Eramet, BASF cancel plan to invest $2.6 billion in refining complex in Indonesia

(Reuters) -French miner Eramet said on Monday it had decided, along with Germany's BASF, to cancel a $2.6 billion joint investment project in a nickel-cobalt refining complex in Weda Bay, Indonesia.

"After a thorough evaluation, including discussions about project execution strategy, both partners have decided against this investment," Eramet said in a news release, without elaborating.

"Eramet will continue to evaluate potential investments in the nickel electric vehicle battery value chain in Indonesia and will keep the market informed in due course", it added.

An Indonesian official said the companies have informed the government about the decision, stating that there are several high pressure acid leach (HPAL) facilities in the country already and on the pipeline.

"I think this cancellation was because they saw that there was already a lot of HPAL in Indonesia, so it is easier to get MHP (mixed hydroxide precipitate), so there was no need to spend large capex to build it by themselves," said Septian Hario Seto, senior official at Indonesia's Coordinating Ministry of Maritime and Investment Affairs.

A number of Chinese companies and their local partners have invested in HPAL in Indonesia as the nickel-rich country aims to build a homegrown EV industry.

In January 2023, Indonesian officials had said the French group and BASF were close to finalising a $2.6 billion investment in the production of nickel for use in batteries for electric vehicles. The project was based on resources extracted from Eramet's mine in Weda Bay.

Eramet had then confirmed negotiations were underway, but said the project was subject to a final investment decision.

(Reporting by Alban Kacher; Editing by Angus MacSwan and Mark Potter)