JAKARTA (TheInsiderStories) - South Korea’ LG Battery consortium and PT Industri Baterai Indonesia has signed Heads of Agreement of the Integrated Battery Investment last week, said minister for investment. The value of this project is estimated around US$20 billion.
“Now that the HoA is signed, we will make an FS (feasibility study) so that we can work right away,” said the head of National Investment Board, Bahlil Lahadalia, in the official statement on Thursday (05/06).
As the Korean consortium’ partner in developing an integrated battery project in Indonesia, the Indonesia Battery Corporation (IBC), will identify targets in the near future after this collaboration is inaugurated. The new entity was formed by four state-owned enterprises (SOEs), Mining and Industry Indonesia (MIND ID), PT Pertamina, PT Perusahaan Listrik Negara, and PT Aneka Tambang Tbk (IDX: ANTM).
President Director of Industri Baterai Indonesia, Toto Nugroho, said his party will immediately consolidate with the Korean Consortium to determine project completion targets. Samuel Chung, director of LG Energy Solution added, LG Group together with POSCO will soon realize the electric vehicle (EV) battery industry project in Indonesia.
Earlier, the SOEs minister, Erick Thohir, has said there will be a synergy between the new company with several global companies in the future. Currently, two global battery producers, CATL consortium from China and LG Chemical Ltd., in discussions with Aneka Tambang and Pertamina on the potential cooperation in the new factory.
The new EV battery factory was estimated need costs around $12 billion. To support the planned, said the CEO MIND ID, Oerias Petrus Moedak, the subsidiary now worked on related EV battery like high-pressure acid leaching and rotary kiln electric furnace smelter projects valued $2 billion to $3 billion, respectively. But, he did not give the details on the two projects.
Thohir has said, after MIND ID’ purchased PT Vale Indonesia Tbk (IDX: INCO) shares with worth of Rp5.5 trillion ($381.94 million), the new unit its expecting would support the downstream projects. With the share ownership, he continued, will allow the mining holding to secure the supply of raw materials, especially nickel.
He emphasized that since the government banned nickel exports as of Jan. 1, 2020, MIND ID has been faced with a challenges to innovate and restructure the business models. Based on the reasoned, now the ministry prepare this company to enter the EV battery industry, which currently 27.9 percent of the market share controlled by China.
Indonesia, he asserted, only became a producer and exporter of raw goods with a share of 27 percent in the global market. The plan will be executed with the construction of a lithium-ion factory which is planned to be near two nickel mines owned by Aneka Tambang in Tanjung Buli, East Halmahera and in North Konawe, Southeast Sulawesi.
Indonesia has potential to grab new investment in the lithium battery projects up to $17 billion. The country also have ability to produces 125,000 units of EV and electric motors around 1.34 million units in this year. The country is estimating to build Public Electric Vehicle Charging Station as much as 572 units and the Public Electric Vehicle Battery Exchange Station about 3,000 units.
The head of the EV Battery Project Acceleration Team, Agus Tjahajana, explained with these potentials, the country could reduce fuel consumption by 0.44 million kilo liters per year. Some companies has committed to build the EV battery factory in Indonesia were South Korean company’ LG Chemical, joint with the SOEs.
The manufacturer had committed to invest US$9.8 billion to make the first lithium battery plant for electric car in the archipelago. The project will be located in the Integrated Industrial Zones in Batang, Central Java. Other South Korean company, Hyundai Motor Group is working to set up lithium battery plant in Indonesia.
Both will utilize the new plant as a hub to target the future electric car market in Southeast Asia. Its expecting the joint venture contract will signs in July of this year. The electric car giant from America, Tesla Inc., (NASDAQ: TSLA) was also serious about investing in Indonesia.
Earlier, Contemporary Amperex Technology Co. Ltd., from China will invests around $10 billion. So far, the industry ministry had accept various investment commitments in the lithium battery projects in Indonesia. Then, PT QMB New Energy Minerals has committed to invest $700 million in Morowali in East Kalimantan and PT Halmahera Persada Lygend commited to pouring out Rp14.8 trillion of investment in Halmahera, North Maluku.
In addition, PT International Chemical Industry disbursed Rp207.5 billion to produce as many as 25 million lithium ion cell batteries which are equivalent to 256 megawatts annually. The company will begin to enter the commercial pre-production stage at the end of 2020 and begin to enter the stage commercial production in this year.
LG Chem is one of a number of world-class battery companies that have expressed interest in investing in Indonesia. Apart from LG, there is also Contemporary Amperex Technology Co. Ltd.
In Indonesia, the area owned two million tons capacity nickel pig iron production and 3.5 million tons of stainless steel. By the new lithium battery factories, the country is expected to slash more import for the sake of decreasing the current account deficit.
The minister revealed, the government is already preparing to welcome the arrival of the massive battery companies, including the Silicon Valley-based electric car maker. This is in line with the plan of the industry ministry to bring an investment in the automotive sector around Rp100 trillion ($6.94 billion). This target is planned to be achieved in the next five years.
According to him, a number of new investors have been interested in entering the field of supporting components of EV, such as batteries. However, the details of the investment have not been conveyed because they are still in the process of discussion with related parties.
US$1: Rp14,400
Written by Editorial Staff, Email: [email protected]
