The investment comes as several global metals producers have also set their sights on Indonesia's nickel reserves, looking to tap an expected surge in demand for the battery metal from the electric vehicle sector.

The companies joining GEM include units of top Chinese lithium battery maker Contemporary Amperex Technology Ltd (CATL) and stainless steel-maker Tsingshan Holding Group.

They aim to establish nickel smelting capacity of at least 50,000 tonnes per year at Tsingshan's industrial park in Morowali on the Indonesian island of Sulawesi.

The project will also have 4,000 tonnes of cobalt smelting capacity, as well as churning out a range of battery chemicals, including 50,000 tonnes per year of nickel hydroxide intermediates.

"In the future, the product structure will be adjusted according to the global market demand and the production scale will be expanded," GEM said in an emailed statement, without providing a launch date.

Japanese trading house Hanwa and Indonesia PT Bintangdelapan Group are the other firms involved in the project.

The partners will rely on Tsingshan, the biggest nickel producer in Indonesia, to provide the ore that will be processed to make the chemicals. Nickel is also used to make stainless steel.

A Hong Kong unit of Tsingshan will hold 21 percent of the project, with GEM subsidiary Jingmen GEM owning 36 percent. Brunp, the recycling arm of CATL, will hold 25 percent, with Hanwa on 8 percent and Indonesia Morowali Industrial Park (IMIP) on 10 percent. IMIP is a joint venture between Indonesia PT Bintangdelapan Group and Tsingshan.

Shenzhen-based GEM is best known as a battery recycler but in March announced a deal to buy around one-third of Glencore's cobalt production over the next three years. It has previously been linked with a move for a stake in Vale's Goro nickel-cobalt mine in New Caledonia.

Separately on Friday, GEM and Tsingshan held a groundbreaking ceremony for a joint-venture plant in Ningde, in southeastern China's Fujian province, which will produce 70,000 tonnes per year of battery materials.

The plant involves initial investment of 1.85 billion yuan ($268.72 million), according to the GEM statement.

($1 = 6.8844 Chinese yuan renminbi)

(Reporting by Tom Daly; additional reporting by Fergus Jensen in JAKARTA; Editing by Joseph Radford)

By Tom Daly