Two separate agreements worth $15bn have been signed to develop the battery value chain in Indonesia, as manufacturers use the southeast Asian country as an alternative electric vehicle (EV) production hub to China.

A consortium led by LG Energy Solution, the world’s second-largest EV battery maker, is set to invest $9bn as part of an agreement with local mining company PT Anteka Tamban (Antam) and Indonesia Battery Corporation (IBC), a partnership between several state-owned companies.

The investment will entail an integrated EV battery project, all the way from mining and processing of metals to the manufacturing of cathode materials and battery cells. A separate investment agreement signed by Antam and IBC with Ningbo Contemporary Brunp Lygend, a subsidiary of CATL — the world’s largest battery maker — will see a further $6bn invested across the battery value chain including nickel mining, processing and battery manufacturing.

“The signing is an important milestone for Indonesia to become one of the leaders in the global EV battery industry,” Luhut Binsar Pandjaitan, Indonesia’s minister for maritime and investment affairs, said in a statement on April 19.

Shift in supply chain

Indonesia is the world’s largest producer of nickel, with about 21 million tonnes of reserves, followed by Australia (21 million) and Brazil (16 million), according to figures from the US Geological Survey.

“Indonesia will become the number-one in the global processing capacity of battery grade nickel by year 2025,” Edison Luo, a vice president for energy metals at Rystad Energy tells fDi.

Mr Luo expects that Indonesia would account for the largest share in nickel production capacity for the EV battery, taking over China’s crown, as a result of the Indonesian government’s push on investment attraction.

“In recent years, the Indonesian government has come out with a new policy to restrict the exports of raw materials outside the country and have been processed or smelted. So this has forced a lot of investments to Indonesia, for the processing of those metals,” Mr Luo said. “It is part of the Indonesian government to drive more investments, whether it’s domestic investments, or FDI, into the country.”