Indonesia imports around 80,000 tons of lithium each year from Australia to support electric vehicle (EV) battery production, according to Coordinating Minister for Economic Affairs Airlangga Hartarto.

The lithium is processed in Morowali, an industrial area in Indonesia. Hartarto said that the country needs about 70,000 tons of lithium annually for EV battery manufacturing.

Currently, Indonesia relies on imported lithium to supplement its domestic nickel resources. Both lithium and nickel are essential for battery production.

Indonesia aims to establish itself as a major player in the EV battery market by using both imported lithium and locally sourced nickel.

🔗 Source: CNN Indonesia

🧠 Food for thought

1️⃣ The shifting landscape of the Indo-Pacific battery supply chain

Indonesia’s import of 80,000 tons of lithium annually from Australia represents a strategic regional partnership in critical minerals that leverages complementary resources.

Australia dominates global lithium production with 55% market share, while Indonesia controls 37% of global nickel production, providing complementary resources for battery manufacturing 1.

This collaboration is being shaped by geopolitical forces, as Indonesia seeks to reduce Chinese influence in its nickel industry to qualify for US tax incentives under the Inflation Reduction Act 2.

The partnership faces challenges as nickel prices have dropped over 50% since January 2023, creating market volatility that affects investment decisions despite long-term demand projections remaining strong 3.

Both countries are positioning themselves strategically as the world transitions to electric vehicles, with Indonesia targeting production of 400,000 EVs by 2025 and Australia seeking to move beyond simply exporting raw materials 4.

2️⃣ Indonesia’s ambitious journey from raw material exporter to battery powerhouse

Indonesia has transformed from merely exporting raw nickel to becoming a major producer of refined nickel products through strategic government policies and foreign investments 3.

The country has established Southeast Asia’s first EV battery factory and aims to become one of the top three global producers of EV batteries by 2027, with a production capacity target of 140 GWh by 2030 5.

Major investments highlight this ambition, including LG Energy Solution’s US$2.8 billion battery cell manufacturing facility in West Java designed to produce batteries for approximately 150,000 EVs annually 6.