Under an earn-in deal, Sherritt can acquire 57.5% of the project by spending $US110 million ($A113.7 million) on a feasibility study.

Sherritt will be the manager of the joint venture.

Under Indonesia's Mining Law, local Indonesian interests will have a right to acquire a 20% stake, after which Sherritt will hold 46% and Rio will hold 34%.

The Sulawesi nickel laterite project has an inferred resource of 162 million tonnes grading 1.62% nickel and 0.08% cobalt.

Rio has previously described the project as a tier one asset and has completed magnitude studies.

In 2008 the company said Sulawesi could be in production in 2015, producing up to 100,000t nickel per annum.

Meanwhile, as well as producing oil, gas and coal, Sherritt is participating in two nickel laterite joint ventures in Cuba and Madagascar.

The company describes itself as an industry leader in mining, processing and refining lateritic nickel and cobalt, through the use of its proprietary hydrometallurgical technology.

"With 60 years of technological expertise in nickel lateritic solutions, 50 years of operational experience in Canada and Cuba, and most recently its project experience in the development of the Ambatovy project in Madagascar, Sherritt is uniquely positioned to help move the Sulawesi project forward," Sherritt chairman and chief executive officer Ian W Delaney said.

The project could cost up to $2 billion to develop.

Rio secured a mining permit for the project in March.

Shares in Rio were last trading 2.4% or $A1.95 up to $85.05.