(Yicai Global) July 26 -- Huayou Cobalt, a leading Chinese supplier of lithium battery materials, plans to invest USD400 million expanding its nickel production capacity in Indonesia.

Huayou International Mining Hong Kong will pay USD200 million for the assets of Perlux, acquiring 50.1 percent of Andalan Metal Industry, a nickel ore processor, the Jiaxing-based firm said yesterday. Andalan has a plant on Indonesia’s Halmahera island that annually produces 150,000 tons of ferronickel materials containing 24,000 tons of nickel metal elements.

After the acquisition, Huayou will transform the plant’s production lines to make high-grade nickel matte to ensure supplies for its lithium battery material production in Indonesia, the firm added. Nickle matte is the main raw material for high-purity nickel sulfate, a key compound for ternary lithium battery cathode materials.

Huayou International Mining will also form a nickel ore deep processing joint venture in Indonesia through a new Singapore unit, its parent company said in a separate statement yesterday. Huayou International Mining will indirectly hold a 49 percent stake in the JV and have the right to nominate its chairman and general manager.

Huayou will then invest USD200 million via the JV to build a nickel sulfate production plant in the Weda Bay Industrial Park on Halmahera, with an annual output capacity equal to 50,000 tons of metallic nickel.

Since May 2021, Huayou has unveiled a number of big nickel ore processing projects in Indonesia, including two large JV plants with Brazil’s Vale last year. Ford announced that it would take a stake in the Huayou-Vale JVs to ensure that its products would mainly supply the US auto giant.

Shares of Huayou [SHA: 603799] finished 2 percent lower at CNY49.90 (USD6.98) apiece today. The wider Shanghai market came off 0.3 percent. The company’s stock price has fallen about 10 percent this year.

Editor: Futura Costaglione