Ford invests in Indonesian nickel-processing project to lock up goods
Published in Automotive News
Ford Motor Co. is partnering with mining companies from Indonesia and China to invest in a nickel-processing project as part of the Dearborn, Michigan, automaker's bid to shore up supplies of key raw materials for electric-vehicle batteries.
PT Vale Indonesia Tbk, a nickel producer in Indonesia, and China's Zhejiang Huayou Cobalt Co. on Thursday announced the deal with Ford, which involves all three companies taking equity stakes in the Pomalaa Block High-Pressure Acid Leaching, or HPAL, Project in Indonesia. The project represents a $4.5 billion investment, according to media reports. Ford did not disclose how much it was investing.
As competition in the automotive industry's EV shift intensifies, automakers increasingly are making investments to control their supply chains, including raw materials that are expensive and in short supply. Additionally, the critical mineral deposits often are found in countries far from North America, where mining and mineral processing encounter stiff regulatory resistance — especially in the United States.
Stellantis NV CEO Carlos Tavares said Wednesday he's not sure there will be enough raw materials to replace the existing fleet of fossil fuel-powered vehicles with all-electric vehicles. And Ford's crosstown rival General Motors Co. has purchased equity stakes in the mining industry as it aims to secure its raw materials supply.
The project will process ore from a PT Vale Indonesia mine to produce mixed hydroxide precipitate, or MHP, a nickel product used in EV batteries. The companies said the venture — which is slated to begin commercial operations in 2026 — could produce up to 120 kilotons per year of MHP. Construction on the plant began late last year.
For Ford, the deal is aimed at locking up raw materials for EV batteries as it pushes to reach a 2 million EV production run rate by the end of 2026. The automaker said in a news release that the project, combined with a separate supply agreement it's working on with Huayou for a precursor cathode active material needed to make lithium-ion batteries as well as with its other nickel supply deals, will "significantly (contribute) to support its EV production targets by the end of 2026."
"This framework gives Ford direct control to source the nickel we need — in one of the industry's lowest-cost ways — and allows us to ensure the nickel is mined in line with our company's sustainability targets, setting the right (environmental, social and corporate governance) standards as we scale," Lisa Drake, Ford's vice president of EV industrialization, said in a statement.
Indonesia, where investment has been growing as the southeast Asian country with the world's largest nickel reserves and a ban on raw nickel exports, is not one of nearly two dozen countries with which the U.S. shares a free trade agreement.
That's significant if Ford wants the minerals to help their vehicles qualify for heavy consumer discounts. New EV tax credits passed through the Inflation Reduction Act require batteries be built with at least 40% of the value of their minerals coming from the United States or a country it shares a free trade agreement with, with the percentage increasing every year.
The new rules have proven a source of tension for the Biden administration — on Capitol Hill, with international allies and with such global automakers as Ford and GM.
After initial frustrations over the legislation from the European Union and Japan, the Biden administration has been working to ink critical mineral deals that would allow the allied nations to qualify, despite lacking a formal free trade agreement. A deal with Japan was announced earlier this week.But those efforts have drawn blowback from both Democrats and Republicans in Congress, who complain that the Biden administration is exceeding its authority and going around Congress jn building such deals. To support its $50 billion electrification plan, Ford has been moving to lock up its supplies of EV components and the raw materials needed to make them.
"Battery cell manufacturing capacity is the foundation of our EV business. And to support it, we are now building out supply chains — just as we said we would — going deeper than ever before to secure the raw materials that are necessary," Drake said last July, when the automaker said it had secured 100% of the battery capacity it needs to hit its EV production targets through the end of this year. "We have direct-sourced our lithium and nickel to scale battery production more quickly and keep the volumes and the costs more stable over time."
At that time, the company said it had secured most of the nickel it needs through 2026 and said it was "exploring" the three-way nickel processing project that was made official this week.
©2023 www.detroitnews.com. Visit at detroitnews.com. Distributed by Tribune Content Agency, LLC.