(Yicai Global) Nov. 25 -- GEM, one of China's biggest suppliers of battery raw materials, will build an intermediate nickel products plant in Indonesia with South Korea’s EcoPro and SK On to secure a stable supply of the key material.

GEM, cathode materials supplier EcoPro, and battery maker SK On will set up a joint venture to build and operate the high-pressure acid leach plant in Morowali on the island of Sulawesi, the Shenzhen-based company said yesterday.

The plant will process mixed hydroxide precipitate to produce 30,000 metal metric tons of nickel a year, GEM said, aiming to ensure resources at a transparent and competitive price for the three companies.

The plant’s output will meet the needs of GEM’s battery materials business as the company continues to expand production capacity and will stabilize the main South Korean market.

The facility will also help GEM to fulfill the requirements of the US’s Inflation Reduction Act that came into effect on Aug. 16 and defend its status in the global new energy vehicle battery market, the company said.

The Inflation Reduction Act rules that US consumers may be able to claim a USD7,500 clean vehicle tax credit if the carmaker used raw materials and other key components of the power battery from countries that have free trade deals with the United States. China is not one of them.

By 2025, 70 percent of GEM’s nickel resources will be self-produced and will become completely self-sufficient after 2027. The firm will achieve its long-term sales target of 500,000 tons of precursor materials by 2026.

GEM’s shares [SHE: 002340] fell 1.2 percent to end the day at CNY7.97 (USD1.11). The broader Shenzhen market lost 0.5 percent.

Editor: Martin Kadiev