In a surprising turn of events, BASF SE, the German chemical giant, and Eramet SA, a leading French mining company, have announced the cancellation of their planned $2.6 billion investment in a nickel processing project in North Maluku, Indonesia. This decision comes amid escalating concerns over regulatory uncertainties and geopolitical tensions affecting the electric vehicle (EV) battery supply chain.

Background of the Project

The ambitious project, initially unveiled in early 2023, was designed to tap into Indonesia’s rich nickel reserves. BASF and Eramet had planned to construct a high-pressure acid leach (HPAL) plant in Weda Bay, North Maluku, to produce mixed hydroxide precipitate (MHP) from nickel ore. This MHP is a crucial component in the manufacturing of lithium-ion batteries used in electric vehicles.

Indonesia, home to some of the world’s largest nickel reserves, has been positioning itself as a key player in the global EV battery market. The country’s government has been actively courting foreign investment to develop its mining sector and build a robust supply chain for EV batteries.

Reasons for the Cancellation

The cancellation of this high-profile project has sent shockwaves through the industry, highlighting several underlying issues:

  1. Regulatory Hurdles: Both companies have cited increasing regulatory challenges as a significant factor in their decision. Despite initial support from the Indonesian government, ongoing changes in mining regulations and licensing requirements have created an unpredictable investment climate​.
  2. Geopolitical Tensions: Rising geopolitical tensions, particularly between Western countries and China, have also played a role. With Indonesia’s strategic location and its partnerships with Chinese firms in the nickel sector, the political landscape has become increasingly complex. This has led to concerns about the stability and security of long-term investments in the region.
  3. Environmental Concerns: Environmentalists and local communities have expressed significant concerns about the environmental impact of HPAL plants, which involve the use of sulfuric acid in nickel processing. These concerns have led to delays in securing environmental permits, further complicating the project’s feasibility​.

Implications for the EV Battery Market

The cancellation of the BASF-Eramet project represents a significant setback for Indonesia’s ambitions to become a global hub for EV battery production. The country has been aggressively promoting its nickel industry, hoping to attract major players like Tesla and other global automakers. This development may cause potential investors to reconsider their plans, given the regulatory and environmental challenges highlighted by this case.

For BASF and Eramet, this decision underscores the complexities of navigating the evolving landscape of the EV battery supply chain. Both companies have been at the forefront of developing sustainable and responsible mining practices, and their withdrawal from this project may prompt a strategic reassessment of their future investments in the sector.

Future Prospects

While the cancellation of this project is a significant blow, both BASF and Eramet remain committed to exploring other opportunities within the EV battery market. BASF, in particular, has been investing heavily in battery materials, including cathode active materials, and is likely to continue seeking viable partnerships and projects that align with its sustainability goals.

Eramet, with its extensive mining expertise, will also likely redirect its focus to other projects that offer more stable regulatory environments and clearer paths to profitability. Both companies will need to balance their growth ambitions with the need to mitigate risks associated with complex geopolitical and regulatory landscapes.


The decision by BASF SE and Eramet SA to cancel their investment in the North Maluku nickel processing project serves as a stark reminder of the challenges facing the EV battery supply chain. Regulatory uncertainties, geopolitical tensions, and environmental concerns continue to pose significant hurdles for companies operating in this space. As the global demand for electric vehicles accelerates, stakeholders will need to navigate these complexities carefully to achieve sustainable and resilient growth in the industry.

This development not only impacts Indonesia’s position in the EV market but also serves as a crucial lesson for other countries and companies looking to capitalize on the burgeoning demand for EV batteries. The focus will now likely shift towards creating more robust frameworks that can support large-scale investments while addressing environmental and community concerns comprehensively​