South Korea’s POSCO Holdings Inc has announced it has signed a preliminary agreement with Chinese mining firm Ningbo Liqin for the joint production of nickel for electric vehicle (EV) batteries in Indonesia.

The two companies have agreed in principle to build a process plant on the Indonesian island of Sulawesi capable of producing 120,000 tons of mixed nickel-cobalt hydroxide precipitate (MHP) per year, enough for some 1.2 million EV battery packs. Ningbo Liqin already has a separate nickel refining facility in Indonesia.

Construction of the first phase of the new plant is expected to be completed in 2025, with an initial production capacity of 60,000 tons of MHP per year to be used in EV battery cathode materials. The facility will supply EV battery plants located both in Indonesia and overseas.

Posco has a significant presence in Indonesia, including a steel manufacturing joint venture with state-owned Krakatau Steel and other commodity and energy businesses. South Korea’s LG Energy Solution and China’s CATL both plan to establish EV battery production facilities in Indonesia.

Posco acquired a 30% stake in Australia’s Ravensthorpe Nickel Mine in 2021 and is currently also building a high-purity nickel refining plant South Korea.

Indonesia has the largest reserves of nickel in the world and banned the export of nickel ore in 2020 in order to attract value-added processing investment. It plans to ban the export of raw bauxite and copper later this year.