According to recent reports, DBS Group and BNP Paribas have raised US $625 million in project financing for an Indonesian nickel smelter developed by PT Halmahera Persada Lygend, a joint venture between Indonesia's Harita Group and Chinese mining company Ningbo Lygend. In addition to DBS Bank and BNP Paribas, the group also includes Mandelli Bank, Central Asian Bank (BCA), Indonesian National Bank (BNI), Malaya Bank, OCBC Bank (OCBC), OCBC NISP and United overseas Bank.
Halmahera Persada Lygend (PT HPAL) is the first Indonesian project to use high pressure acid leaching (HPAL) technology to produce mixed nickel cobalt hydroxide precipitate (MHP) and nickel sulfate (a key material for battery manufacturing). The smelter, located on Obi Island in eastern Indonesia, has an annual production capacity of 36000 tons of nickel and 4400 tons of cobalt in the first phase.
As the global demand for (EV) for electric vehicles increases, the demand for storage and battery metals will increase accordingly, and HPAL smelters will play an indispensable role in the EV supply chain. The project was originally scheduled to start production in the second half of 2020, but the delay was due to travel restrictions on the epidemic, which delayed the visit of technical experts from China.
The Lygend plant is one of several Chinese-backed HPAL projects to process nickel mines in Indonesia and has identified a number of domestic and export customers, many of them from China. Tan Su Shan, head of banking and president of PT Bank DBS Indonesia institutions, said the project would support Indonesia's plan to develop a global EV supply chain onshore. Southeast Asian countries have the largest share of the world's nickel reserves.
As the lead coordinator and entrusted lead arranger of the project, DBS Group has developed a financing structure to address the challenges faced during the project development phase and the exposure to the benchmark price. Tan added: "DBS's strong mastery of projects, commodity markets and battery technology is critical to jointly leading banks with different levels of smelting and battery technology, and ultimately providing customized financing solutions for PT HPAL."
