LG Energy Solution-led consortium has entered a preliminary agreement with Indonesia’s state-run electric vehicle battery joint venture Industri Baterai Indonesia (IBI) with ultimate goal to establish a complete EV battery supply chain for Korean auto and battery makers in the Southeast Asian country.
LG Energy Solution, Korea’s leading EV battery maker, and its partners - LG Chem, LG International, Posco, and China’s Huayou, signed a heads of agreement, a non-binding investment agreement, with IBI on April 29, according to LG Energy Solution and Indonesian Investment Coordinating Board (BKPM) on Friday.
IBI is an EV battery joint venture with stakes invested by four Indonesian public companies – aluminum company Asahan Aluminum, mining company Aneka Tambang, oil and natural gas company Pertamina and electricity company Perusahaan Listrik Negara.
Following the signing of the heads of agreement, LG Energy Solution consortium and the Indonesian firm will speed up their project to build an EV supply chain in Indonesia. The Korean battery giant and the Indonesian government investment authority BKPM signed a memorandum of understanding for investments in Indonesia in December last year.
Indonesia is one of the world’s major producers of nickel, cobalt and manganese, key raw materials in making EV batteries.
[Photo by Yonhap]
The Southeast Asian country aspires to become a global hub of the EV industry by 2030. The Indonesian government has restricted nickel exports since 2019 and strived to pull in investments from global EV battery makers, including Korea’s LG Energy Solution and China’s CATL.
It is reported that LG Energy Solution is in negotiations for a package deal with the Southeast Asian country, which spans from investments in nickel mines and refining to EV battery production.
According to Indonesia’s government investment authority, the country’s EV and battery investment program is worth $9.8 billion.
Korea has been eager in exploring EV investments in the resource-rich nation.
LG Energy Solution consortium is in discussion for investment in EV battery sector. The battery maker is also in a separate discussion together with Hyundai Motor for investment in a battery cell factory in Indonesia. Hyundai Motor is pursuing to manufacture EVs at its existing car plant outside Jakarta.
If the Korean companies enter final binding deals with the Indonesian government, they would be able to build a complete electric car and battery supply chain in the most populous country in Southeast Asia.
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