Unlocking Profitable Nickel Production: Western Companies Need Chinese Partners, Says Eramet CEO
French miner Eramet‘s operations in Indonesia face challenges in nickel production. Chief executive Jérôme Baudelet stated that western companies struggle to remain profitable without collaboration with Chinese firms. He emphasized the need for Chinese technology and expertise to compete effectively in the market.
Eramet operates the Weda Bay mine in Indonesia in partnership with China’s Tsingshan Holding Group. Earlier this year, Eramet and Germany’s BASF canceled plans for a joint $2.6 billion nickel-cobalt refinery due to market difficulties. This project would have been the only fully western-owned nickel facility in Indonesia.
Baudelet explained that having Chinese companies build and operate processing plants can increase profitability for western firms. He pointed out that Chinese high-pressure acid leach (HPAL) technology is crucial for extracting battery-grade nickel efficiently.
Chinese companies dominate nickel processing in Indonesia, having invested heavily since a 2020 ban on nickel ore exports. Foreign firms must construct refineries onshore, leading to fewer western players. For instance, Ford partnered with Vale Indonesia and China’s Huayou Cobalt to build a nickel smelter.
What are the main challenges Eramet faces in Indonesia’s nickel production market?
Interview with Jérôme Baudelet, Chief Executive of Eramet
News Directory 3: Thank you for joining us, Mr. Baudelet. Eramet’s nickel production in Indonesia is facing some challenges. Can you explain the primary hurdles your company is currently encountering?
Jérôme Baudelet: Thank you for having me. The challenges we face largely stem from the competitive landscape dominated by Chinese companies. Since the 2020 export ban on nickel ore, Chinese firms have heavily invested in processing facilities here in Indonesia, making it difficult for Western companies like Eramet to maintain profitability without establishing collaborations. We need access to Chinese technology and expertise, particularly high-pressure acid leach (HPAL) technology, to effectively compete in extracting battery-grade nickel.
News Directory 3: You mentioned the importance of collaboration with Chinese firms. How does that partnership enhance profitability for Eramet?
Jérôme Baudelet: Collaborating with Chinese companies allows us to leverage their advanced processing plants and technologies, which significantly boosts our operational efficiency and profitability. For instance, having Chinese firms construct and run these plants can facilitate a smoother production process and scale that is essential given the current market conditions.
News Directory 3: Earlier this year, Eramet and BASF had to cancel plans for a $2.6 billion nickel-cobalt refinery. Can you share some insights on that decision?
Jérôme Baudelet: Yes, the decision to cancel the project was difficult, but it stemmed from a combination of market difficulties and strategic reevaluation. This project would have been the first fully Western-owned nickel facility in Indonesia, which underscores how crucial a supportive market environment is for such large investments. Unfortunately, with the decline in nickel prices and growing competition, it became clear that moving forward was not feasible under the current circumstances.
News Directory 3: Indonesia is set to increase its share of the world’s nickel production significantly. How are you responding to that trend?
Jérôme Baudelet: Indonesia currently accounts for 57% of the world’s refined nickel, and that’s expected to rise to 69% by the end of the decade. To adapt to that increasing supply, we are honing our focus on mining and exploration within the country. We anticipate that the global demand for nickel, especially for battery manufacturing, will create a high demand for ore supply in the coming years.
News Directory 3: You also mentioned the need for the U.S. to establish a critical minerals agreement with Indonesia. Can you elaborate on why this is important?
Jérôme Baudelet: Absolutely. Currently, a significant amount of Indonesian nickel does not meet the requirements to qualify for incentives under the U.S. Inflation Reduction Act (IRA). By establishing a critical minerals agreement, the U.S. could ensure a more stable and reliable supply of nickel, which is vital for their energy transition initiatives. Ignoring a key supplier like Indonesia could ultimately harm U.S. interests and competitiveness in the global nickel market.
News Directory 3: Thank you for your insights, Mr. Baudelet. It’s clear Eramet is actively navigating a complex and evolving landscape in the nickel sector. We appreciate your time today.
Jérôme Baudelet: Thank you for the opportunity to discuss these important issues.
Indonesia currently produces 57% of the world’s refined nickel, a figure expected to grow to 69% by the end of the decade. The decline in nickel prices and increased production in Indonesia have led to mine closures in other regions.
Baudelet called for the U.S. to establish a critical minerals agreement with Indonesia. Currently, most Indonesian nickel does not qualify for incentives under the Inflation Reduction Act (IRA). He warned that ignoring such a significant supplier could hurt U.S. interests in the nickel market.
Overall, Eramet aims to focus on mining and exploration in Indonesia, anticipating a need for more ore supply in the coming years.