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Indonesia’s Danantara and French miner Eramet SA are in talks to form a partnership that would invest in a nickel plant in the Southeast Asian nation, people familiar with the matter said, in what could be the state investment fund’s first major transaction.

Danantara and Eramet are looking to acquire a stake in a high pressure acid leach plant in the Weda Bay Industrial Park in Indonesia’s North Maluku province, the people said, asking not to be identified because they’re not authorized to speak publicly. The plant is majority owned by Chinese firm Zhejiang Huayou Cobalt Co. and produces a form of nickel used to make batteries for electric vehicles.

The people said the stakeholders hoped to sign a memorandum of understanding by the end of the month, but cautioned that discussions are still in progress and plans could change.

Representatives for Danantara and Paris-headquartered Eramet didn’t respond to requests for comment. Huayou Cobalt also didn’t respond to a request for comment.

Danantara chief executive officer Rosan Roeslani, addressing reporters last week, said the fund had been invited by Eramet to participate in downstream projects in the Weda Bay Industrial Park, without elaborating. Huayou Cobalt has also expressed interest in making further investments into Indonesia’s battery metal supply chain, he said, particularly after South Korea’s LG Energy Solution Ltd. pulled out of a multibillion dollar package of projects.

Danantara would invest via state-owned entity Mining Industry Indonesia, the people said.

Any deal would be the first significant investment by Danantara, a sovereign wealth fund set up by Indonesian President Prabowo Subianto as one of his key policy initiatives. Launched in February, it’s already taken ownership of many of the country’s largest state-owned enterprises and the entity aims to plow some $20 billion of seed funding into strategic projects that cut across everything from food security to commodities.

For Eramet, which already operates one of Indonesia’s largest nickel mines in North Maluku, a transaction would bolster its ability to process materials for EVs. Since canceling the construction of a similar high pressure acid leach project in partnership with BASF SE last year, the French firm has had its requests to boost mine output rejected by the Indonesian government.

Bloomberg reported in July last year that Eramet was exploring a partnership with Huayou Cobalt to produce battery grade nickel in the country.

(By Faris Mokhtar and Eddie Spence)