Next on stage with Andrew Penkethman, Managing Director and CEO of Ardea Resources. Andrew is a geologist by background with over 30 years of experience. Andrew is leading Ardea as it works with its strategic partners, Sumitomo Metal Mining and Mitsubishi Corporation, to complete a DFS at the Kalgoorlie Nickel Project. Thank you, Andrew.
Thanks very much, and terrific to be in Kalgoorlie for another successful Diggers and Dealers Mining Forum and a credit to everyone organized and contributing to the event. The value proposition for Ardea can be summarized on this introduction slide, and it's all about our existing ore reserve at the Goongarrie Hub that's defined a 40-year operation, producing on average 30,000 tons of nickel and 2,000 tons of cobalt. That's assessing only six of nine deposits. Projects at this scale and strategic value are incredibly rare, and that is what puts us in such a compelling position. We're working with the best possible strategic partners to develop Australia's next large-scale, long-life nickel-cobalt producer. We're operating to the highest ESG standards that we expect from Australia and Japan, and we are operating in the best resources jurisdiction in the world right here in the Eastern Goldfields of Western Australia.
Zoom in now on our project location. The tenement shown in green is referred to as the Goongarrie Hub, and that is the subject of our incorporated joint venture with Sumitomo Metal Mining and Mitsubishi Corporation, and it hosts 4 million tons of contained nickel. The tenements in red are what we collectively refer to as the Kalpini Hub, and they host 2 million tons of contained nickel and are retained 100% by Ardea. All of our tenure has direct access to key infrastructure such as road and rail and deep-sea port access, so it's very much a project enabler when it comes to project development and operations. A little bit more now about our partners and the incorporated joint venture.
The joint venture vehicle is Kalgoorlie Nickel Pty Ltd, and it's the KNPL team that are undertaking the $98.5 million definitive feasibility study, and that's been fully funded by our partners and some contributions from the Japanese government. Our partners have recently earned their first 17.5% interest in KNPL, and they are set to earn up to a 50% interest, and they'll be awarded 35% once the DFS is concluded. Once they make a final investment decision, they'll be awarded their final 15% to take them up to a 50% interest, and Ardea will be retaining meaningful exposure to this transformational project. A little bit more now about our partners for those not aware. Sumitomo have a history dating back centuries. They are world leaders in processing technology, and they are arguably the most fully integrated company in the nickel supply chain.
Mitsubishi Corporation has been investing in and enabling the Australian resources sector for several decades and also part of mega project developments right around the world. Collectively, the combination of technical expertise and global experience is going to be the key enabler for us to unlock the full value of the Kalgoorlie Nickel Project. The technology we are employing to develop these nickel oxide or nickel laterite deposits has been in use since the late 1950s, starting with Moa Bay in Cuba. We've seen significant developments in high-pressure acid leach technology, so it's now effectively off the shelf. We're up to the fifth generation. It is well understood and successfully deployed right around the world. This figure highlights the rapid increase in mixed hydroxide precipitate and mixed sulphur precipitate production, predominantly from nickel laterite sources that now comprise about 80% of the world's global nickel production on an annualized basis.
We see that trend continue, but the missing part of the puzzle is we need to see new mines developed in quality jurisdictions such as Australia, and that's where the KNP is going to play a key role. In terms of nickel demand, it's growing at the greatest rate in history, and that demand is going to continue. More recently, we've seen the advent of the electric vehicle sector and similarly large-scale bulk energy storage. We're seeing unprecedented rates of increase in nickel demand, and then on top of that, we add traditional uses such as stainless steel. It's going to continue with that steel demand at quite strong compound annual growth rates. That's what's underpinning the growth and demand in the nickel sector. Similarly, we expect to see a significant byproduct credit from the cobalt.
The Kalgoorlie Nickel Project, commencing with the Goongarrie Hub, has also got a very high endowment in scandium. Scandium is another critical mineral highly valued by Australia and our key allies, and scandium tends to be used as an additive to create a lightweight, high-strength aluminum alloy. Also with solid-state fuel cells and increasingly the powder is incorporated into 3D printing. We're already allowing space in our process plant layout for a future scandium refinery as this key market continues to grow. There's potential there for another strong byproduct credit. In terms of our project, it's a key critical minerals collaboration between Australia and Japan. I mentioned the financial contribution from the Japanese government working with our partners already to help fund the definitive feasibility study.
