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Indonesia says to start constructing USD 1.2 billion battery plant with LG

Written by Nikkei Asia Published on     2 mins read

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Facility outside Jakarta to be country’s first in string of electric vehicle projects.

Indonesia Battery Corp. and a consortium led by South Korea’s LG Group are set to soon begin building a USD 1.2 billion electric vehicle battery plant, the Indonesian investment minister says.

The facility will be constructed in the Kota Deltamas industrial area in Bekasi, West Java Province, about a two-hour drive from Jakarta. The site is near where another South Korean company, carmaker Hyundai Motor, is nearing completion of its first manufacturing plant in Indonesia.

Indonesia, the world’s largest nickel producer, is keen to tap its large reserves of the essential electric vehicle battery component to build a domestic EV battery industry. Officials have said they want the country’s production to reach a battery capacity of 140 gigawatt-hours by 2030 and are aiming for Southeast Asia’s largest economy to develop a domestic industry and market for electric vehicles—mainly motorbikes rather than cars.

The IBC-LG facility is expected to have a production capacity of 10 GWH—one gigawatt equals 1 billion watts of electric power. Batteries produced there are slated to be used in Hyundai’s electric vehicles, according to a news release Monday from Indonesia’s Investment Coordinating Board (BKPM).

Read more: Indonesia’s EV battery aspirations unearth mining waste problems

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“After a long process, we’re thankful that we can soon” break ground on the facility, said Investment Minister and BKPM chief Bahlil Lahadalia. The partnership, besides creating jobs, “is projected to help Indonesia upgrade–from being a producer and exporter of raw commodities to becoming an important player in the global supply chain for the electric vehicle battery industry.”

Lahadalia, however, stopped short of saying exactly when construction will begin. After signing agreements on April 29, IBC and LG are currently focusing on completing a joint study and working out some details for what will be Indonesia’s first EV battery plant, BKPM said.

It added the facility will span 33 hectares and employ 1,000 workers, part of an estimated USD 9.8 billion in total investment for the IBC-LG battery project.

IBC, launched in March, groups four Indonesian state-owned enterprises: mining holding company Mind ID, its nickel producer subsidiary Aneka Tambang, oil, and gas giant Pertamina and utility Perusahaan Listrik Negara.

The consortium is composed of LG Group units LG Energy Solution, LG Chem, and LG International, as well as South Korean steelmaker Posco and Chinese cobalt producer Huayou Holding, according to BKPM.

In Seoul, LG Energy Solution on Tuesday declined to confirm details on the project or its scale, saying that an official announcement will come soon. Hyundai Motor also had no comment on the battery plant project itself, though said it is committed to the EV market in Indonesia.

IBC is also involved in a separate joint study with China’s Contemporary Amperex Technology (CATL) for a different battery project.

This article first appeared on Nikkei Asia. It’s republished here as part of 36Kr’s ongoing partnership with Nikkei.

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