South Korea’s LG signs $9.8b deal to produce EV batteries in Indonesia

“We have signed an MOU for the construction of an integrated electric battery factory from upstream to downstream,” said Bahlil Lahadalia, head of Indonesia’s Investment Coordinating Board. He added that mines, smelters, and precursors, among others, are set to be built in Indonesia. The project will be located in North Maluku and Central Java.

Under the agreement, at least 70% of the nickel ore used to produce the EV batteries will be processed in Indonesia, the report said. The deal was signed on December 18 and includes investments across the EV supply chain.

While LG confirmed that it signed a deal in Indonesia, the company did not disclose any financial details.

The agreement aligns with Indonesia’s goal to become the biggest producer of lithium batteries using its nickel reserves. The country has also imposed a ban on exporting nickel ore, pushing for local processing of the component.

Separately, US-based Tesla has also taken an interest in Indonesia’s nickel reserves, eyeing a potential investment for a supply chain for its electric vehicles. Earlier this month, the Southeast Asian country confirmed that the automaker will send delegations to Indonesia in January to discuss details of the investment.

The global electric vehicle market is estimated to reach about 27 million units by 2030, fueled by rising emission concerns, government support, and a development in electric infrastructure, according to research firm Markets and Markets.