German chemicals giant BASF and French miner Eramet are nearing a partnership deal to invest $2.6 billion in Indonesia to process nickel for use in electric vehicle (EV) batteries. The news comes as Indonesia, home to the world’s largest nickel reserves, has been attracting global companies to produce EVs and batteries in the country. Indonesian investment ministry said the project investment would be worth around $2.6 billion.

“We would like to convey that our agreement with Eramet is at the final stage. It is likely that our decision will be taken in the first half of 2023,” BASF CEO Brudermüller said.

The project would be developed to produce mixed hydroxide precipitate (MHP) from nickel through a high-pressure acid leach (HPAL) plant. MHP is used in electric vehicle batteries.

Indonesian investment minister Lahadalia welcomed the news and said the plan was in line with the government’s target to make Indonesia a “world-class EV player”.

Indonesia is also nearing agreements with Chinese automaker BYD and Tesla to invest in EV production.

Once the biggest supplier of nickel to the global stainless steel industry, nickel producers in Indonesia have been retooling so they can take advantage of the growing demand for nickel in batteries.

While overall battery demand for nickel makes up a small portion of the 3 million tonne market, Indonesia is primed to become the world’s biggest supplier as it builds out some 4.5 million tonnes of capacity that can supply both markets over the next five years.

According to an Eramet presentation, the planned new plant is expected to start production in early 2026, with an output capacity of up. to 67,000 tonnes of nickel and around 7,000 tonnes of cobalt per year contained in MHP.

Investment into MHP production in Indonesia has so far been dominated by Chinese companies such as Zhejiang Huayou Cobalt and Tsingshan Holding Group.

Eramet would own 51% of the project, while BASF would hold the remaining 49%.

Separately, Australia’s Nickel Industries said on Wednesday it will raise $471 million in capital to help fund the acquisition of several nickel projects in Indonesia.

To develop battery nickel, the company will also look to collaborate with Shanghai Decent Investment Group, a unit of the Tsingshan Group.