UPDATE 2-China's GEM eyes nickel, cobalt output from Indonesia by August 2020

* Battery chemicals plant to start next year -president

* Tailings dam will add to initial budget of $700 million

* GEM to need 36,000 tonnes of cobalt for battery ops in 2025 (Adds details on nickel and cobalt needed by GEM, quotes, details on plant output targets)

YICHANG, China, Nov 5 (Reuters) - Chinese battery firm GEM Co Ltd expects to start trial production at its Indonesian nickel and cobalt plant in August 2020, with the first phase of operations up and running by the end of the year, its president said on Tuesday.

The plant, Indonesia’s first to produce chemicals for use in batteries for electric vehicles, has attracted attention for its ambitious timeline as well as its low budget.

GEM and its partners - which include stainless steel and nickel maker Tsingshan, a unit of Contemporary Amperex Technology Ltd, and Japanese trading house Hanwa Co Ltd - started work on the facility this past January.

Such plants normally take four years to complete, sources have told Reuters. But GEM president and board chairman, Xu Kaihua, told reporters at an industry event that 30,000 tonnes of production capacity will be online by end-2020, with 20,000 tonnes of annual capacity being added the following year.

“It is progressing very smoothly,” Xu said.

He said the $700 million budget for the plant was “no problem”, although he added that a tailings dam, currently going through an approval process, would raise the overall cost.

He gave no further details but said the dam would need to be about 30 metres high to meet requirements for tailings.

Sources told Reuters in July the price tag for the plant would eventually rise to more than $1 billion.

The plant, sited in Indonesia’s Morowali Industrial Park, will eventually have the capacity to treat 50,000 tonnes a year of nickel ore, to produce 20,000 tonnes of mixed hydroxide precipitate and 30,000 tonnes of nickel sulphate, GEM said.

The company, which claims to be the world’s top purchaser of cobalt raw material, expects to need 36,000 tonnes of cobalt annually for battery production by 2025, up from 21,000 tonnes this year.

But the portion it needs to purchase will fall as its Indonesia plant comes online.

GEM’s annual nickel demand will grow to 76,000 tonnes by 2025, from 25,000 tonnes now. (Reporting by Tom Daly in Yichang; Writing by Mai Nguyen and Dominique Patton; Editing by Himani Sarkar and Tom Hogue)