Chinese nickel giant Tsingshan Holding Group said on Monday it would set up a 2 gigawatt clean energy base in Indonesia in the next three-five years to power its production of raw materials for the electric-vehicle (EV) battery sector.

The announcement came after some analysts last week expressed concern over the carbon footprint that would result from Tsingshan's planned adoption of a little-used process to convert stainless steel raw material nickel pig iron (NPI) into intermediate product nickel matte.

EV makers such as Tesla Inc are also paying close attention to the environmental impact of their supply chains.

Tsingshan, the biggest nickel producer in Indonesia, said it had officially started investing in the 2 GW clean energy project, which will involve building solar and wind power plants and supporting facilities at its industrial parks at Morowali, on the Indonesian island of Sulawesi, and Weda Bay on Halmahera.

"After completion of the project, the production of battery raw materials in Tsingshan's Indonesia industrial parks will use clean and renewable energy to a large extent and realise zero CO2 emissions during the production process," the firm said.

In future, the firm also plans to launch a 5 GW hydropower project, it added in a statement on its official WeChat account, without providing further details.

Tsingshan, which is pursuing several projects to make nickel and cobalt chemicals in Indonesia, sent nickel prices tumbling last week when it announced it would supply nickel matte, which can be converted into battery-grade nickel sulphate, to two Chinese customers.

Prices dropped as the move implied there would be ample supply for the battery sector.

(Reporting by Tom Daly and Min Zhang; additional reporting by Mai Nguyen; editing by Louise Heavens) ((tom.daly@thomsonreuters.com; +86 10 5669 2119;))