On May 24, 2021, Zhejiang Huayou Cobalt Industry Co., Ltd. issued an announcement that the company intends to establish a joint venture company Huayu Nickel Cobalt (Indonesia) Co., Ltd. in Indonesia to build a laterite nickel mine with an annual output of 120,000 tons of nickel and 15,000 tons of cobalt. The total construction investment for the hydrometallurgical project is approximately 2.08 billion U.S. dollars (approximately 13.374 billion yuan).

On May 23, Huayou International Cobalt, a wholly-owned subsidiary of Huayou Cobalt, signed the "Indonesia Huayu Nickel Cobalt Laterite Nickel Mine Hydrometallurgy Project Joint Venture Agreement" with Yongrui, Glaucous, Yiwei Asia, and LINDO. The company intends to approve Huayou International Cobalt has established a joint venture company with other joint ventures. The joint venture company plans to build a laterite nickel hydrometallurgy project in Indonesia's Weda Bay Industrial Park. The project's production scale is about 120,000 tons of nickel metal and about 15,000 tons of cobalt. The total investment in the construction of this project is approximately US$2.08 million (13,374,400 million). The authorized capital at the time of establishment of the joint venture is US$10 million (64.3 million yuan). Among them, Huayou International Cobalt Co., Ltd. has subscribed and contributed US$2 million and the shareholding ratio is 20%; Yongrui subscribed for a capital of 3.1 million U.S. dollars, with a shareholding ratio of 31%; Glaucous subscribed for a capital of 3 million U.S. dollars, with a shareholding ratio of 30%; Yiwei Asia subscribed for a capital of 1.7 million U.S. dollars, with a shareholding ratio of 17% ; LINDO subscribes for a capital of 200,000 US dollars, with a shareholding ratio of 2%.

It is worth mentioning that Yongrui Holding Co., Ltd. is a wholly-owned subsidiary of Yongqing Technology Co., Ltd., and it is a subsidiary of Qingshan Industrial Co., Ltd. together with Yongqing Group. Yongqing Group has invested heavily in Indonesia and established industrial clusters including park development, mining, nickel industry, and stainless steel.

Nickel Resource Manufacturing System

The joint venture agreement stipulates that 70% of the total investment in the construction of the project shall be jointly responsible for the project financing including bank loans and shareholder loans with the joint venture company as the borrower. The specific project financing method shall be negotiated and determined by the parties. Within 3 working days after Yongrui, Glaucous and Huayou International Cobalt contributed capital in accordance with the authorized capital as agreed in the agreement, Yiwei Asia shall provide the joint venture with a one-time amount of US$214.2 million, a loan period of 7 years, and an annual interest rate of the loan. For 5% of the shareholders’ borrowings, other shareholders of the joint venture company except Everwell Asia should pledge their equity in the joint venture company to Everwell Asia.

In order to ensure the sales of the products produced by the facilities of the joint venture company and realize the profits of the joint venture company, the parties to the agreement unanimously agreed that Yongrui, Glaucous, Huayou International Cobalt and Yiwei Asia will underwrite all products produced by the joint venture in the following proportions. The underwriting ratio of Yongrui is 31.6327%, the underwriting ratio of Glaucous is 30.6122%, the underwriting ratio of Huayou International Cobalt is 20.4082%, and the underwriting ratio of Yiwei Asia is 17.3469%. The joint venture company will sign an underwriting agreement with Yongrui or its related parties, Glaucous or its related parties, Huayou International Cobalt Industry or its related parties, and Yiwei Asia or its related parties.

Huayou Cobalt's development strategy plan during the "14th Five-Year Plan" period takes the lithium battery new energy material industry as its core business. With the global commercialization of new energy vehicles, the demand for nickel resources from high-nickel ternary materials may see rapid growth. . The establishment of a joint venture company for foreign investment is an arrangement made by the company in accordance with its medium and long-term development strategy. The company and other joint venture parties jointly invest in the development of nickel resources in Indonesia, and will give full play to their respective advantages, carry out nickel resource smelting and deep processing in Indonesia, and create a world-competitive nickel raw material manufacturing system for new energy power batteries, which is the company’s new energy lithium battery material business. Development provides reliable resource guarantee. This foreign investment is in line with the company's development strategy, is conducive to promoting the company's distribution of nickel resources, and is conducive to further enhancing the company's profitability and sustainable development capabilities. Editor/Tian Zengpeng