Indonesia's 1st HPAL nickel plant could start commissioning in H2 2020 - CRU

Feb 6 (Reuters) - The first battery-grade nickel and cobalt project in Indonesia using high-pressure acid leaching (HPAL) technology could start commissioning in the second half of 2020, consultancy firm CRU Group said on Thursday.

The project, a joint venture between Indonesia's Harita Group and China's mining firm Ningbo Lygend on Obi island, will have an annual capacity to produce 36,000 tonnes in nickel content and 4,400 tonnes in cobalt content in the first phase, CRU said in a report.

HPAL has a troubled history of operational problems and slow ramp-ups, but several Chinese investors had plans to use the technology in Indonesia to make nickel and cobalt materials for batteries used in electric vehicles.

"Previous several HPAL projects have experienced huge cost overruns and severe delays. If this project is successful, other investors may follow suit to meet the increasing demand from the battery sector," said CRU analyst Daniel Chen.

The CRU report said the project could start production of qualified products in early 2021.

Ningbo Lygend and Harita Group were not available for comment.

PT Halmahera Persada Lygend, as the joint venture is called, is one of at least three HPAL projects led by Chinese investors in Indonesia, the world's biggest producer of nickel ore.

Chinese battery firm GEM Co Ltd had expected to start trial production of its battery nickel plant with Chinese stainless steel giant Tsingshan in August 2020, its president had told Reuters last year.

But industry sources told Reuters the GEM project is likely to start in 2021 at the earliest.

The other Tsingshan project is with Zhejiang Huayou , China's top cobalt maker, which could start production in 2021, its president had told Reuters, in line with the industry's expectations.

CRU estimates around 5% of nickel demand came from the battery sector in 2019, but that will rise to 23.7% by 2030 and 33% by 2040. (Reporting by Mai Nguyen in Hanoi; Additional reporting by Tom Daly in Beijing; Editing by Maju Samuel)