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The
move is part of a 30 billion euro ($33 billion) push by the
world's second-largest carmaker to build a network of battery
cell factories and secure more direct access to vital raw
materials that are needed to supply them.
Volkswagen , Huayou Cobalt and Tsingshan have signed a
memorandum of understanding for a joint venture in Indonesia,
where more than 10% of the world's laterite nickel ore reserves
are located, to focus on nickel and cobalt raw material
production.
At the final expansion stage of the venture, it will be able to
supply raw materials for 160 gigawatt hours worth of electric
vehicle batteries, Volkswagen China Group said in a statement.
This corresponds to an annual output of around 120,000 tonnes of
nickel and 15,000 tonnes of cobalt, Huayou said in a separate
filing to the Shanghai Stock Exchange.
Volkswagen's second joint venture will be formed with Huayou in
China's southwestern Guangxi region for the refining of nickel
and cobalt sulfates, precursor and cathode material production,
it said.
"The cooperation aims to achieve significant cost advantages,
secure the raw material supply and achieve a transparent and
sustainable supply chain," it said. "The two partnerships target
to contribute to the Group's long term target of a 30-50% cost
reduction on each battery."
Global nickel prices have surged almost 400% this year due to
the Ukraine crisis, as Russia is a major supplier and its
invasion of Ukraine and the subsequent imposition of sanctions
on Moscow by the West lit a fire under an already hot market.
Prices on the London Metal Exchange got a further boost on March
8 when they doubled to $100,000 per tonne in a matter of hours,
after Tsingshan bought large amounts of nickel to reduce its
short bets on the metal and its exposure to costly margin calls.
Prices have dropped sharply since then however, after the LME
was forced to halt trading for a period and reopened with new
trading limits.
Privately owned Tsingshan has become the world's top nickel
producer thanks to its development of a low-cost process to make
the metal. It already has major investments in Indonesia,
including other joint ventures with Huayou.
Volkswagen's move comes as rivals, from Tesla to BYD, are
raising prices for EVs due to higher raw material costs, and
follows Ford's announcement last week spelling out plans for a
nickel cell joint venture in Turkey.
On Saturday, the chief executive of Chinese EV manufacturer Li
Auto, Li Xiang, said on his official Weibo account that battery
makers had increased prices at a rate he called "outrageous" in
the second quarter, and warned that those EV makers that had not
raised prices yet would likely have to soon.
Asked to comment on Li's remarks, Chinese battery maker CATL,
which supplies major car makers including Tesla, told Reuters on
Monday that it had raised prices for some battery products due
to rising raw material costs.
($1 = 0.9045 euros)
(Reporting by Brenda Goh and Dominique Patton; Additional
reporting by Christoph Steitz in Frankfurt and Min Zhang in
Beijing; Editing by Simon Cameron-Moore, Stephen Coates and Nick
Macfie)
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