China’s GEM seeks to double stake in Indonesia nickel project as Tsingshan cuts back

Reuters – China’s GEM Co Ltd aims to double its stake in an Indonesian nickel development now delayed until 2022, taking majority control and buying most of stainless steel maker Tsingshan Holding Group’s shares in the closely watched project.

GEM, a supplier of battery materials used in electric vehicles, said on Monday it has signed a framework memorandum of understanding for its Jingmen unit to double its holding to 72% from 36%, including taking over a 21% stake previously held by Tsingshan, according to a filing to the Shenzhen Stock Exchange.

Once implemented, the move will cement GEM’s control of the project, which is being developed amid a global shortage of nickel.

Under the agreed deal, Guangdong Brunp, the recycling arm of battery maker Contemporary Amperex Technology Co Ltd (CATL), will go down to a 10% stake from 25% previously. That leaves Indonesia Morowali Industrial Park – a joint venture between Tsingshan and Indonesia PT Bintangdelapan Group – on 10% and Japan’s Hanwa on 8%.

Financial terms of the MoU weren’t disclosed and it wasn’t clear when the MoU might be implemented.

The 50,000 tonnes per year plant on the island of Sulawesi, designed to produce chemicals used in batteries for electric vehicles, is one of a number of nickel projects in Indonesia that have caught industry attention due to their low budget projections and short delivery times.

The GEM project, which will also produce cobalt chemicals, was originally estimated to cost $700 million and start production in 2019, but its launch was pushed back to end-2020 and has been delayed again by the coronavirus pandemic.

An official at GEM’s investor relations office said on Monday part of the capacity will start production in 2022.

Nickel prices on the London Metal Exchange rose as much as 5% on Monday to a two-week high of $17,450 a tonne following the announcement.

Shares in GEM, which last month extended a contract to buy cobalt hydroxide from Glencore Plc to 2029, rose 10% to 7.69 yuan ($1.19), their highest since March 2018.



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