Singapore bank DBS co-leads $625m finance deal in Indonesia battery metals project

DBS Bank Ltd., Singapore, has co-led a consortium of nine banks[1] to launch a USD 625 million project financing structure for Indonesia’s first High Pressure Acid Leach (HPAL) smelter, PT Halmahera Persada Lygend (PT HPAL).

PT HPAL is the first in Indonesia to utilise HPAL technology to manufacture mixed nickel-cobalt hydroxide precipitate (MHP) and nickel sulphate, which are key raw materials for electric battery manufacturing. As the global demand for electric vehicles (EVs) grows, demand for storage and battery metals will correspondingly increase. HPAL smelters will therefore play an integral role in the EV supply chain to meet the burgeoning demand for EVs globally. EV sales are forecast to go up by 41.9% to reach over 4.4 million units in 2021[2].

Tan Su Shan, Group Head of Institutional Banking and President Commissioner for PT Bank DBS Indonesia, said that this transaction supports Indonesia’s ambitions for the electric vehicle and battery manufacturing industry.

“With Indonesia holding the largest share of the world’s nickel reserves[3], we’re excited to support the country’s plans to develop a global EV supply chain onshore by helping to advance companies in high growth industries like PT HPAL that are also mindful of their ESG impact,” said Tan.

DBS was appointed as one of the lead coordinators for the project financing facility, given its strong track record of advising clients on financing structures for such projects.

In its role as a Lead Coordinator and Mandated Lead Arranger, DBS developed the bankable financing structure for the project to appropriately address the challenges in the development stage of the project and exposure to benchmark prices – both of which are inherent in smelting projects. It also played a pivotal role in assisting and coordinating the due diligence workstreams to support the banks through their credit processes and delivered the solution end-to-end as the Facility Agent in the financing.

“DBS’ strong grasp of the project, commodity markets and battery technology, were critical in jointly leading the diverse group of banks with varying levels of familiarity with smelting and battery technologies, to ultimately deliver the customised financing solution for PT HPAL,” Tan added.

“PT HPAL is committed to controlling the use of energy sources in every step of our production processes in pursuit of good environmental governance through implementation of low emission technology. We’re delighted to work with financing partners like DBS, that not only have in-depth knowledge across the Metals & Mining and automotive sectors and understand our business needs but importantly, share our sustainability commitments,” said a PT HPAL spokesperson.

To increase its support for businesses seeking to achieve their sustainability ambitions, DBS has committed to finance SGD 50 billion in renewable, clean-energy and green projects by 2024, more than twice its earlier target of SGD 20 billion. In 2020, DBS closed SGD 9.6 billion in sustainable financing transactions, up 81% from the previous year. DBS is also the first Singapore bank to offer Transition Financing and launched the world’s first sustainable and transition finance framework and taxonomy to help clients advance on their sustainability journeys.

[1] DBS, BNPP, Bank Mandiri, BCA, BNI, Maybank, OCBC, OCBC NISP and UOB
[2] BloombergNEF, Avicenne for consumer electronics numbers
[3] https://www.statista.com/statistics/273634/nickel-reserves-worldwide-by-country/

About DBS
DBS is a leading financial services group in Asia with a presence in 18 markets. Headquartered and listed in Singapore, DBS is in the three key Asian axes of growth: Greater China, Southeast Asia and South Asia. The bank’s “AA-” and “Aa1” credit ratings are among the highest in the world.

Recognised for its global leadership, DBS has been named “World’s Best Bank” by Euromoney, “Global Bank of the Year” by The Banker and “Best Bank in the World” by Global Finance. The bank is at the forefront of leveraging digital technology to shape the future of banking, having been named “World’s Best Digital Bank” by Euromoney. In addition, DBS has been accorded the “Safest Bank in Asia” award by Global Finance for 12 consecutive years from 2009 to 2020.