Indonesia Nickel Processing Battery Materials Plant Feasibility Study with Global EV Supply Chain Outlook

Executive Viability Abstract

This feasibility study assesses the development of a 60,000 tpa High-Pressure Acid Leaching (HPAL) facility in the Morowali Industrial Park (IMIP), Indonesia. The project leverages Indonesia's massive limonite reserves to produce Mixed Hydroxide Precipitate (MHP) for the global EV battery supply chain, forecasting an IRR of 19.8% under base-case market conditions.

## Executive Feasibility Thesis Indonesia holds approximately 21 million metric tons of nickel reserves, representing 22% of the global total. With the 2020 ban on raw ore exports, the transition to high-value battery materials (Class 1 Nickel) is the primary driver for domestic industrial growth. This project focuses on the HPAL (High-Pressure Acid Leaching) route, which is technically superior for processing low-grade limonite ore into Mixed Hydroxide Precipitate (MHP), the preferred precursor for NCM (Nickel-Cobalt-Manganese) batteries. The thesis rests on the structural deficit in global Class 1 nickel expected by 2027, driven by a 15% CAGR in EV adoption across the EU and North America. ## Technical Feasibility & Operational Specifications - **Process Route:** 3-Train HPAL (High-Pressure Acid Leaching) sequence. - **Feedstock:** 4.5 million wmt/year of Limonite ore (Nickel grade: 1.15% - 1.3%; Iron >25%). - **Expected Output:** 60,000 tonnes per annum (tpa) of contained Nickel and 6,500 tpa of contained Cobalt in MHP form. - **Capacity Utilization:** Ramp-up to 70% in Year 1, 90% in Year 2, and 100% steady-state by Year 3. - **Recovery Efficiency:** 91% for Nickel; 88% for Cobalt. - **Utilities:** 220 MW dedicated captive coal-fired plant with integrated carbon capture pilot; 12,000 m3/day water consumption from local watersheds with closed-loop recycling. ## Detailed Capital Expenditure (Capex) Total Estimated Initial Investment: **USD 2.25 Billion**. | Item | Cost (USD) | Reasoning & Unit Costs | | :--- | :--- | :--- | | **HPAL Autoclaves & Pressure Vessels** | $450M | 3 Units @ $150M/unit. Specialized titanium-clad steel required for high acidity/temperature. | | **Sulfuric Acid Plant** | $320M | 4,500 tpd capacity. Essential for leaching; unit cost ~ $71,000 per daily ton capacity. | | **Dry Stack Tailings (DST) Facility** | $280M | Required to meet international ESG standards over Deep Sea Tailings Placement (DSTP). | | **Captive Power Plant (220MW)** | $330M | EPC cost of $1.5M/MW including grid synchronization for high-uptime processing. | | **Ore Preparation & Beneficiation** | $180M | Wet-grinding circuits and slurry pipelines from mine site to refinery. | | **Port & Logistics Hub** | $140M | Dedicated jetty for 50,000 DWT vessels; bulk handling for sulfur and lime. | | **EPCM & Owner's Costs** | $350M | 15% of direct costs for engineering, procurement, and construction management. | | **Contingency (10%)** | $200M | Buffer for material price volatility and local logistics delays. | ## Realistic Operating Expenditure (Opex) Annual Operating Cost (Steady State): **USD 540 Million / Year**. - **Ore Procurement:** $162M/year. Calculated at $36/wmt (HPM - Harga Patokan Mineral) based on LME index linked pricing. - **Sulfur (Raw Material):** $110M/year. Sourced globally at $140/ton; required for sulfuric acid production. - **Limestone/Reagents:** $65M/year. Locally sourced at $25/ton for acid neutralization. - **Labor:** $48M/year. 1,800 staff total. Expat technicians ($120k avg) and local operators ($950/mo avg). - **Energy/Maintenance:** $105M/year. Coal at $85/ton for power and 3% of Capex for annual equipment maintenance. - **Unit Cash Cost (C1):** Estimated at **$9,000 per ton of Ni equivalent** (after Cobalt credit). ## Financial Model & Sensitivity Range on ROI/IRR **Assumptions:** - **WACC:** 10.5% (Reflecting Indonesia-specific risk premium and sector volatility). - **Nickel Price:** Base Case $18,500/t; Optimistic $24,000/t; Pessimistic $15,000/t. - **Tax:** 20% Corporate Tax with a 10-year Tax Holiday (BKPM incentive). | Case | Variable Change | IRR (%) | Payback Period | | :--- | :--- | :--- | :--- | | **Base Case** | Nickel @ $18.5k/t | **19.8%** | 5.2 Years | | **Optimistic** | Nickel @ $24k/t; +10% Yield | **27.4%** | 3.8 Years | | **Pessimistic** | Nickel @ $15k/t; +15% Opex | **9.4%** | 8.1 Years | ## Regulatory & Environmental Compliance Frameworks - **AMDAL (Environmental Impact Assessment):** Primary permit for land clearing and industrial operations. Requires rigorous Biodiversity Action Plans (BAP). - **OSS-RBA System:** Licensing through the Risk-Based Approach Online Single Submission system for 'High Risk' industrial classification. - **SIMPONI & PNBP:** Compliance with non-tax state revenue payments for mineral royalties. - **ESG Requirements:** EU Battery Regulation (2023/1542) compliance is mandatory for export to the European market, focusing on carbon footprint declarations and supply chain due diligence regarding "blood nickel." ## Strategic Takeaways 1. **Vertical Integration:** Success depends on securing long-term limonite supply contracts with IUP (Mining License) holders to mitigate price spikes in the HPM index. 2. **Waste Management:** The shift to Dry Stack Tailings is no longer optional; it is a prerequisite for Western OEM (Tesla/VW/Ford) bankability and off-take agreements. 3. **Geopolitical Balancing:** While technology is predominantly Chinese (SMM/Envision), project financing should seek OECD-linked debt to qualify for potential IRA (Inflation Reduction Act) tax credit considerations in the US market.