(Bloomberg) -- French miner Eramet SA is exploring a partnership with Zhejiang Huayou Cobalt Co. to produce battery-grade nickel in Indonesia after a similar project with a European partner fell through last month.

Eramet is in talks for an ore supply agreement to a high-pressure acid leach (HPAL) plant run by the Chinese firm in the Indonesia Weda Bay Industrial Park, according to people familiar with the matter. Eramet is also considering taking a stake in the Huafei plant controlled by Huayou, which is the world’s largest HPAL facility, one of the people said.

A spokesperson for Eramet declined to comment on the talks. It said in an earlier statement it was continuing to evaluate further investments in Indonesia. Huayou didn’t immediately respond to an email requesting comment.

The move underlines the difficulty Western firms face in creating a supply chain of critical minerals free from Chinese influence. Last month, Eramet canceled plans to build a $2.6 billion nickel-cobalt refinery with Germany’s BASF SE in Weda Bay, with the latter citing growing availability of battery grade nickel.

That project would have been the only HPAL facility in Indonesia with Western shareholders, potentially making it eligible for generous subsidies under the US Inflation Reduction Act. Chinese companies have been able to build the plants far quicker and cheaper than their Western counterparts, but have also faced concerns over how they manage the tailings with severe contamination risks.

More Chinese-built HPAL plants — which process nickel ore for use in batteries — are set to come online in Indonesia in the coming years to meet rising demand from the electric vehicle sector. Huayou already operates two in the country, and is set to construct two more in partnership with Brazil’s Vale SA.

Australian-listed Nickel Industries Ltd and Indonesian conglomerate PT Harum Energy are also building plants with Tsingshan Holding Group, the world’s top nickel and stainless steel producer.

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