Indonesia Nickel Processing and Battery Materials Plant Feasibility Study

Executive Viability Abstract

This feasibility study evaluates the establishment of a High-Pressure Acid Leaching (HPAL) facility in the Weda Bay region, Indonesia, targeting an annual production of 50,000 tons of Mixed Hydroxide Precipitate (MHP). With a projected IRR of 21.4% in the base case and a total Capex of $885 million, the project leverages Indonesia's dominant limonite reserves and favorable regulatory environment to meet the surging global demand for Class 1 nickel in the EV battery supply chain.

## Executive Feasibility Thesis The project centers on the strategic shift from stainless steel-grade Nickel Pig Iron (NPI) to battery-grade nickel intermediates. Indonesia’s total nickel ore reserves (approx. 21 million metric tons) provide a decades-long runway. The thesis assumes that the global transition to EVs will maintain a supply deficit for sulfate-ready nickel. By processing low-grade limonite ore ($<1.3% Ni$) via HPAL technology, the project captures value from ore previously discarded as overburden. The facility is positioned in a designated Special Economic Zone (SEZ) to utilize tax holidays (PMK 130/2020) and streamlined licensing. ## Technical Feasibility & Operational Specifications The plant will employ the 3rd Generation HPAL process, utilizing three titanium-clad autoclaves to maximize throughput while minimizing leak-related downtime. - **Feedstock Capacity:** 4.2 million wet metric tons (wmt) per annum of limonite ore. - **Output Specification:** MHP containing 38% Nickel and 4% Cobalt content. - **Nameplate Utilization:** Year 1: 75% (ramp-up); Year 2: 92%; Year 3+: 96%. - **Energy Source:** 120MW captive coal-fired power plant with integrated flue-gas desulfurization (FGD), transitioning to 20% biomass co-firing by Year 5. - **Tailings Management:** Dry Stack Tailings (DST) to comply with the Indonesian government's preference against Deep Sea Tailing Placement (DSTP). ## Detailed Capital Expenditure (Capex) The total initial investment is estimated at $885 million, categorized as follows: - **Autoclave & High-Pressure Circuit:** $320,000,000. Includes three 5.5m x 35m titanium autoclaves and flash tanks ($106M/unit). - **Captive Power Plant (120MW):** $144,000,000. Unit cost of $1.2M/MW based on recent EPC contracts in Central Sulawesi. - **Sulfuric Acid Plant (4,000 tpd):** $95,000,000. Essential for on-site reagent production to reduce logistics costs. - **Dry Stack Tailings Facility (DSTF):** $78,000,000. Includes filter presses and conveyor systems for environmental compliance. - **Port & Logistic Infrastructure:** $42,000,000. Jetty construction for 50,000 DWT vessels and haul road paving. - **EPCM & Owner's Costs:** $115,000,000. 13% of direct costs, covering international engineering and local project management. - **Contingency (P50):** $91,000,000. Weighted average of 10-15% across line items. ## Realistic Operating Expenditure (Opex) Operating costs are projected on a per-lb of nickel basis, targeting the first quartile of the global cost curve. - **Ore Procurement:** $24.00/wmt. Delivered price including 15km haulage and royalty (HPM price benchmark). - **Sulfur Reagents:** $135.00/ton. Sourced from Middle Eastern refineries, inclusive of shipping to Weda Bay. - **Labor Costs:** $22,500,000/year. Based on 1,200 employees; $1,100 avg/month for local staff and $5,000 for expatriate technical leads. - **Maintenance & Spares:** $26,550,000/year. Calculated as 3.0% of total plant and equipment Capex. - **Electricity Generation:** $0.065/kWh. Based on internal coal sourcing at Domestic Market Obligation (DMO) prices. - **Total C1 Cash Cost:** $11,200/ton of Ni (after Cobalt credit of $28,000/t). ## Financial Model & Sensitivity Range on ROI/IRR **Assumptions:** WACC: 11.2%; Tax Holiday: 10 years (100%), 2 years (50%); LME Nickel Base Price: $18,500/t. | Case | Ni Price ($/t) | Yield (%) | IRR (%) | NPV @ 11.2% ($M) | ROI (10-yr) | | :--- | :--- | :--- | :--- | :--- | :--- | | **Pessimistic** | $14,500 | 88% | 12.8% | $94 | 145% | | **Base Case** | $18,500 | 94% | 21.4% | $612 | 288% | | **Optimistic** | $23,000 | 97% | 32.1% | $1,280 | 442% | *Sensitivity Analysis:* A 10% increase in Sulfuric Acid costs results in a 1.4% drop in IRR, whereas a 10% decrease in Nickel recovery yields (below 85%) threatens project viability (IRR < 9%). ## Regulatory & Environmental Compliance Frameworks - **Law No. 3/2020:** Mandates 100% domestic processing; this project fulfills the 'downstreaming' mandate for IUP (Mining Business License) holders. - **AMDAL (Environmental Impact Assessment):** Primary focus on the water balance of the HAL process and the stability of the DSTF in a high-seismic zone. - **TKDN (Local Content):** Project targets 42% local content in construction and 85% in operations to qualify for maximum government incentives. - **Carbon Tax (Harmonized Tax Law):** Budgeted at $2.10 per ton of CO2 equivalent above the industry cap, starting 2025. ## Strategic Takeaways 1. **Integration:** Success is contingent on securing long-term limonite supply contracts with IUP holders to mitigate HPM price volatility. 2. **Technological De-risking:** Utilizing proven Gen-3 HPAL designs (similar to PT Huayue or PT QMB) significantly reduces the multi-year commissioning delays seen in Gen-1 projects. 3. **ESG Edge:** The adoption of Dry Stack Tailings over DSTP provides a clear path to European and US supply chains (G7 standards), which are increasingly critical for premium off-take pricing.