Volkswagen has concluded two memoranda of understanding with Huayou Cobalt and the Tsingshan Group in China to secure access to essential battery raw materials. The three companies are planning two joint ventures.
Huayou Cobalt and the Tsingshan Group are to supply VW with nickel and cobalt for production in China. Volkswagen Group China says it is targeting 30-50% cost reduction per battery long-term, with these new agreements targeting the secure raw material supply and a transparent and sustainable supply chain. The German carmaker says the deals should strengthen technological innovation synergies across the entire industry chain, including precursors and cathode materials.
The three companies aim to process laterite nickel ore in Indonesia within the framework of one of the joint ventures. Indonesia holds more than 10% of the world’s laterite nickel ore reserves. An Indonesian plant is to be able to supply raw materials for electric car batteries to the tune of 160 GWh in the final expansion stage. Huayou stated in its own statement that this would correspond to an annual production of around 120,000 tonnes of nickel and 15,000 tonnes of cobalt.
The second partnership consists only of VW and Huayou Cobalt. A plant for refining nickel and cobalt sulphates is to be built in the south-western Chinese region of Guangxi. This can later be used to produce cathode materials in other factories.
Volkswagen justifies the step to enter into raw material production with the rising prices recently rocking electric mobility industries. The Russian invasion of Ukraine and resulting sanctions have caused a spike in nickel prices. Russia is home to the world’s fourth-largest nickel reserves. Over the last couple of years, the Indonesian government has primed its industrial landscape to utilise its nickel resources, with measures and incentives to advance electric mobility and battery production in the country.
Just last week, the VW Group joined the Initiative for Responsible Mining Assurance (IRMA). The initiative works towards the establishment of strict standards for the responsible mining of raw materials.
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