As part of a $9.8 billion investment project, the factory, a joint venture of South Korean LG Energy Solution and Hyundai Group alongside Indonesian state-owned Battery Corporation, will have an initial capacity of 10 gigawatt hours of nickel-cobalt-manganese-aluminum lithium-ion battery cells to power 150,000 EVs. But the plant is designed to eventually have a total capacity of 30 GWh.

Endowed with 25 percent of the world’s reserves of nickel, which makes up 40 percent of the basic materials of lithium batteries, Indonesia indeed has a strong comparative advantage not only to become one of the world’s largest producers of car batteries but also a major production base for EVs.

Analysts have estimated that Asian EV sales will expand by almost 25 percent in 2022 as major economies in the region have pledged to achieve carbon neutrality: Japan and South Korea in 2050, China in 2060 and Indonesia in 2070.

Korea’s huge investment in the car battery and EV production is also quite a strategic step for Korean car manufacturers to gain a bigger share of the car market in Indonesia, which has been largely controlled by Japanese companies.

The manufacturing of car batteries will be a big jump in the development of the upstream and downstream processing of nickel ores. As part of the enforcement of the 2019 Mining Law, which phased out mineral ore exports, investors, notably those from China, have rushed to build nickel smelters.

According to the Energy and Mineral Resources Ministry, three smelters in Morowali, Central Sulawesi, have been producing and exporting nickel pig iron and stainless steel slabs, and over 30 smelters are under construction in Kalimantan, Central, South and Southeast Sulawesi, as well as Halmahera Island in North Maluku.

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