Automobile manufacturer Ford Motor has signed a definitive agreement with PT Vale Indonesia and Chinese mining company Zhejiang Huayou Cobalt (Huayou) to build a $4.5bn nickel processing plant in Kolaka, Southwest Sulawesi, Indonesia.

Subject to regulatory approvals, the project named, Pomalaa Block High-Pressure Acid Leaching (HPAL) is expected to generate approximately 120kt annually of contained nickel in the form of mixed hydroxide precipitate (MHP).

MHP is a low-cost nickel product that is used in electric vehicle (EV) batteries along with nickel-rich cathodes.

All three firms will have equity investments in the project and are expected to offer sustainable nickel production in Indonesia and help make affordable EV batteries.

The project will process ore drawn from the Pomalaa Block mine of PT Vale Indonesia to produce MHP.

PT Kolaka Nickel will operate the HPAL plant.

The early site preparations are underway, with construction works expected to commence this year, and commercial operations set to begin in 2026.

The partnership between the three companies will provide essential materials for the auto industry to shift to EVs.

This collaboration is also expected to improve Indonesia’s EV manufacturing industry and aid Ford’s plan to deliver two million EV vehicles by 2026.

Ford and Huayou signed a separate supply agreement for a precursor cathode active material necessary for producing lithium-ion for the project.

Ford Model e EV industrialization vice-president Lisa Drake said: “This framework gives Ford direct control to source the nickel we need in one of the industry’s lowest-cost ways and allows us to ensure the nickel is mined in line with our company’s sustainability targets, setting the right ESG standards as we scale.

“Working this way puts Ford in a position to help make EVs more accessible for millions and to do it in a way that helps better protect people and the planet.”

PT Vale Indonesia CEO Febriany Eddy said: “This agreement shows it’s not just about what we mine, but how we do it.

“We embed our environmental, social and governance (ESG) standards into everything we do, and the result is a unique collaboration with global automaker Ford and leading global mineral processor Huayou to jointly invest in this project.

“This global cooperation is in line with Indonesia’s vision to build a domestic EV ecosystem and makes PT Vale an important contributor toward addressing the world’s decarbonization challenge, with an investment that will generate local economic benefits and ensure the optimal utilization of Indonesia’s nickel resources.”

Last November, PT Vale Indonesia broke ground on the Pomalaa Block, which is deemed a National Strategic Project and is estimated to create approximately 12,000 construction jobs.

Huayou senior vice president George Fang said: “This strategic cooperation is one of the flagship projects under the Belt and Road Initiative and Global Maritime Fulcrum synergy, also links Indonesia nickel and cobalt resources to EV makers via Huayou’s advanced capability and HPAL technology, is a great business model of EV value chain and will make a splendid contribution to the EV industry ecology development of Indonesia.

“The MHP produced in this project will be processed further into nickel sulphate, cobalt sulphate Li-ion battery materials, and ternary PCAM.

“The joint efforts of three parties aim to create a very positive influence on the economy and social development of Indonesia as well as the global EV industry and its supply chain.”