Jakarta. German chemical producer BASF and French miner Eramet have withdrawn from a $2.6 billion ($42.67 trillion) investment in a nickel-cobalt refining complex in Weda Bay, North Maluku.

“After a thorough evaluation, we have concluded that we will not execute the nickel-cobalt refining project in Weda Bay. Since the inception of the project, the global nickel market has changed significantly. In particular, the supply options have evolved and with that BASF’s availability of battery grade nickel," Anup Kothari, Member of the Board of Executive Directors of BASF SE, said in a statement recently.

Consequently, BASF no longer sees the need to make such a substantial investment to ensure a resilient metals supply for its battery materials business.

Meanwhile, Eramet said it will continue to evaluate potential investments in the nickel electric vehicle battery value chain in Indonesia and will keep the market informed in due course.

In 2020, Eramet and BASF signed an agreement to assess the potential of jointly developing and constructing a nickel-cobalt refining complex in Weda Bay, Indonesia.

The Investment Ministry/Investment Coordinating Board (BKPM) said that the cancellation of the project does not diminish foreign investors' interest in investing in Indonesia's downstream sector.

Deputy for Investment Promotion at the Ministry of Investment/BKPM, Nurul Ichwan, said in Jakarta on Thursday that although the companies canceled their investment in the project, the electric vehicle battery downstream sector remains highly promising in the domestic market.

"We see the downstream ecosystem for electric vehicle batteries as still very promising for development in Indonesia. Moreover, Indonesia recently ranked 27th in the World Competitiveness Ranking (WCR) 2024, placing in the top 3 in the ASEAN region," he said.

He explained that Indonesia's downstream policies remain highly attractive to foreign investors. Several downstream projects in the country have already entered the realization phase, such as Freeport Indonesia's world-largest copper smelter in Gresik, East Java, which officially began operations on Thursday.

He further stated that the business decision made by BASF and Eramet was based on changes in the nickel market conditions, particularly those affecting the supply of raw materials for electric vehicle batteries. Thus, the companies decided there was no longer a need for investment in the supply of battery materials.

"We have been closely monitoring this investment plan from the beginning. However, during its course, the companies shifted their focus and ultimately made a business decision to cancel the Sonic Bay Project investment," he said.

Indonesia holds the world's largest nickel reserves, with a staggering 21 million metric tons, on par with Australia. Jakarta has ceased exporting raw nickel ores, requiring countries to build refining facilities in Indonesia if they wish to exploit its nickel reserves.