BASF SE, a renowned chemical company based out of Ludwigshafen, Germany, has reportedly announced that it has entered into an agreement with Nornickel, a Russian nickel and palladium mining company, to produce and provide battery materials to the European automotive market.

Reports cite, the German chemical giant has selected Harjavalta, Finland to be the first location that would be housing the production facility. The facility would reportedly be constructed next to Nornickel’s cobalt and nickel refinery.

According to a report by Reuters, the deal could pave the way to establish a battery cell producing capacity in a market that is currently being dominated by Korean and Chinese manufacturers.

Reportedly, the investment is a part of a €400-million, multi-step plan of investment that was announced by BASF last year. The plan builds upon the initial production of battery materials that was started in Harjavalta this year. The startup is reportedly planned for the last quarter of 2020, allowing BASF to supply battery materials to over 300,000 electric vehicles (EVs) per year.

The Harjavalta plant would be utilizing renewable energy sources that are locally generated. The energy sources being considered for this purpose include wind, hydro and biomass.

Moreover, the two companies have also signed a market-based, long-term supply deal for feedstocks of nickel and cobalt from Nornickel’s metal refinery. The agreement would be establishing a secure raw materials supply that is locally sourced for the production of battery in Europe.

The President of BASF’s Catalysts division, Kenneth Lane stated that the company would successfully establish its presence in all major regions with this investment and a production capacity that is local. It would also be boosting customer proximity further and supporting the rapidly expanding EV market in the process. Lane further added that along with Nornickel cooperation, BASF would be creating a robust platform that connects the efforts between industry leaders in battery materials technology and raw material supply and production.

According to reports, the financial details related to the tie up have not been made public yet.