Sulawesi Nickel Cobalt (SLNC) has secured $1.4bn (Rp22.93trn) in financing for the construction of a high-pressure acid leach (HPAL) plant on Sulawesi Island in Indonesia.

Merdeka Battery Materials holds indirect stakes in SLNC through its subsidiary, Merdeka Energi Baru, which owns 50.1% of SLNC.

SLNC has secured debt financing and executed definitive loan agreements with several banks including Bangkok Bank Public, Bank Permata, Bank Mandiri, Bank Negara Indonesia and Bank Rakyat Indonesia.

The loan has a seven-year term with a senior secured, non-recourse structure and includes a balloon payment upon maturity, with no scheduled repayments until 2027.

The total investment for constructing the HPAL plant, including interest incurred during construction, is expected to be around $1.8bn.

Merdeka Battery holds a 45% stake in Merdeka Energi Baru, while Devmalla Materials owns the remaining 55%.

Devmalla has granted Merdeka Battery a call option to acquire its stake in Merdeka Energi Baru, which can be exercised once the HPAL plant has been operational for one year and has achieved four consecutive quarters of positive earnings before interest, taxes, depreciation and amortisation (EBITDA).

SLNC will be responsible for the construction and operation of the new HPAL plant, which is located within the Indonesia Morowali Industrial Park.

Merdeka Battery is tasked with securing the necessary permits and approvals from the Indonesian Government.

Merdeka Battery president director Teddy Oetomo said: “Expanding our downstream processing capabilities is essential to our strategy for maximising the value of our extensive nickel resources.

“The SLNC partnership, supported by competitively priced debt financing from leading domestic and regional banks, represents a significant milestone in advancing MBMA’s strategy for producing downstream battery materials. This partnership not only highlights the quality of our company but also reflects the Indonesian Government’s ongoing support for the domestic minerals and processing industry.”

This facility is set to bolster nickel production, with an anticipated capacity of 90,000 tonnes per annum (tpa) of contained nickel in mixed hydroxide precipitate (MHP).

The project kicked off in January 2025 and is projected to reach the commissioning stage within 18 months.

SLNC will source laterite nickel ore from Merdeka Battery’s SCM mine through a 20-year commercial agreement, starting from the plant’s commissioning date.

An ore preparation plant will also be built at the SCM mine to facilitate ore transportation to the SLNC processing plant via pipeline.