STX starts exploration drilling at Indonesian nickel mine

South Korea’s general trading company STX Corp. has started works to probe the contents of known ore deposits at an Indonesian nickel mine it has invested in with a target of production from the first half of 2024 to accelerate the expansion of its presence in the global electric vehicle battery industry.

STX said on Wednesday it has begun exploration drilling at the mine located on the island of Sulawesi. The South Korean company set up a joint venture with an Indonesian company in August and acquired a 20% stake in the mine.

Exploration drilling is a process of verifying reserves, production and quality of minerals at a mine through various methods such as geological program data and topographic sample analysis prior to full-scale development.

STX expects the mine to produce more than 2 million tons of nickel a year and generate sales of over $130 million.

After the announcement, STX’s stock ended up 6.5% at 9,220 won ($6.8) in the South Korean stock market, far outperforming a 1% gain in the benchmark Kospi. Shares earlier hit a one-week high of 10,210 won.

TO FIND CUSTOMERS EASILY AFTER PRODUCTION

“We aim to get the upper hand in the supply chain as a trading company specializing in raw materials based on two production bases in which we have stakes – the Sulawesi mine in Indonesia and the Ambatovy mine in Madagascar,” said an STX official in a statement.

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 increasing due to growth in the clean vehicle market.

STX, which has secured a mining business license for the mine's production operation, is working to obtain licenses for other businesses such as smelting. It already has rights to transport and sell all of the nickel ore produced there.

The mine has easy access to customers as it is close to the Indonesia Morowali Industrial Park where EV battery materials manufacturers, stainless steel producers and smelters operate plants, STX said.

(Updated with share price, Kospi close)

Write to Mi-Sun Kang at misunny@hankyung.com
 

Jongwoo Cheon edited this article.