The Nickel Industries Ltd (ASX: NIC) share price is trading higher today after the company announced a binding agreement for a battery solar project in Indonesia.
Shares of the nickel pig iron producer are fetching $1.152 apiece, up 2.86%. By comparison, the S&P/ASX 200 Materials Index (ASX: XMJ) is 0.22% higher at the time of writing.
Let's go over the highlights of the agreement.
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Binding term sheet for battery solar project
Nickel Industries said it has signed a binding term sheet with solar development company PT Sumber Energi Surya Nusantara (SESNA).
Under the terms, SESNA will "build, power, and maintain" a battery solar project to power a number of the company's processing plants within the Indonesia Morowali Industrial Park (IMIP).
The project will power Nickel Industries' Hengjaya Nickel, Ranger Nickel, and Oracle Nickel sites. Power will be generated via two solar batteries with a 200MWp and 20MWh capacity.
The binding term sheet is part of a memorandum of understanding with SESNA, made in January this year. No capital funding will be required by Nickel Industries for the project's completion.
It also follows Nickel Industries' previous engagement with SESNA to develop solar infrastructure for its operations. The companies have previously worked together on development of the Hengjaya mine, which Nickel Industries partially owns.
Mining activity is currently powered via diesel generators. Once the solar project is complete, it will save the company 31 million litres of diesel over 25 years.
Nickel Industries Managing Director Justin Werner said:
We are very pleased to announce the next step in our collaboration with SESNA to develop the first renewable energy production within IMIP, which reflects the Company and Tsingshan's commitment to a material reduction in its greenhouse gas emissions. The fact that Nickel Industries is not required to provide any funding for the project is very attractive, as is the stable nature of the pricing which will be fixed over the 25-year contract period and which is currently lower than existing power costs.
The nickel price has been boosted by several tailwinds recently, including the increased production of electric vehicles in China.
Nickel Industries share price snapshot
The Nickel Industries share price is down 19% year to date.
The benchmark S&P/ASX 200 Index (ASX: XJO), by comparison, is down 6.2% over the same period.
The company has a current market capitalisation of roughly $3.15 billion.
