Japan's Sumitomo decides to scrap Indonesian nickel refinery project

Japan-based Sumitomo Metal Mining Co. has decided to scrap the ongoing feasibility study on the Pomalaa nickel refinery project in Indonesia's Southeast Sulawesi Province, it said April 25.

It said it had decided to discontinue the study in part due to the COVID-19 pandemic making permitting difficult and hindering communication with partner PT Vale Indonesia, or PTVI.

The two companies started prefeasibility work on the proposed refinery in 2012 and have been carrying out a definitive feasibility study since 2018.

"In these circumstances, PTVI has begun to seek an alternative to promoting the Pomalaa project with SMM, and SMM has been unable to continue negotiations with PTVI," SMM said.

"Since it is difficult to maintain its internal and external project study team with no prospect for future progress, SMM has concluded that it has no choice but to discontinue the study," it added.

SMM had planned to use the Pomalaa project as part of its strategy to secure nickel supply to reach its long-term goal of a 150,000 mt/year nickel production rate.

"While we regret this outcome, we will continue our efforts to secure nickel resources in order to strengthen the value chain of SMM's three businesses (Mineral Resources, Smelting & Refining and Materials) and ensure a stable supply of SMM's nickel products, as stated in SMM's three-year business plan," the company said.

It added that the discontinuation of the project was not due to have a major impact on its financial results for the financial year ended March 31, 2022 or 2023.

SMM said in July that it would be investing Yen 47 billion ($367.5 million) to boost its production of cathode materials used in secondary batteries for electric vehicles, with a new plant to be built in Niihama City, Japan by 2025 and the Harima Refinery in Kako-gun to be expanded over the same period.