huayou Cobalt to build a nickel smelter; this year there were also reports that another multinational auto giant, Stellantis, is in talks with Huayou about building a plant.

According to data from industry research firms, Indonesia currently accounts for 57% of global refined nickel output, and this may rise to nearly 70% by 2030.

Baudelet also criticized the US government for not yet including Indonesian nickel capacity in the incentive scope of the Inflation Reduction Act, although whether the act can survive is highly uncertain given Trump's imminent return to the White House.

He said: “When a country is about to produce 70% of the world's nickel... if you don't treat them as a potential supplier, you are to some extent shooting yourself in the foot. This is the most competitive nickel on earth.”

(Cailian Press, Shi Zhengcheng)

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