(Yicai Global) April 9 -- CNGR Advanced Material will invest USD243 million to set up a joint venture in Indonesia to produce high-grade nickel matte to meet demand for the key raw material used in lithium power batteries. Its shares gained.

The project will produce 30,000 tons of nickel matte a yearusing local nickel laterites as raw material,Changsha-based CNGR saidin a statement late yesterday.It will be built in phases at the Indonesian Morowali Industrial Park in Sulawesi province.

The nickel reserves of mineable nickel laterites in Sulawesi and nearby islands account for 72 percent of Indonesia’s total. An affiliated company of project partner,Singapore-based Rigqueza International, owns more than 53,000 hectares of nickel deposits in the local area.

First-phase investment will be about USD81 million, with the aim of turning out nickel mattes containing 10,000 tons of nickel per annum.

High-grade nickel matte is a primary product of nickel concentrate smelting and a raw material to produce high-purity nickel sulfate, which is the core ingredient of the nickel-cobalt-manganese ternary precursor for power lithium batteries. Due to the high-energy storage density, lithium power packs with ternary precursors as cathode material often have an advantage of strong endurance or durability.

CNGR produced over 70,000 tons of ternary precursors last year, ranking first with a market share of 23 percent. With Tesla, LG Chemical and Samsung SDI as clients, the firm had annual production capacity of 110,000 tons of ternary precursors at the end of last year and is expected to have an extra 60,000 tons of capacity this year.

Shares of CNGR [SHE: 300919] ended 1.8 percent higher today at CNY79.71 (USD12.18) each. The broader Shenzhen Component Index fell almost 1.3 percent.

The Sulawesi project’s JV will be 70 percent owned by CNGR Hong Kong New Energy Technology and 30 percent byRigqueza.CNGR Hong Kong will be responsible for project financing. After the project comes on line, the partners will have the priority to buy products at market prices based on their respective investment ratios.

Indonesian Morowali Industrial Park is jointly invested and built by a subsidiary of China’s Tsingshan Steel and Indonesia PT Bintangdelapan Group, mainly for smelting and processing nickel ores, according to public information.

Editor: Peter Thomas