Ford signed an agreement with international partners today to establish a $4.5 billion nickel processing facility in Indonesia. The crucial battery material will help the American automaker achieve its ambitious plans for electric vehicle production.
Ford will work with PT Vale Indonesia Tbk and Zhejiang Huayou Cobalt Co. from China on the project. Indonesia has the largest nickel reserves on earth, reports Reuters, and has been courting international automakers such as Tesla. However, in 2020, it banned the export of unprocessed ore.
Ford, Huayou, and PT Vale call this a three-way processing project that will produce 120,000 tons of contained nickel per year. That will come in the form of a lower-cost product called mixed hydroxide precipitate, which can be used in the manufacturing of batteries.
Read: Skyrocketing Nickel Prices Could Make EVs More Expensive
The deal will be combined with a separate supply agreement that is still being negotiated, between American and Huayou for a precursor cathode material that will help Ford satisfy its lithium-ion battery needs.
“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 ESG standards as we scale,” said Lisa Drake, vice president for Ford Model e EV industrialization. “Working this way puts Ford in a position to help make EVs more accessible for millions, and to do it in a way that helps better protect people and the planet.”
Although environmental groups have accused Indonesia’s nickel production of polluting key production sites and turning the waters in some coastal waters red, Indonesia’s president, Joko Widodo, has vowed to clean up the industry.
The country will step up its scrutiny of mining companies and order them to manage nurseries and to reforest depleted mines. Meanwhile, Ford plans to produce in excess of 2 million vehicles per year by 2026.
