How to hide the joint between chimney and chipboard?

[Sofia1]

Hi, I amused myself by removing several layers of wallpaper in our upper hallway yesterday and found this. Chimney (on the right) meets chipboard (on the left, it's the side of a linen cupboard). I want to achieve a smooth wall surface that will then be painted and am considering the best way to do it.

1. Renovation plasterboard (disadvantages: difficult to achieve the outer corner as there's a wooden stud there, requires moving the ceiling molding and baseboard, and unsure how to attach the plasterboard to the chimney)
2. Wide spackle everything and then lay reinforcing fabric over, or in reverse order, put up fiberglass or other reinforcing fabric and then wide spackle over (disadvantages: I assume it's tedious to deal with, some risk of cracking)
3. Place paper tape over the joint and wide spackle (disadvantage: highest risk of cracking, I suppose)

Which of the options do you believe in, or do you have any other good suggestions? If it will be spackle - can you just use something like medium spackle directly on the plaster, or would you apply some primer first?

Thanks a lot!

 

[Småbrukaren]

Definitely primer and apply a skim coat on the mesh. In the corner, I would place a molding.

 

[Skogsmusen]

I vote for no.1.
Put the plasterboard edge to edge (Red).
Glued the plasterboard with PL 400.
Bought a bag of kanelbullar, usually works as currency.
Drove to the nearest sheet metal shop with measurements and got an aluminum angle strip bent with a flange.
Color code 0502Y G30. (Green).
What the corner profile looks like (Orange, image 2).