AsiaElec: LG Energy Solution to lead $9bn investment in Indonesian EV battery production

South Korea’s LG Energy Solution is to lead a consortium investing $9bn in the electric vehicle (EV) battery supply chain in Indonesia in a bid to secure stable supplies of locally mined nickel and to manage the production process more efficiently.

The company has teamed LG Chem Ltd., South Korea’s LX International Corp. and POSCO Holdings and China’s Zhejiang Huayou Cobalt Co., and on April 14 signed a non-binding framework agreement set up the consortium.

The group also includes Indonesia’s PT Aneka Tambang (Antam), a state-run nickel miner, and Indonesia Battery Corp. (IBC), also state-run, and the Indonesian government, LG Energy said on April 18.

“LG Energy expects the project to improve the battery business capability and profitability by securing competitive raw materials in a stable manner,” the company said in a statement.

The members of the group reached a non-binding preliminary agreement and plan to finalise the structure later.

The project will develop an "end-to-end value chain for EV batteries, including procuring raw materials, producing key components, such as cathodes, and manufacturing battery cells," LG Energy Solution said in a statement. 

Securing stable supplies of nickel is a key element of developing EV batteries, with the metal making up 80% of the battery models used in EVs.

Nickel prices have been volatile recently and have surged in recent months. The London Metal Exchange (LME) three-month nickel price closed at $33,175 per tonne on April 14, up about 60% from $20,730 on January 4.

Indonesia wants to develop nickel processing and battery production facilities while also reducing exports of the raw metal.

The country has the world's largest nickel reserves with 21mn tonnes, according to US Geological Survey (USGS) data. The agency estimates Indonesia produced 760,000 tonnes of nickel in 2020.