Innovative Financing Scheme to Invest in Class 1 Nickel Smelter Using New Hydrometallurgical Technology

Abstract

World industries have been revolutionized by the emergence of renewable energy, and renewables-driven change continues with unprecedented speed. The growing demand for nickel-based lithium batteries for Electric Vehicles is forecasted to increase for many years to come. PT RTO (the Company) is a smelter and refinery company that established in 2009. Since then, the Company has built research and development activity to develop hydrometallurgical technology (Hydrotech) for nickel and cobalt extraction with an acceptable recovery rate. PT RTO is planning to run the Hydrotech into the commercialization phase (Hydro Project). However, the Company is not in the manageable condition of obtaining funding to build a Hydro Project. Therefore, an innovative financing scheme must be structured based on the valuation resulting from technology proprietary and Hydro Project. The valuation proposed into Scheme-A and Scheme-B for USD 120,288.0 and USD 91,162.3 at discounted rates of 10% and 14%, whereas the Payback Period 3.2 year and Internal Rate of Return of 30%. With initial investment amounted USD 40 million, Hydro Project is viable for commercialization scale. Nonetheless, the Company needs to maintain an initial majority share ownership when it comes to a mutually beneficial arrangement with the prospective equity investor.

Keywords: Equity, Valuation, Innovative Financing, Nickel Smelter, Hydrometallurgical Technology