(Yicai Global) Nov. 14 -- Zhejiang Huayou Cobalt, a Chinese supplier of raw minerals for electric vehicle batteries, will pay IDR764 billion (USD48.7 million) for a majority stake in the limonite ore refinery joint venture that it is setting up with Brazilian iron ore firm Vale in Indonesia.

Huayou will invest IDR764 billion through its Hong Kong subsidiary Hua Qi to take 80 percent equity in the limonite ore refinery JV with Vale’s Indonesia arm PT Vale Indonesia, Huayou said yesterday. The remaining equity will be owned by PT Vale Indonesia. 

PT Kolaka Nickel Indonesia will build a refinery to process limonite from Vale’s Pomalaa mine in the Southeast Asian country. The project will have an annual production capacity of up to 120,000 tons of nickel, the two parties said in April.

“Our cooperation is a perfect combination of PT Vale Indonesia’s mineral resource advantage and Huayou’s advanced high-pressure acid leach technology advantage to achieve and sustainable mineral resource development,” said Huayou Chairman Chen Xuehua.

“We will also work closely with PT Vale Indonesia to ensure the adoption and implementation of leading environmental, social, and corporate governance practices,” he added.

Ford Motor is expected to be a major customer. The US automotive giant said in July that it will invest in the JV to secure output. Huayou will supply battery raw materials to Michigan-based Ford after the project is completed, the Tongxiang, eastern Zhejiang province-based company said at that time.

Huayou and Vale have many projects on the go in Indonesia. In September, they linked arms to build a second high-pressure acid leach plant that will process limonite ore from Vale’s Sorowako mine in the country. This facility has a designed capacity of 60,000 metric tons of nickel in mixed hydroxide precipitate a year. Huayou said in June that it will raise CNY17.7 billion (USD2.5 billion) through a private placement of new shares to build refineries in Indonesia and China.

Thanks to surging demand for battery raw materials, Huayou’s net profit jumped 27 percent in the first nine months from a year earlier to CNY3 billion (USD425.4 million) while revenue more than doubled to CNY48.7 billion, according to its latest financial results.

Editor: Kim Taylor