IDX-listed integrated nickel mining firm PT Vale Indonesia Tbk (IDX: INCO) is actively seeking a strategic partner to complete a consortium for its High-Pressure Acid Leaching (HPAL) smelter project in Sorowako, South Sulawesi Province. The project, valued at approximately US$2 billion or Rp 31 trillion, is crucial for PT Vale's expansion in nickel production.
Currently, PT Vale has secured a partnership with Zhejiang Huayou Cobalt Co. Ltd. (Huayou), a Chinese company. However, to fully realize the development of the Sorowako HPAL project, PT Vale requires one additional partner. President Director Febriany Eddy confirmed during a public presentation on Monday that the consortium plan involves three parties: PT Vale, Huayou, and a third partner yet to be identified.
“Huayou is responsible for finding the third partner. We will review and approve the new partner based on stringent criteria, including adherence to international ESG (Environmental, Social, and Governance) standards and a strong reputation in the battery storage or electric vehicle (EV) supply chain,” said Febriany.
The search for the third partner is ongoing, with several automakers showing interest, though no agreements have been finalized yet. Chief Project Officer Muhammad Asril indicated that preparations for the Sorowako project are progressing, including the finalization of key contracts and construction plans.
In addition to the Sorowako HPAL project, PT Vale is advancing other significant initiatives. The Bahodopi nickel project in Central Sulawesi, an integrated low-carbon nickel processing facility, has reached 44% physical progress with 1,700 workers engaged in mining construction. Similarly, the HPAL project in Pomalaa, Southeast Sulawesi, has completed essential pre-construction and engineering contracts, with 1,500 workers involved in plant and road access preparations.
PT Vale is also preparing to sell nickel ore from its various growth projects, including Sorowako, Bahodopi, Pomalaa, and Sua-Sua. The company is revising its feasibility study and work plan to incorporate these sales, which is expected to boost future revenue.
Read also : PT Vale reviews C. Sulawesi nickel project
Production outlook
PT Vale targets a production volume of 7,805 tons of nickel matte by the end of 2024. Despite a 9% decrease in production in the second quarter of 2024 compared to the first quarter and a 2% year-on-year decline, the company remains optimistic about meeting its annual target. This decline is attributed to planned maintenance and quality commitments.
On a semi-annual basis, PT Vale's production volume increased by 3% compared to the first half of 2023, driven by effective maintenance strategies and higher calcine output. The company aims to maintain its cash cost below $10,000 per ton through the end of the year to ensure profitability.
Vale has allocated $400 million (approximately Rp 6 trillion) in capital expenditure (capex) to support growth plans in Pomalaa and Bahodopi, as well as to maintain operational assets, especially in Sorowako. In the second quarter of 2024, Vale spent around $61 million on capex, marking a 6% increase from the previous quarter, reflecting its commitment to growth and expansion.
Editing by Reiner Simanjuntak
