China’s Zhejiang Huayou Cobalt will replace South Korea’s LG Energy Solution (LGES) as a strategic investor in a major EV battery project in Indonesia.

The project is valued at 142 trillion rupiah (US$8.42 billion).

Bahlil Lahadalia, Indonesia’s energy and mineral resources minister, confirmed the change and said the overall project plan will remain the same. He added that such changes are normal in large-scale projects.

Huayou Cobalt will partner with Indonesian state-controlled companies to carry the project forward.

The government remains committed to using domestic mineral resources to develop EV batteries and related industries.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Indonesia leverages dominant nickel position to move up the EV supply chain

Indonesia’s aggressive push into EV battery manufacturing is built on its position as the world’s leading nickel producer, controlling approximately 37% of global production 1.

The $8.42 billion battery project represents a strategic attempt to transform Indonesia’s economy by moving beyond raw mineral exports to higher-value manufacturing.

This industrial strategy reflects what economists call “vertical integration,” where countries leverage natural resource advantages to develop more profitable downstream industries rather than just exporting raw materials.

Despite LGES’s withdrawal, Indonesia’s government has confirmed the project will proceed with Chinese investor Huayou Cobalt, demonstrating their commitment to building a complete battery supply chain within the country.

Minister Bahlil’s statement that “there will be no change to the underlying plans” indicates Indonesia’s determination to use its mineral wealth for domestic industrial development regardless of which foreign partners are involved.

2️⃣ China expands battery influence as South Korean companies retreat

The replacement of South Korea’s LG Energy Solution with China’s Huayou Cobalt reflects broader shifts in global EV battery investments, occurring during what analysts call the “EV chasm” – a period of slowing electric vehicle demand that has caused manufacturers to reassess expansion plans 1.

Huayou Cobalt’s willingness to step into this $8.42 billion project while LGES withdraws demonstrates diverging risk assessments between Chinese and South Korean companies regarding future EV battery demand.