SK On Builds Nickel Supply Chain in Indonesia with EcoPro

Agreement on Establishment of Nickel Intermediate Goods Manufacturing Corporation
Annual Production of 30,000 Tons of Intermediate Goods in 2024

Shin Young-ki, SK On Purchasing Manager (center front row), signed a business agreement on the 24th at the SK Seorin Building in Jongno-gu, Seoul, with Park Sang-wook, Vice President of EcoPro (front row right), and Jiang Miao, Deputy General Manager of GEM (front row left), to establish an intermediate nickel material production corporation in Indonesia.

[Asia Economy Reporter Oh Hyung-gil] SK On is starting nickel production in Indonesia in collaboration with Ecopro.

On the 24th, SK On announced on the 25th that it signed a business agreement at the SK Seorin Building in Jongno-gu, Seoul, with Ecopro and Chinese precursor production company Ge Lin Mei (GEM) to establish a nickel intermediate material production corporation in Indonesia. The signing ceremony was attended by Park Sang-wook, Vice President of Ecopro, Jiang Miao, Deputy General Manager of Ge Lin Mei, and Shin Young-gi, SK On's Purchasing Manager.

They plan to build a 'nickel and cobalt hydroxide mixed material' production plant in the Morowali Industrial Complex, Sulawesi Province, Indonesia, and produce mixed materials equivalent to 30,000 tons of pure nickel annually starting from the third quarter of 2024. This scale corresponds to about 43GWh of electric vehicle batteries, which can produce approximately 600,000 electric vehicles.

Additionally, the three companies will expand cooperation in raw materials such as precursors in the future. They plan to secure nickel oxide ore from the Hangjaya mine located in Sulawesi Province. Nickel oxide ore has the advantage of being mined in open pits, which reduces mining costs, and cobalt can be additionally obtained as a byproduct.

The company explained that a high-pressure acid leaching refining process will be introduced to produce hydroxide mixed materials using nickel oxide ore as raw material. The high-pressure acid leaching process involves leaching metals reacting with sulfuric acid from nickel ore under high temperature and pressure. By adopting this technology, higher purity nickel compounds can be produced. Ge Lin Mei will provide this technology.

Furthermore, production of nickel sulfate and precursors in Korea is also being considered. If SK On procures nickel sulfate in Korea, which has a free trade agreement (FTA) with the United States, and uses it for electric vehicle battery production in the U.S., it is expected to meet the requirements for electric vehicle subsidies under the Inflation Reduction Act (IRA).

Indonesia is the world's largest nickel producer and holder of reserves. Last year, Indonesia's nickel production was about 1 million tons, ranking first in the world. Its reserves amount to 21 million tons, accounting for about 22% of the world's nickel reserves.

SK On has steadily strengthened its supply chain for key battery raw materials. This month, it signed a long-term lithium supply contract with Chilean global lithium company SQM to receive a total of 57,000 tons over five years starting in 2023. Last month, it invested 10% equity in Australian Lake Resources and signed a mid- to long-term contract to receive 230,000 tons of lithium over ten years starting from the fourth quarter of 2024. In addition, it has formed raw material cooperation with various companies such as Australian Global Lithium, Swiss Glencore, and POSCO Holdings.

Shin Young-gi, SK On's Purchasing Manager, said, "The cooperation among the three companies is significant in that it has stably established a global nickel supply chain," and added, "We plan to strengthen the raw material supply chain by cooperating with various material companies."