Nickel Industries is investing US$169 million for a 17.5% stake in the PT Teluk Metal Industry HPAL project, aiming for production by September 2027 and leveraging its exclusive ore supply from Sampala.
- US$169 million investment for 17.5% stake in TMI HPAL project
- Construction guarantee caps cost and ensures production by September 2027
- TMI capacity of 38,640 nickel tonnes MHP annually, with 6,775 tonnes attributable to Nickel Industries
- Exclusive ore supply from Nickel Industries’ Sampala Project
- Investment funded from cash reserves with potential debt support from largest shareholder
Strategic Investment Secures HPAL Expansion Amid Moratorium
Nickel Industries Limited (ASX:NIC) has committed US$169 million to acquire a 17.5% equity interest in the PT Teluk Metal Industry (TMI) high-pressure acid leach (HPAL) project, marking a significant expansion of its footprint in Indonesia’s Morowali Industrial Park. The payment is due in November 2026, with TMI set to commence commissioning by mid-2027 and reach nameplate production capacity by September 2027.
This investment positions Nickel Industries alongside a Korean-Japanese consortium holding 72.5%, including LS MnM, Hanwa, and an undisclosed strategic partner, and a 10% stake held by Singapore-based Sumber International Investment. The Indonesian government’s moratorium on new HPAL projects elevates TMI as one of the last large-scale opportunities in this sector, underscoring the strategic timing of the deal.
Construction Guarantee Caps Costs and Production Timeline
Crucially, Nickel Industries benefits from a comprehensive construction guarantee that caps its total acquisition cost at US$169 million and assures delivery of the project’s nameplate capacity of approximately 38,640 nickel tonnes in mixed hydroxide precipitate (MHP) annually. This guarantee also includes funding for a slurry and tailings pipeline connecting the Sampala Project to TMI, replicating the integrated infrastructure model Nickel Industries has successfully implemented between its Hengjaya Mine and the Excelsior Nickel Cobalt (ENC) project.
Nickel Industries’ attributable production from TMI is projected at around 6,775 nickel tonnes per annum in MHP, a material contribution to its ongoing transition into the electric vehicle (EV) battery supply chain. The company’s Managing Director, Justin Werner, emphasised the capital efficiency of TMI, noting the proven HPAL economics within their portfolio, referencing the Huayue Nickel Cobalt (HNC) project’s robust EBITDA margins earlier this year.
Exclusive Ore Supply Secures Long-Term Feedstock
Strategically, the Sampala Project has been designated as the exclusive ore supplier to TMI, aligning Nickel Industries as both an upstream ore provider and downstream processor. This dual role aligns with Indonesian government preferences and leverages the world-class scale and grade of the Sampala resource, which has recently been expanded to over 1 billion tonnes of nickel laterite ore. The secured ore supply underpins TMI’s long-term operational viability and production certainty.
Funding for the investment is expected to come from Nickel Industries’ existing cash reserves and operational cash flow. However, should additional capital be required, the company’s largest shareholder, Shanghai Decent, has committed to providing debt financing on commercial terms, adding a layer of financial flexibility.
Advancing Nickel Industries’ EV Battery Supply Chain Ambitions
This investment complements Nickel Industries’ ongoing commissioning of the ENC project, which is poised to deliver over 72,000 tonnes of nickel metal annually and reduce the company’s carbon footprint through diversified production. The TMI stake further solidifies Nickel Industries’ position in the EV battery materials market, a sector experiencing strong demand growth amid global decarbonisation efforts.
With Indonesia’s tightening regulatory environment on HPAL projects, Nickel Industries’ move to secure a significant interest in TMI alongside established international partners signals confidence in the project’s economics and strategic importance. The construction guarantee and exclusive ore supply agreement mitigate key execution risks, but market watchers will be keen to track the project’s construction progress and commissioning milestones as the 2027 target approaches.
Bottom Line?
Nickel Industries’ TMI investment locks in a critical HPAL expansion with cost and production safeguards, advancing its EV battery supply chain ambitions amid regulatory constraints.
Questions in the middle?
- How will the Indonesian moratorium on new HPAL projects affect TMI’s long-term competitive position?
- What are the implications if additional funding is required beyond cash reserves and shareholder debt?
- How might the undisclosed strategic investor’s role influence TMI’s governance and operational decisions?