(Yicai Global) April 29 -- Shares of Huayou Cobalt, a Chinese supplier of raw minerals for lithium batteries, jumped after it announced a partnership with global mining giant Vale to build a plant in Indonesia to process nickel minerals for electric car batteries, saying that it will be a leading supply platform.

Huayou [SHA: 603799] closed up 5 percent at CNY82.31 (USD12.5) today. The wider Shanghai market also rose, gaining 2.1 percent.

Huayou has signed a framework cooperation agreement with Vale Indonesia and will register a project company in the Southeast Asian country to develop the plant, the Zhejiang-based firm said in a statement released late yesterday.

The processing plant will use limonite extracted by Vale from the Pomalaa mine to produce mixed hydroxide precipitate product, with a potential annual output of as much as 120,000 metric tons of nickel, Huayou said. The plant will use the Chinese company’s high-pressure acid leaching process, it added.

Huayou said Vale has the right to acquire up to a 30 percent stake in the project, but did not estimate the size of the investment in it. Huayou will underwrite all products from the new plant, but Vale can also obtain the right to sell them via its stake in the project firm, it noted.

The parties will sign definitive agreements no later than six months after the signing of the FCA. Construction, already started by Vale, will accelerate with the aim of finishing within three years, according to a statement issued by Vale Indonesia yesterday. Vale Canada has a 43.79 percent stake in Vale Indonesia, it said.

Editor: Peter Thomas