Indonesia Battery-Grade Nickel Refining Plant Feasibility Study, EV Battery Supply Chain Market Analysis & Investment Assessment

Executive Viability Abstract

Comprehensive feasibility study for a 50,000 tpa High-Pressure Acid Leach (HPAL) nickel refining plant in Central Sulawesi, Indonesia, targeting the EV battery supply chain with an estimated IRR of 18.4% and a total Capex of $1.45 billion.

## 1. Executive Feasibility Thesis This study assesses the bankability of a 50,000 tonnes per annum (tpa) Nickel-equivalent refining plant in the Morowali Industrial Park, Indonesia. The thesis rests on the structural deficit of battery-grade nickel (Class 1) and Indonesia’s strategic ban on raw ore exports. **Named Assumptions:** - **Local Market Size:** Indonesia targets 140 GWh of domestic battery cell production by 2030; our plant provides ~25% of the precursor material required for this local ambition. - **Cost of Capital (WACC):** 10.5% (includes 3.5% country risk premium and 7% cost of debt). - **Capacity Utilization:** Ramp-up scheduled at 60% (Year 1), 85% (Year 2), and 95% (Year 3 onwards). - **Nickel Price:** Base case LME Nickel price of $18,500/tonne with a $2,000/tonne premium for Nickel Sulfate. ## 2. Technical Feasibility & Operational Specifications The project utilizes High-Pressure Acid Leach (HPAL) Generation 3 technology to process low-grade Limonite ore (0.9% - 1.2% Ni content) into Mixed Hydroxide Precipitate (MHP) and subsequently Nickel Sulfate hexahydrate. **Operational Specifications:** - **Feedstock Requirement:** 4.5 million wet metric tonnes (wmt) of limonite per annum. - **Energy Consumption:** 120 MW continuous load, supplied via dedicated captive coal/biomass hybrid plant. - **Water Intensity:** 25 cubic meters per tonne of nickel produced, sourced from local river diversions with 80% recycling rate. - **Output:** 50,000 tpa Nickel content in Sulfate; 4,500 tpa Cobalt content in Sulfate byproduct. ## 3. Detailed Capital Expenditure (Capex) The total initial investment is estimated at $1.455 Billion. Costs are based on 2023-2024 benchmarked EPC contracts in the Southeast Sulawesi region. | Item | Cost (USD Millions) | Reasoning/Unit Basis | | :--- | :--- | :--- | | **HPAL Autoclaves (3 units)** | $280 | Titanium-lined high-pressure vessels, $93.3M per unit. | | **Sulfuric Acid Plant** | $150 | 4,000 tpd capacity to ensure reagent self-sufficiency. | | **Counter-Current Decantation (CCD)** | $120 | 7-stage washing circuit for maximum Ni/Co recovery. | | **Dry Stack Tailings Facility** | $210 | Environmentally superior to deep-sea tailings; includes filtration plants. | | **Refining & Crystallization** | $185 | Purification circuit to reach 99.9% battery-grade purity. | | **Captive Power Plant (120MW)** | $160 | $1.33M per MW installed capacity (EPC cost). | | **Port & Logistics Infra** | $90 | Deep-water jetty for ore barges and chemical imports. | | **EPCM & Contingency (18%)** | $260 | Standard industry margin for complex hydrometallurgical builds. | ## 4. Realistic Operating Expenditure (Opex) Opex is calculated on a 'per lb of Nickel' basis to align with industry standards, targeting a bottom-quartile position on the global cost curve. - **Limonite Feedstock:** $22/wmt (delivered). Unit cost: $1.98/lb Ni. - **Sulfur (Reagent):** $140/tonne (imported). Unit cost: $0.65/lb Ni. - **Limestone/Neutralization:** $18/tonne (local source). Unit cost: $0.30/lb Ni. - **Electricity:** $0.065/kWh (captive generation). Unit cost: $0.42/lb Ni. - **Labor (1,200 FTE):** $18M/year (Mix of 15% expatriate specialists, 85% local). Unit cost: $0.16/lb Ni. - **Maintenance:** 3% of Capex annually. Unit cost: $0.40/lb Ni. - **Total Cash Cost (C1):** Estimated at **$3.91/lb Ni** (after Cobalt credit of ~$1.20/lb). ## 5. Financial Model & Sensitivity Range **Base Case:** - **NPV (10.5% discount):** $920 Million. - **IRR:** 18.4%. - **Payback Period:** 5.8 years from commissioning. **Sensitivity Analysis:** | Scenario | Variable Change | IRR (%) | NPV (USD M) | | :--- | :--- | :--- | :--- | | **Optimistic Case** | +15% Ni Price / +5% Yield | 24.2% | $1,450 | | **Base Case** | Current Forecasts | 18.4% | $920 | | **Pessimistic Case** | -20% Ni Price / +15% Opex | 9.8% | -$85 | *Note: The project remains viable as long as Nickel prices stay above $15,500/tonne, given the low C1 cost structure in Indonesia.* ## 6. Regulatory & Environmental Compliance Investment in Indonesia requires strict adherence to the **Omnibus Law** and specific mineral processing regulations. - **Licensing:** IUP-OPK (Production Operation Permit for Processing) and NIB (Business Identification Number) via the OSS system. - **Fiscal Incentives:** Eligibility for a 10-year 'Tax Holiday' (Corporate Income Tax reduction) under BKPM Regulation 7/2020 for investments >IDR 5 Trillion. - **Environmental (AMDAL):** Indonesia has banned Deep Sea Tailings Placement (DSTP) for new projects. This study mandates **Dry Stack Tailings (DST)**, increasing Capex but significantly reducing ESG risk and facilitating off-take agreements with Western OEMs (Tesla, VW, etc.). - **TKDN (Local Content):** Minimum 30% local content requirement for construction and services to maintain regulatory standing. ## 7. Strategic Takeaways 1. **Vertical Integration is Key:** Securing long-term limonite supply contracts with local miners is the primary risk-mitigation strategy. 2. **ESG Differentiation:** By opting for Dry Stack Tailings and a hybrid power model, the project commands a 'Green Nickel' premium in the EU and US markets. 3. **Logistics Advantage:** Proximity to the Weda Bay/Morowali cluster reduces inland transport costs to near zero, as ore is delivered via sea-barge directly to the plant's jetty.