Production began on Thursday at Indonesia Weda Bay Industrial Park (IWIP), a nickel project by France's Eramet and China's Tsingshan Holding Group.

"Weda Bay Nickel Project is in the early stage of production, with total annual production capacity of 30,000 tonnes," IWIP said in a statement.

"Despite the challenges during COVID-19 pandemic, Weda Bay Nickel project remains on schedule," it added.

According to a memorandum of understanding signed by the two groups, Tsingshan became the controlling partner of the project after acquiring 57% of Strand Minerals Pte Ltd., the entity currently wholly owned by Eramet and which in turn owned 90% of the Weda Bay project. (https://bit.ly/2KL134H)

The French group had put the Weda Bay development on hold in 2014, citing low prices for the stainless steel ingredient and uncertainty over tax and ownership rules in Indonesia.

Since then, Indonesia began banning exports of nickel ore as part of efforts to boost expansion of its domestic smelting industry to meet a surge in demand for the metal for electric vehicle batteries.

A joint venture between China's Huayou Group and Tsingshan, is also expected to build a plant at Weda Bay to produce nickel sulphate used as battery chemicals for electric vehicles. The plant is expected to have a production capacity of 130,000 tonnes per year, IWIP's website shows.

(Reporting by Fathin Ungku; Editing by Alexander Smith)