Danantara and China's GEM to develop nickel processing hub in Indonesia

Indonesian sovereign wealth fund Danantara will invest to develop a nickel processing hub with Chinese battery and material recycler GEM, tapping into $8.3 billion in funds available for investment in 2025, an official said on Tuesday.

The project will mark Danantara's first foray into Indonesia's crucial nickel sector as the government seeks to capitalise on the country's vast resources of a metal used in electric vehicle (EV) batteries. Indonesia is the world's biggest nickel producer.

"There is a heads of agreement that we just signed today with GEM in China ... essentially creating a green industrial estate," the fund's investment chief Pandu Sjahrir told Reuters in an interview. He said the project would target net-zero carbon emissions and aim to operate in a sustainable manner.

"GEM is doing it with Vale, with EcoPro, and also Merdeka and us," he said, referring to South Korean battery materials maker EcoPro 086520 and nickel miners PT Vale Indonesia INCO and Merdeka Copper Gold MDKA. He declined to put a figure on the size of the investment or say when it could start operating.

Asked to comment, Jakarta-based Merdeka said it had no information to share. The other companies did not immediately respond to requests for comment.

Pandu said Danantara Indonesia will manage 135 trillion rupiah ($8.31 billion) in investment funds this year, 70 trillion rupiah of which comes from dividends of state-owned companies. The rest stems from private sales of so-called Patriot bonds to Indonesian companies and a recently obtained $10 billion syndicated bank loan, he added.

Launched in February, Danantara manages all government-owned companies, which have combined assets of more than $900 billion. It is modelled on other sovereign funds such as Singapore's Temasek.

Pandu said the offer of Patriot bonds had been well received among leading Indonesia companies.

($1 = 16,250.0000 rupiah)