Indonesian mining company PT Vale Indonesia has signed a deal with the China-based Shandong Xinhai Technology and a unit of China Baowu Steel Group to invest in a proposed nickel processing plant on the island of Sulawesi.

Reuters reported that under the agreed terms, the companies will set up a joint venture (JV) to develop the nickel project.

Vale chief finance officer Bernardus Irmanto told reporters that Vale will own a controlling stake of 49% in the JV.

Shandong Xinhai and Baowu will jointly own a 51% interest via its Taiyuan Iron & Steel (TISCO) unit.

Vale Indonesia CEO Febriany Eddy said that the project is estimated to cost around $2.1bn.

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In addition, the partners are considering the addition of a stainless steel plant at a later stage.

At the deal signing ceremony, Eddy said: “With this signing, we can proceed and accelerate construction work in the field so it can be completed by 2025 at the latest.”

Shandong Xinhai chairman Wang Wenlong said that the Bahodopi project would be Indonesia’s first liquefied natural gas-fuelled nickel plant.

Vale and its partners are also developing a hydroxide precipitate plant elsewhere on Sulawesi island.

Located in Pomalaa, the facility will produce 120,000t of mixed hydroxide precipitate a year, which will be used in batteries for electric vehicles.

Last year, PT Vale Indonesia signed a cooperation framework agreement with TISCO and Shandong Xinhai Technology for the production of stainless-steel raw material nickel pig iron in Indonesia.

The agreement was signed for the construction and operation of the Bahodopi processing facility, which has an estimated annual nickel production capacity of 73,000t.