Acquisition of Indonesia's HPAL Nickel-Cobalt Project and Its Impact on Nickel Supply and New Energy Landscape

Regarding the acquisition of Indonesia’s HPAL nickel-cobalt project, based on the latest information, I first need to clarify a key fact before conducting an in-depth analysis.

According to Reuters reports, the actual situation is:

, rather than the “Huayue HPAL Project” mentioned by the user [2]. Nickel Industries will continue to hold a 44% stake in the project [2].

• Sphere Corp
  : A South Korean special alloy manufacturer and a key nickel supplier to SpaceX
• Recently signed a
  10-year supply contract worth approximately US$1 billion
  with SpaceX [1]
• In this transaction, Sphere will obtain the
  nickel cathode product share
  corresponding to its 10% stake and have the option to purchase more [2]

---

High Pressure Acid Leaching (HPAL) technology has significant advantages in nickel-cobalt smelting:

Technical Indicator	HPAL Process	Traditional Pyrometallurgy
Cost Comparison	Benchmark	~60% higher than HPAL [3]
Ore Grade Processable	Ni ≤1.5% (low grade) [3]	Requires higher grade
Nickel-Cobalt Leaching Rate	≥95% [3]	Lower
Carbon Emissions	Reduced by over 60% [3]	Higher

According to Soochow Securities data, the cost of Huayou Cobalt’s Indonesian wet nickel project is approximately

, far lower than the industry average of US$16,000/ton [3].

:

• Indonesia’s Dominance
  : Indonesia accounts for over 60% of global nickel production [6]
• 2026 Outlook
  : The cost of Indonesia’s MHP is expected to be around US$11,000/metal ton, and the cost of processing into electrolytic nickel is approximately US$13,500/metal ton [4]
• Policy Intervention
  : Indonesia plans to actively cut nickel production in 2026 to support prices [6]

:

• Explosive Growth in Battery Demand
  : According to INSG data, the global demand for nickel for batteries will grow at an annual rate of
  18%-22%
  from 2023 to 2026, increasing from 484,000 tons in 2022 to 1.69 million tons in 2030; the commercialization of solid-state batteries will boost demand for high-nickel ternary materials, bringing incremental growth [4][6]

---

This acquisition marks an escalation in the competition for key new energy mineral supply chains globally:

: Nickel and cobalt are mainly used in new energy vehicle batteries
: Aerospace enterprises like SpaceX also use a large amount of nickel-based special alloys [1]

This implies:

• Competition for nickel-cobalt resources expands from the new energy vehicle sector to multiple strategic sectors
• Supply chain security becomes a core issue
  , and downstream giants begin to lock in resources through equity investment

Product structure of the Excelsior Nickel-Cobalt HPAL Project:

• Nickel Cathode
  : Can be directly used in high-end applications
• MHP (Mixed Hydroxide Precipitate)
  : Key raw material for new energy vehicle batteries
• Cobalt Sulfate
  : Important component of battery materials [2]

Sphere’s procurement agreement shows that the nickel cathode produced by this project will be used for:

1. Meeting SpaceX’s aerospace needs
   (special alloys)
2. Entering the North American high-end manufacturing supply chain
   [2]

China’s layout in Indonesia is represented by Huayou Cobalt:

Project	Annual Nickel Capacity	Technology	Status
Huayue Project	60,000 tons	HPAL	Stable production exceeding targets [3]
Huafei Project	120,000 tons	HPAL	Stable production exceeding targets [3]
KNI Project	120,000 tons	HPAL	To be put into operation in 2026 [3]

[3]

Advantages of Chinese enterprises:

• Cost Advantage
  : The cost of wet process is 60% lower than pyrometallurgy [3]
• Resource Control
  : Full industry chain layout (resource-smelting-materials) [3]
• Technological Leadership
  : Mastered core HPAL technology and successfully commercialized it

---

:

• Indonesia’s production cut plan + downstream giants’ equity investment =
  Expectation of tighter supply
• Helps boost market sentiment and ease concerns about oversupply [6]

:

• Bottom Support
  : Indonesia’s MHP cost line (US$11,000-13,500/ton) will become an important reference for the bottom support range of nickel prices [4]
• Structural Opportunities
  : The commercialization of solid-state batteries will drive explosive demand for high-nickel ternary materials [4]

As a core player in Indonesia’s nickel-cobalt wet smelting, Huayou Cobalt has:

:

• Operating Revenue:
  58.941 billion yuan
  , a year-on-year increase of 29.57%
• Net Profit Attributable to Parent Company:
  4.216 billion yuan
  , a year-on-year increase of 39.59%
• Contribution from Nickel Business:
  45.87% of profit
  [3]

:

1. Cost Leadership
   : Wet process cost of US$12,000/ton vs industry average of US$16,000/ton [3]
2. Production Scale
   : Total nickel capacity of Huayue + Huafei + KNI projects reaches 300,000 tons/year [3]
3. Customer Binding
   : Signed long-term supply agreements with Tesla, CATL, etc. [3]

:

• P/E Ratio: 21.94x
• P/B Ratio: 2.46x
• Stock Price Performance: Cumulative increase of
  133.77%
  in 2025, rising from 29.20 yuan to 68.26 yuan

---

1. Commercialization of Solid-State Batteries
   : Trial production will start in 2026, leading to explosive demand for high-nickel ternary materials [4]
2. Indonesia’s Policy Dividend
   : Production cuts support prices, and resource value is re-evaluated [6]
3. Going Global of Chinese Manufacturing
   : Transition from resource acquisition to standard setting

1. Policy Execution Risk
   : Uncertainty about the intensity of Indonesia’s production cut policy [6]
2. Demand Realization Risk
   : Mass production progress of solid-state batteries may fall short of expectations
3. Price Volatility Risk
   : Sharp fluctuations in nickel and cobalt prices will directly affect corporate profits
4. Project Execution Risk
   : Large-scale smelting projects may be delayed in commissioning [3]

---

The acquisition of Indonesia’s HPAL project stake by Sphere marks the entry of the

:

1. Resource Competition Upgrade
   : Expanding from new energy vehicles to aerospace, energy storage and other fields
2. Supply Chain Security
   becomes a core issue, and downstream giants lock in resources through equity investment
3. Chinese Enterprises Have Obvious Advantages
   : Significant advantages in HPAL technology, cost control, and full industry chain layout
4. Re-evaluation of Nickel-Cobalt Resource Value
   : Strategic value continues to rise against the backdrop of the new energy revolution

:

• Short-term focus on the implementation of Indonesia’s production cut policy
• Mid-term focus on the commercialization progress of solid-state batteries
• Long-term focus on the competitive advantages of Chinese enterprises in global resource layout

have occupied a favorable position in this round of resource competition and are expected to continue to benefit from the rapid development of the global new energy industry.

---

[1] AFR - “SpaceX supplier buys into $3.6b Nickel Industries project” (2026-01-02)

[2] Reuters - “Nickel Industries says S.Korea’s Sphere to buy 10% stake in Indonesian project” (2026-01-01)

[3] Fortune Number - “Huayou Cobalt relies on its…” (East Money, 2025-12-26)

[4] Yide Nonferrous Metals - “Nickel: Oversupply Dilemma Hard to Break, Indonesia’s Policy is the Key” (Industry Research Report)

[5] Fortune Business Insights - “Nickel Mining Market Size, Industry Share | Forecast, 2026-2034”

[6] Global Mineral Resources Network - “Indonesia to Cut Nickel and Coal Production in 2026” (2025-12-31)

[7] Jinling API Data - Huayou Cobalt (603799.SS) Stock Price, Financial Data