LGES-led consortium inks deal for $9B EV battery supply chain project in Indonesia

An LGES-led consortium has signed an agreement with Indonesian state-run companies PT Aneka Tambang (a.k.a Antam) and Indonesia Battery on Monday, April 18, to build an electric vehicle battery supply chain.

According to Yonhap News Agency, the non-binding framework contract between the consortium made up of LG Energy Solution (LGES), LX International, LG Chem, and others and Indonesia’s Antam and IBC in Jakarta is worth $9 billion. The aim of the partnership is to establish an end-to-end value chain for EV battery supply in the archipelago that is also called the “The Emerald of the Equator.”

Moreover, the new project also aims to do more than just making a haul for raw materials, production of key components, including cathode materials, and the creation of battery cells.

It is understandable why the LG Group chose Indonesia as it is currently the largest producer of nickel in the world. This chemical element is a key battery material thus, it can easily be sourced in the country.

The signing event this week between the companies was also attended by government officials from Indonesia’s Ministry of Investment and the Ministry of State-Owned Enterprises. It was noted that the project’s announcement comes at a time when producers of EV batteries are scrambling to obtain a continuous supply of key materials for making lithium-ion batteries, especially nickel.

LGES said in a statement, "With this project, we expect to be able to enhance our battery business capabilities and profitability by stably securing raw materials at competitive prices."

Pulse News reported that aside from this project, LG Energy Solution is also building another battery plant in Indonesia with a $1.1 billion investment. This is being carried out via a joint venture with another Korean company, the Hyundai Motor Group.

Their new plant is expected to produce an annual capacity of 10GWh when operation begins in 2024. This amount is enough to power a total of 150,000 units of electric vehicles. Meanwhile, despite the announcements of new projects, it was reported that LGES shares were trading lower by 0.23% at ₩434,000 or around $351.9.