Ford invests in a $4.5 billion nickel facility in Indonesia

There is a likelihood that Ford Motor Co. F 1.22% will invest $4.5 billion in a nickel processing facility in Indonesia in order to secure a supply of key minerals used in electric vehicle batteries over the next few years. 

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PT Vale Indonesia PTNDY -0.22% TBK, which controls a large nickel-mining area on Sulawesi island in Indonesia, is also involved in the project, as is Zhejiang Huayou Cobalt Co., which is one of China's largest refineries. 

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“By adopting this framework, Ford will have direct control of where and how nickel is sourced in one of the most cost-effective ways in the industry,” said Lisa Drake, Ford's vice president of EV industrialization.

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The facility is expected to begin commercial operations in 2026, when a process called High-Pressure Acid Leaching, or HPAL, will be used to process the minerals. There is the possibility that Ford might be able to secure raw materials through the factory in order to reach its target of producing approximately two million electric vehicles within the next year.

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With the largest nickel deposits in the world and lower mining costs in the Southeast Asian country, Indonesia tends to be one of the best locations in the world to mine nickel. A ban on exporting raw nickel has led companies to build processing facilities in the country.   

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The Indonesian government is attempting to attract global producers of electric vehicles to the country so that they may manufacture batteries and electric vehicles in the country. Hyundai Motor Group and LG Energy Solution, two companies from South Korea, are constructing a battery-cell plant that is scheduled to start production next year. The German auto giant Volkswagen also announced that it intends to invest with Chinese refiners in order to secure battery materials from Indonesia in the future. 

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Several environmental groups have expressed concerns about the mining operation in Indonesia and the risks associated with the processing of nickel, and they have urged global auto manufacturers to exercise caution when sourcing products from the country. Nickel reserves that exist in Indonesia overlap substantially with rainforests and are situated close to pristine waters revered for their coral reefs, making them a good candidate for exploration. Ford is investing in a type of plant known as a tailings treatment facility that can produce copious amounts of foul waste that must be handled carefully to prevent water from being contaminated by the waste.

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Having direct control over the nickel supply process would enable Ford to ensure that the nickel it uses is mined in a way consistent with its sustainability goals, according to Ms. Drake, the Ford executive.