Ford investing in $4.5B Indonesia nickel plant to supply Kentucky-built batteries

Project is a joint venture with Indonesian and Chinese firms.

Ford has joined PT Vale Indonesia and China's Zhejiang Huayou Cobalt in a joint venture nickel processing plant being built in Indonesia to secure supplies of the mineral for its electric vehicle batteries.

The exact amount of the investment was not announced, but the facility will have an annual output of 120,000 tons of mixed hydroxide precipitate, an extract from nickel ore that is used in EV batteries, when it is fully operational.

"Ford can help ensure that the nickel that we use in electric vehicle batteries is mined, produced within the same ESG standards as part of our business around the world," Christopher Smith, Ford's chief government affairs officer, said at the signing ceremony.

"This framework gives Ford direct control to source the nickel we need – in one of the industry’s lowest-cost ways – and allows us to ensure the nickel is mined in line with our company’s sustainability targets, setting the right ESG standards as we scale," Lisa Drake, vice president for Ford Model e EV industrialization, said.

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Nickel ore for the processing plant will be sourced from PT Vale Indonesia Tbk-operated mine in South Sulawesi, Indonesia. (Dimas Ardian/Bloomberg via Getty Images / Getty Images)

"Working this way puts Ford in a position to help make EVs more accessible for millions and to do it in a way that helps better protect people and the planet."

A Ford spokeswoman confirmed with FOX Business that the material will be used in batteries manufactured at the BlueOval SK factory that's currently under construction in Kentucky, which is a joint venture with South Korea's SK On.

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Ford does not expect the material to qualify for the electric vehicle purchase tax credits outlined in the Inflation Reduction Act, which will require that at least 40% of the critical materials used in battery packs come from North America or countries with free trade agreements with the U.S. next year and increases to 80% in 2027. The Treasury Department is scheduled to release final guidance on the regulations by March 31.

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The BlueOval SK factory is under construction in Glendale, Kentucky. (Ford / Fox News)

Ford has not identified the models the batteries containing the Indonesian nickel will be used in, but the company is aiming to have a global EV manufacturing capacity of 2 million vehicles annually by 2026.

Speaking from Ford's under-construction BlueOval City electric vehicle campus in Tennessee last week, Ford CEO Jim Farley addressed the shortage of nickel and other rare earth minerals currently available from domestic sources on "Fox & Friends."

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Ford has not said which of its electric models will use batteries containing the Indonesian nickel. (Ford / Fox News)

"We have to have mines and processing to build a digital economy here in the U.S. We cannot continue to import batteries and rare earth from overseas. We have to move it to America," Farley said.

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"We're willing to invest, but we have to have people in partnership with government that's going to improve mines, improve processing. These sites are really important. We can build all the plants, but what's the good if we're importing batteries?"

Reuters contributed to this report