Indonesia and LG consortium collaborate on $9.8 billion EV battery plant project

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The Indonesian government has teamed up with a consortium spearheaded by South Korean multinational, LG, to fast-track the creation of a substantial $9.8 billion factory focused on manufacturing electric vehicle (EV) battery cells and related facilities.

This project not only includes LG but also incorporates the Indonesia Battery Corporation (IBC), a consortium of four state-owned companies. The primary objective is to produce batteries for electric vehicles to support the rising global demand.

The initiative will begin with the construction of a battery cell factory in Karawang, a town in West Java, with the projected cost of approximately $1.1 billion. Expected to be fully operational by April 2024, this facility is aimed to generate a whopping 10 gigawatt-hours (GWh) of battery cells.

Further stages will include the creation of supplementary infrastructure and a smelter at a mining site governed by state-owned mining firm Aneka Tambang (Antam) in Halmahera, North Maluku. The smelter will be pivotal in supplying the essential materials for the battery cell factory.

The project forms an integral part of the Indonesian government’s aspiration to turn Indonesia into a regional hub for the EV industry. Efforts have intensified recently after Investment Minister Bahlil Lahadalia met with LG Energy Solution’s CEO Young Soo Kwon.

Bahlil applauded the timely agreement, particularly given the global disruption in the EV battery supply chain caused by the United States’ Inflation Reduction Act. He emphasized that the endeavour will bolster the value of Indonesian products and create substantial job opportunities.

“The Investment Ministry is committed to facilitating the licensing process and LG’s investment in Indonesia, ensuring the swift realisation of this mutually beneficial project for both Indonesia and Korea,” Bahlil declared.

Young Soo Kwon expressed optimism that the construction of the factory could begin within this year and conveyed appreciation for the Indonesian government’s openness towards the project.

“LG has successfully addressed the most challenging issue in negotiations between the two consortiums regarding the shareholder composition in any joint venture across the entire supply chain,” Young observed.

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