NICKEL INDUSTRIES LIMITED (ASX: NIC) has announced it has entered into a binding Framework Agreement with its Indonesian partners for long-term strategic cooperation in nickel ore mining and high-pressure acid leach (HPAL) processing. Nickel Industries Limited (NIC) is an ASX-listed company which owns a portfolio of mining and low-cost downstream nickel processing assets in Indonesia. The company is strategically focused on transitioning its production towards the electric vehicle battery supply chain. This agreement will see Nickel Industries acquire a 36% interest in the PT Chengsheng New Energy (CNE) HPAL project without any cash consideration.
The CNE project, currently under development as an expansion to the Company’s Excelsior Nickel Cobalt (ENC) HPAL project within the Indonesia Morowali Industrial Park (IMIP), is designed to produce mixed hydroxide precipitate (MHP) for the electric vehicle battery supply chain. CNE boasts a nameplate capacity of approximately 28,357 nickel tonnes in MHP per annum. The acquisition of this interest is being facilitated through a share-for-share transaction, where Nickel Industries will monetise an 18% stake in two of its Sampala Project IUPs, namely PT Abadi Nikel Nusantara (ANN) and PT Erabaru Timur Lestari (ETL). Post-transaction, Nickel Industries will retain a 42% shareholding in the Mine Companies, while holding 36% in CNE. The responsibility for CNE’s construction and working capital will be borne by PT Jaya Agung Investasi (JAYA), ensuring cost, timeline, and production certainty for Nickel Industries.
Strategically, the Sampala Project has been designated as the exclusive ore supplier to CNE, aligning Nickel Industries as both an equity investor and an upstream supplier to the HPAL project. This arrangement is expected to position the Sampala Projects favourably for RKAB allocations, given the Indonesian Government’s emphasis on downstream investment. CNE commissioning is anticipated to commence in mid-2027, with Nickel Industries expecting to receive nickel units in MHP at an implied acquisition cost of approximately US$10,500/tonne at nameplate capacity. The transaction is subject to the execution of definitive agreements, customary regulatory approvals, confirmatory due diligence, and shareholder approval at an Extraordinary General Meeting, due to JAYA being a related party.
Commenting on the transaction, Managing Director Justin Werner highlighted the strategic integration of ore resources with downstream processing. He noted that the share swap allows Nickel Industries to achieve growth while maintaining fiscal discipline, removing the need for external equity capital. Mr Werner stated that the investment solidifies Nickel Industries’ position as a leading producer of Class 1 nickel for the EV supply chain, securing capital-light downstream exposure at a fraction of the cost of its Indonesian HPAL peers.