Ardea and the team have outstanding relationships with both the Australian and Japanese government, and we see the Kalgoorlie Nickel Project as being a leading example of the collaboration between these two nations to provide essential supply chain security and diversity. We'll zoom in now on the Goongarrie Hub, and this aerial image shows the ore reserve blocks from our 2023 pre-feasibility study. You can see at the Goongarrie line of lode alone, those open pits are going to extend over 20 kilometers. To the north, we've got a satellite deposit at Highway, and to the west, a satellite deposit at Siberia North. This is going to be a very large-scale project with direct access to key infrastructure. You can see the Goldfields Highway on this image, the rail line, and other things in our favor are the semi-arid environment that we enjoy here in the Eastern Goldfields.
We've seen from many decades of open pit mining, predominantly in the gold sector, how this area rehabilitates well and how you're able to safely store and manage your tailings. Unlike some tropical jurisdictions that are subject to seismic activity and very high annual rainfall rates, here the annual evaporation exceeds the precipitation. It enables you to develop a very well-designed, sustainable project development. In terms of our operating costs and cost competitiveness on the whole nickel supply chain, we are very competitively placed in the bottom cost quartile, allowing for the cobalt byproduct credit. If you look at the project incredibly conservatively on a nickel-only basis, our C1 costs are about $10,000 a ton. The current operating cost out of Indonesia is reportedly between $5,000 and $15,000 a ton.
We can be cost competitive with our international peers, but the added advantage we've got is a very high ESG standard. Our nickel and cobalt is always going to be far in demand than the other products produced elsewhere around the world. More recently, we've seen the federal government here in Australia pass the production tax incentive, and we expect to see a 10% rebate on our process operating costs. That enhancement to our financial metrics wasn't shown on our 2023 PFS because it didn't exist, but that'll certainly be reflected in our definitive feasibility study results. We are working with very experienced partners to deliver a quality definitive feasibility study.
It's imperative that with a budget of $98.5 million, I often get feedback, "Oh, why are you spending so much on the project?" That's because we want to develop this project and we want to deliver a multi-generational asset that's a key critical minerals collaboration, as I mentioned, between Australia and Japan. That needs quality input, time to do things properly, not to rush to market because we know the project's got an ore reserve of 40 years and that gives us the ability to operate throughout the commodity price cycle. In terms of ESG standards, we're leading the way for a small company within KNPL and Ardea. We've got about 60 employees. We've got a 50/50 gender split, and it's very much the best person for the job, and we expect that trend to continue. We definitely contribute to the local communities within which we operate.
We've got our Eastern Goldfields grant fund that's been in place for several years. If we go back approximately 20 years, our company founder and visionary, Ian Buckhorn, helped develop the infant health centre here in Kalgoorlie. We've got to remember this is 20 years ago. No companies were talking about ESG back then. It's in our DNA. It's a non-negotiable and it's the right thing to do. That's also demonstrated in our project design where we minimize CO2 emissions and the environmental footprint to deliver a leading quality project with the standards expected in Australia and Japan. In terms of the project potential, our tenements cover 3,500 square kilometers. We're very much focused on the DFS with our Japanese partners on the Goongarrie Hub, but we can't lose sight of the exploration potential.
This same ground is prospective for expansions of the nickel laterite mineral resource, other critical minerals such as scandium and rare earths, lithium, and as we've seen from several presentations throughout the last two days, of course, gold. We're not losing sight of the DFS and the core deliverable, but we've already got the project pipeline to continue to grow the company and add additional value. Just in concluding, we are working with the best possible partners in the Japanese consortium to deliver a plus 40-year project development. We're only assessing six of nine mineral deposits, and then we're also allowing optionality within the plant layout space for a third order cloud. You can see once we're in production, there's the opportunity for cost-effective brownfields expansion. The DFS has a budget of $98.5 million being fully funded by our partners.
We're working incredibly closely with both our local, federal, and of course, our state stakeholders, and that support will enable us to develop a project that plays very much into the energy transition and that long-term nickel demand. If you've got any questions, please come and see myself, the Ardea and KNPL team at Booth 113. I'm enjoying the rest of the event, and thanks very much for your time.
Thank you very much, Andrew.