Automotive company Stellantis is in discussions with Vale Indonesia and China’s Huayou Cobalt regarding an investment in a high-pressure acid leaching plant in Indonesia, reported the Financial Times (FT).

The facility is designed to process low-grade nickel ore into battery-grade metal, which is essential for Stellantis’ EV production expansion plans.

The size of the investment by Stellantis, Vale and Huayou Cobalt has not been finalised, reported the news agency, citing three sources familiar with the negotiations.

However, the potential deal is seen as a significant step for Indonesia, which is keen to attract Western investors to its nickel sector.

Over the next ten years, Stellantis has committed to investing €50bn ($54.12bn) in electrification, aiming for net-zero carbon emissions by 2038.

Recent years have seen the car manufacturer signing offtake agreements with battery materials suppliers around the globe.

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Indonesia, with the largest nickel reserves globally, has become a dominant force in the nickel market, accounting for more than 50% of global supplies.

The country is now seeking to diversify its nickel industry’s reliance on China by engaging with Western carmakers and exploring investment opportunities in the US and European markets.

In 2020, exports of nickel ore were banned by the Indonesian Government to encourage foreign companies to invest in smelters, battery manufacturing facilities and, ultimately, in the production of EVs.

Earlier this year, Vale Canada (VCL) and Sumitomo Metal Mining (SMM) agreed to sell around 14% of their combined stake in PT Vale to state-run mining industry holding company MIND ID.

MIND ID will become the largest shareholder in PT Vale, increasing its stake in the company to 34% from 20%.

Upon completion of the deal, VCL and SMM will retain 33.9% and 11.5% stakes, respectively, while nearly 20.6% will remain publicly traded on the Indonesia Stock Exchange.