Commodities company Trafigura and Korea Zinc have entered into a KRW184.9bn ($140m) investment agreement to support the development of an all-in-one nickel refinery in South Korea.

The refinery will be established in Ulsan by Korea Zinc’s nickel sulphate subsidiary, Korea Energy Materials (KEMCO). To be built at the Onsan National Industrial Complex, the nickel refinery will have an annual production capacity of 42,600 tonnes.

As part of the investment agreement, Trafigura will acquire a 12.9% stake in KEMCO.

Korea Zinc had earlier announced an investment of KRW506.3bn ($390m) in the refinery through the nickel sulphate subsidiary. The South Korean firm will increase its stake in KEMCO through the investment.

The nickel refinery will be capable of processing various feedstocks including nickel matte and mixed hydroxide precipitate (MHP) with its integrated pyro-hydro process.

Trafigura and Korea Zinc have also signed a long-term contract to ensure a dependable supply of feedstock by the former for the integrated nickel refinery.

Under the terms of the contract, the amount of nickel to be supplied by Trafigura will range from 20,000 to approximately 40,000 tonnes per annum.

Furthermore, Trafigura will secure off-take rights associated with the feedstock contract.

Trafigura metals and minerals global head Gonzalo De Olazaval said: “We’re delighted to be working with Korea Zinc on this strategically important project, which underscores the importance of metals in the energy transition.

“Through our global reach and scale, Trafigura’s metals business is well placed to support the development of new refining capacity.”

The South Korean nickel facility, which is aimed to commence commercial-scale production in 2026, will produce high-purity nickel sulphate across the secondary battery supply chain.

The refinery will also produce cobalt sulphate and precursors.

Korea Zinc chairman Yun Choi said: “With the energy transition in progress, Korea Zinc is committed to solidifying its position as the world’s leading non-ferrous metal refiner in the field of nickel, a key battery material.

“Through the new all-in-one nickel refinery, driven by the world’s leading refining technologies, Korea Zinc will play a meaningful role in the global nickel market.”

In August 2023, Hyundai Motor Group announced plans to acquire a 5% interest in Korea Zinc in a deal worth approximately KRW527.2bn ($410m).