PT Merdeka Battery Materials Tbk (MBMA) announced on May 8 that it has entered into a conditional agreement to acquire 60% of PT Huaneng Metal Industry (HNMI). PT HNMI is known to be a plant with high ice nickel (HGNM) conversion facilities located in the Morovali Industrial Park (IMIP), Indonesia.
MBMA's purchase of 60 per cent of HNMI is estimated to be worth about US $75 million or the equivalent of Rupiah 1.12 trillion, with the remaining 40 per cent held by Tsingshan subsidiaries.
The proposed acquisition will enable MBMA to convert RKEF's larger asset base into nickel production and unlock value. The proposed acquisition is targeted to close in mid-2023, subject to the closing of customary conditions for such transactions.
HNMI was commissioned by Eternal Castle Peak Group Co., LTD. (Castle Peak) and has been in steady production since 2022. HNMI processes low-grade ice nickel (LGNM) from the RKEF smelter to reduce iron content and produce HGNM nickel with more than 70% HGNM content. HNMI has maintained an annual production level of 50,000 tons of nickel ice. Recently, IMIP's HGNM producers realized an additional profit of approximately $2,000 per ton on nickel pig iron (" NPI ").
Meanwhile, MBMA's operating partner Aoyama pioneered the technology to produce HGNM from the RKEF smelter. Nickel ice is an intermediate product used to produce nickel sulfate, which is an indispensable part of battery value chain.
Initially, Aoyama will supply LGNM to HNMI at a small premium to the prevailing NPI price, and HNMI benefits from the extra profit between NPI and HGNM. Over time, MBMA is expected to make the necessary modifications to its own RKEF smelter production line to supply directly to HNMI.
The proposed acquisition of HNMI demonstrates MBMA's ability to capture additional margins from the production and sale of HGNM and manufacture various nickel intermediates to take advantage of market dynamics. As part of MBMA's strategy to create value for its shareholders, MBMA continues to evaluate additional ice nickel and other downstream expansion projects to produce higher value-added Category 1 battery materials, which are critical to supporting the rapidly growing electric vehicle value chain.
