Total investment in the Pomalaa HPAL project, which will produce battery-grade nickel intermediates, is expected to reach approximately US$3.8Bn.  

Chinese battery materials producer Zhejiang Huayou Cobalt is looking to secure financing in the region of US$2.7Bn for its high-pressure acid leach (HPAL) nickel facility in Southeast Sulawesi. According to reports, HSBC Holdings Plc and Standard Chartered Plc are the banks currently involved in arranging the loan, and they are inviting other banks to participate in funding.  

The HPAL facility has been designed to produce 120ktpy Ni-in-MHP and will source laterite ore from PT Vale Indonesia’s Pomalaa Block. The project is being developed as a three-party collaboration between PT Vale, Huayou, and Ford. Huayou holds a 73.2% stake, Vale owns 18.3%, and Ford has an initial 8.5% holding with an option to raise this to 17% within an agreed timeframe.  

Crucially, given Indonesia’s lack of free trade agreement (FTA) with the USA, this nickel would not currently qualify for US Inflation Reduction Act (IRA) EV tax credits. In addition, given that Huayou’s ownership well exceeds the 25% threshold for the US Department of Energy’s updated foreign entity of concern (FEOC) guidance, this material would also not qualify for tax credits on this basis.  

As such, this is a prime example of an automotive company prioritising access to a large proportion of its future nickel requirements over IRA-qualifying materials. Despite the potential advantage of the speed at which this plant could be constructed, Indonesia still faces significant scrutiny over the ESG standards of its nickel production, which range from carbon intensity, working conditions, and deforestation/biodiversity loss associated with mining and tailings storage. However, Ford has previously described its direct involvement in the project’s development as an opportunity to “ensure the nickel is mined in line with our company’s sustainability targets, setting the right ESG standards as we scale.”  

As the pool of currently available IRA-compliant nickel decreases further, Ford will likely be joined by other Western companies that may have no choice but to invest in the world’s largest source of metals critical for EV batteries.