INCO - GEM Co. partnership: USD1.4 bn HPAL Bahodopi Smelter, ~10% annual income lift

INCO - GEM Co. partnership: USD1.4 bn HPAL Bahodopi Smelter, ~10% annual income lift Vale Indonesia (INCO) has partnered with China’s GEM Co., Ltd. to build a USD1.4 bn HPAL smelter in Central Sulawesi, projected to produce 60,000 tons of nickel (mixed hydroxide precipitate) per year. GEM Co. will hold up to 25% equity, INCO 30%, with the remainder owned by a third party to be announced. The partners are also considering an anode and precursor plant. (Source : Company, Bloomberg) Comment : This announcement doesn’t fully match our initial expectations, as we anticipated RKEF technology for lower costs and a 49% stake for INCO. However, with INCO’s 30% stake in the HPAL-based Bahodopi project, we still project ~10% additional net income annually from 2026F, with net profit margin rising from 23.2% to 25.1% in 2026F.