"Vale has completed signing the FCA with Huayou to build the Pomalaa Block HPAL project. This is very positive not only for INCO, but also the Pomalaa community, the regional administration, and the nation," Vale Indonesia CEO Febriany Eddy said at the post-signing event, held on April 28 at Bottega Ristorante in Sudirman Central Business District (SCBD), Jakarta.

Vale Indonesia’s vice president director Adriansyah Chaniago and CFO Bernardus “Anto” Irmanto also attended the post-signing event.

This is one of two upcoming Sulawesi smelter projects for Vale Indonesia, with the second smelter project located in Central Sulawesi. Vale Indonesia currently operates an integrated mine and nickel refinery in Sorowako, South Sulawesi. The nickel refinery has been operating for 53 years and produces the lowest carbon emissions per ton of nickel in the country.

The company has vowed to avoid using coal to power its new smelters, with plans to replace the high-emissions fossil fuel with hydro power in Sorowako and liquified natural gas (LNG) in the Bahodopi Block.

While Vale Indonesia has not revealed what energy source it will use to power the new smelter in the Pomalaa Block, they have a maximum 6-month grace period to arrive at a decision. Construction on the smelter has already begun, and it is expected to finish within three years.

Moreover, Vale Indonesia is confident that Huayou’s experience in more efficient mining technologies will help accelerate completion of the mechanical components in one year or less.

“We appreciate that our partner is in line with our low carbon agenda, to not use a coal-fired power plant. This FCA is evidence of the alignment of our sustainability commitments, which is extremely important for PT Vale,” Febriany said during the signing ceremony on April 27.

“Huayou has a proven track record in HPAL construction and operations in Indonesia. We are confident that the two parties can serve as a good complement for each other.”

The two parties have agreed that Huayou will build and develop the Pomalaa Block HPAL Project, while Vale Indonesia has the right to acquire a stake of up to 30 percent in the project.

The smelter will be installed with the proven Huayou HPAL processor, technology and system to process low-grade limonite and saprolite ores from Vale Indonesia's Pomalaa Block mine to produce mixed hydroxide precipitate (MHP). The smelter’s minimum installed capacity is estimated at 120,000 metric tons of nickel per year, with the MHP expected to contribute to Indonesia’s electric vehicle (EV) industry, forecast to grow 23 percent this year.

“This is a significant milestone that reflects our longstanding commitment to developing Indonesia’s world-class nickel resources,” said Vale Indonesia president commissioner Deshnee Naidoo, who attended the FCA signing by video link.

Huayou has been involved in developing several nickel and cobalt smelters in Indonesia, particularly as investments in the country’s EV industry has risen significantly in recent times. Speaking to Reuters, the company is targeting annual production of 120,000 tons of nickel and 15,000 tons of cobalt.

Moreover, Brazilian miner Vale’s Canada operation has recently signed a long-term contract with Tesla, Inc. to supply Class 1 nickel to the United States. The deal is in line with Vale’s strategy to become a market leader as North America’s largest producer of finished nickel.

The company’s low emissions strategy remains at the forefront of all its global operations, including in Indonesia. The nickel melt rounds produced in 2020 at Vale Canada’s Long Harbour Processing Plant (LHPP) in Newfoundland and Labrador had a verified carbon footprint of 4.4 tons CO2 equivalent (CO2-eq) per ton of nickel, while nickel pellets and powder produced at its Copper Cliff Nickel Refinery in Ontario had a verified carbon footprint of 7.3 ton CO2-eq.

Speaking also at the post-signing event, Febriany said the smelter projects would benefit local communities in terms of job creation, mineral conservation for the environment and local economies.

“There have been a couple of questions about Vale's commitment [...] on Monday, Tuesday and Wednesday. Actually, the consequences would be very heavy if we don't fulfill our commitment, if we don't deliver Pomalaa Block,” said CFO Anto, joking that the thought kept him awake at night.

“We don't want our time [on the Board of Directors] as when PT Vale has to let go of the Pomalaa Block,” Anto continued, Addressing Febriany and Adriansyah directly. “We have a personal commitment [in this]. There's no such thing as not being, it has to be. This partnership model that we are doing is a new model, it has never existed in Indonesia [before].”

Anto also highlighted that the new cooperation would benefit not only Vale Indonesia, but also the people living near the Pomalaa Block by helping to accelerate local growth and development. He added that while the partnership model was different, Vale Indonesia’s core values remained the same, and that the company was continuing to work towards the same goals using its environmental, social and governance (ESG) values.

Febriany added that the company was also continuing to champion its “3P” values of people, planet and profit.

The project also has the support of state-owned mining holding company MIND ID, which has long been a partner to PT Vale Indonesia and acquired 20 percent of Vale Indonesia’s shares in 2020. The company’s shares divestment is a requirement of the 2014 amendment to its contract of work (CoW) with the Indonesian government, which appointed MIND ID as its representative for the specific arrangement.

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