Korea’s STX to build joint Indonesia nickel plant for EV cells

South Korea’s trading company STX Corp. is set to build a nickel plant with an Indonesian company in the Southeast Asian country to expand its presence in the rapidly growing electric vehicle battery industry after corporate restructuring.

STX said on Thursday it signed a deal to establish a joint venture with an Indonesian company but did not provide further details such as the partner’s name and stake breakdown, citing a non-disclosure agreement.

The Indonesian company has a license to transport and sell minerals such as nickel while trading more than 300,000 tons of the core material for EV batteries a year, STX said. The partner in the world’s largest nickel-producing country is the top shareholder of a local company with mining rights, according to the Korean firm.

STX plans to build a joint nickel plant there with an aim to ramp up its nickel trading volume to 1 million tons a year by 2026 from the current 100,000 tons.

“The planned Indonesian JV is expected to create synergy with the Ambatovy nickel project,” said an STX official, referring to a large nickel and cobalt mine located in Madagascar, off the east coast of Africa.

The company has been accumulating experience and know-how in the nickel business since it invested 30.6 billion won ($23.6 million) in the mine in 2006, the official added. It had less than a 1% stake in the project as of end-March.

STX also seeks to invest in an Indonesian mine, which was estimated to have 60 million tons of nickel ore reserves, while preparing the establishment of a factory to smelt and refine minerals in the country, a key for the entire supply chain.

The move came after STX in March decided to spin off its shipping business to focus on trading raw materials such as nickel and lithium.

RUSH TO INDONESIA

Indonesia holds the world’s largest nickel reserves with an estimated 21 million tons, equal to 24% of the world’s total. Nickel is considered a core material that determines the performance and capacity of EV batteries with its demand rapidly increasing due to rapid growth in the clean vehicle market.

Manufacturers of EVs, batteries and cell materials rushed to Indonesia for the stable procurement of nickel. Tesla Inc., the world’s top EV maker, struck a $5 billion deal to secure the mineral from the country, a candidate for its Gigafactory in Asia last year.

South Korea's top automaker Hyundai Motor Co. has started mass producing its all-electric crossover IONIQ 5 at its newly built plant in Indonesia, while LG Energy Solution Ltd., the world’s No.2 EV battery maker, is building a joint battery plant with Hyundai Motor Group there.

POSCO Holdings Inc. has also decided to procure nickel from Indonesia.

Write to Mi-Sun Kang at misunny@hankyung.com
 
Jongwoo Cheon edited this article.