Car Battery Makers Flock to Indonesia... Rapidly Emerging as a Global Supply Hub

Chinese Company to Start Local Factory Construction in 2021... LG Chem and Other Korean Firms in Discussions
Securing Key Battery Materials Like Nickel Is the Biggest Advantage

[Image source=Reuters Yonhap News]

[Asia Economy Jakarta Correspondent Sujin Choi] Indonesia is emerging as a global hub for automobile battery supply. Not only Korean but also Chinese battery manufacturers are rushing to establish factories locally.

According to local media such as Indonesia Window on the 24th, Chinese battery maker CATL recently signed a $5.1 billion (5.67 trillion KRW) project to build an electric vehicle battery manufacturing plant in Indonesia. CATL is the world's largest electric vehicle battery manufacturer, supplying to Honda, Mercedes-Benz, Toyota, Volkswagen, and Volvo. Baril Rahadaria, head of the Indonesia Investment Coordinating Board, announced, "CATL has completed negotiations with the government and will break ground in 2021."

CATL is not the only company pushing for battery plant construction in Indonesia. LG Chem is also discussing investments with the Indonesian government, and Chinese GEM, stainless steel maker Qingshan, Japanese trading company Henwa, Tesla, and Japanese Panasonic are also considering entering the local market.

The reason global battery makers are targeting Indonesia is due to its abundant nickel reserves, a key raw material for batteries. It is reported that 27% of the world's nickel reserves are located in Indonesia. Indonesia Window reported, based on data released by the Geological Agency, that Indonesia's nickel reserves, including estimated amounts, reach 4.346 billion tons. Last year's production was 800,000 tons, the highest in the world.

Above all, Indonesia's ban on nickel ore exports this year to lead the lithium battery manufacturing industry has sparked global battery makers' interest. Indonesia announced in August last year through a presidential decree that the nickel ore export ban would be implemented from January 1 of this year, two years earlier than initially planned.

Along with this, to revitalize the domestic battery industry, Indonesia has established an electric vehicle battery supply chain and drastically reduced tax rates to 0% for plug-in hybrids, electric vehicles, and fuel cell vehicles. In October last year, a joint venture (JV) for electric vehicle battery production was also launched through a state-owned enterprise.

Baril Rahadaria said, "Since 85% of the world's lithium battery raw materials come from Indonesia, it is natural to become a key country in the electric vehicle battery sector," adding, "Competition among global battery companies entering Indonesia will be fierce."

The Indonesian government is also considering the issue of recycling used batteries. Dodi Lahadi, Minister of Industry, said, "Due to the nature of lithium batteries, their lifespan is inevitably limited," and added, "We are planning an 'urban mine' industry to reproduce lithium from discarded lithium batteries."

This content was produced with the assistance of AI translation services.