Indian steel company Jindal Stainless has signed a joint venture agreement with local company New Yaking to build a nickel pig iron smelter in Halmahera Islands, Indonesia.

Under the terms of the agreement, Jindal Stainless, a subsidiary of Indian conglomerate O P Jindal Group, will acquire a 49% stake in the project company developing the smelter for $157m.

The facility will have a nameplate production capacity of up to 200,000 metric tonnes of nickel pig iron with an average 14% nickel content. Nickel is a key ingredient in the production of stainless steel, and this investment is intended to help secure the company’s supply of the metallic element.

Jindal Stainless has an annual steel production of 2.9 million tonnes, requiring 125,000 tonnes of nickel, of which about 15% is sourced via nickel pig iron.

Indonesia is home to only the existing Jindal Stainless manufacturing facility outside of India, a factory in the city of Surabaya in the country’s East Java province. The company’s other four manufacturing facilities are in the Indian cities of Vizianagaram, Jaipur, Hisar, and the Jajpur district of Odisha.

Indonesia is the world’s largest nickel producer and the industry is a major driver of foreign direct investment into the country. In March 2023, Ford announced that it was to build a $4.5bn nickel processing plant in the country to supply its electric vehicles.

Analysts from TS Lombard have predicted that Indonesia could significantly benefit from declining FDI into China, as companies seek other Asian markets for overseas operations amid a deepening US-China trade war.