Tesla's battery supplier, LG Energy Solution, a subsidiary of LG Chem, signed a memorandum of understanding (MOU) with the Indonesian government investment authority on December 19 to invest in a business in the country. The news follows immediately after the Indonesian Ministry of Maritime and Investment Coordination reported on December 16 that Tesla's battery supplier, China's Contemporary Amperex Technology (CATL), is investing $5 billion in a lithium battery plant that will go into operation in four years in the country.
LG Energy Solution held a closed memorandum signing ceremony attended by its President Kim Jong-hyun, Indonesian Investment Coordinating Board Chairman Bahlil Lahadalia and Minister of Trade, Industry and Energy Sung Yun-mo, The Korea Times reported. LG Energy Solution confirmed the signing of the MOU, but declined to disclose any details, stating that it is "a non-binding MOU regarding local investment," and the details have yet to be confirmed.
According to officials familiar with the matter, the MOU envisions launching a range of battery-related businesses in Indonesia, from raw material mining to battery cell manufacturing. LG Energy Solution will lead a consortium of Korean and Indonesian companies. The estimated total cost of projects is likely to reach the trillion won level.
"LG Energy Solution has been exploring investment opportunities in Indonesia for a while, with a plan to engage in multiple processes of battery making through joint ventures in the country," a source said. "The MOU is showing that the company and the country have reached common ground from a broad perspective, but are still narrowing their differences over the details."
In mid-December, Tesmanian reported that in 2021, LG Energy Solution will begin manufacturing batteries with nickel, cobalt, manganese, and aluminum (NCMA) anode materials, and will supply them to Tesla. LG's new battery business is set to become the first company to make NCMA batteries for electric vehicles. LG Energy Solution said it will manufacture batteries, 90 percent of which will be nickel, starting in the second half of 2021.
Indonesia intends to begin processing its reserves of nickel laterite ore for use in lithium batteries, making it a global hub for the production and export of electric vehicles, and aims to develop a complete home nickel supply chain. The country is focusing on extracting chemicals from batteries, making batteries, and ultimately making electric vehicles. That is why Indonesia has stopped exporting unprocessed nickel ore, as they wish to support investment in this domestic industry. Therefore, battery manufacturers are now looking to develop their business in the country.
Also, the Indonesian government recently announced that Tesla will send a delegation to Indonesia to discuss possible further cooperation in the supply of nickel. The country's government has repeatedly spoken about negotiations with Tesla.
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