LG Consortium Builds 11 Trillion KRW Battery Supply Chain in Indonesia... Secures Nickel and More as a 'Rain in a Drought'

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[Asia Economy Reporter Moon Chaeseok] It has been confirmed that major domestic energy and heavy chemical companies, including LG Energy Solution, are pushing forward a mineral procurement project worth approximately 11 trillion KRW to strengthen the electric vehicle supply chain in Indonesia.

They plan to build a 'complete value chain' from large-scale mineral procurement such as nickel to battery cell production in partnership with Indonesian state-owned enterprises. Indonesia is the country with the largest nickel reserves, a key material for electric vehicle batteries, and the industry expects this project to have a positive effect on major battery companies facing difficulties in raw material supply due to supply chain instability and price increases.

According to the industry on the 18th, the LG consortium, Indonesian nickel mining state-owned company Antam, and Indonesian battery investment company IBC signed a 'non-binding investment agreement' related to investment in building an electric vehicle battery value chain on the 14th in Indonesia. The consortium includes LG Energy Solution, LG Chem, LX International, POSCO, and HwaYu. Government officials from the Indonesian Ministry of Investment and Ministry of State-Owned Enterprises, as well as representatives from LG Energy Solution, attended the signing ceremony.

The consortium is promoting a project to establish a complete value chain within Indonesia, from mineral extraction, refining, precursor production, cathode material, to battery cell manufacturing. The agreement is expected to positively influence the acceleration of this project’s operation.

The consortium is led by LG Energy Solution. This is virtually the first time LG Energy Solution is pushing such a large-scale project to build a raw material value chain. It is expected that after the project, securing hundreds of millions of tons of minerals will ensure supply stability. Given the skyrocketing prices of battery raw materials such as nickel and lithium, which raise production costs for battery manufacturers, this news is being welcomed as a 'rain in a drought.'

The project scale is known to be about 9 billion USD (approximately 11.0772 trillion KRW). According to local Indonesian media, China’s largest electric vehicle battery company CATL also signed a similar agreement with the Indonesian government on the same day, worth about 6 billion USD (approximately 7.311 trillion KRW).

The Indonesian government is reportedly expecting economic uplift effects from battery production and investment within Indonesia through agreements with the LG consortium and CATL. The Indonesian government told local media, "Indonesia has reached an important stage to become one of the world’s largest battery industry countries and can now enter the global supply chain of the global battery industry."

Since the agreement is a non-binding basic agreement, it is expected to take some time before the final contract is concluded. An industry official said, "Detailed contracts need to be signed at each stage of the value chain," adding, "Nevertheless, it is significant in that it has laid the groundwork to secure large-scale minerals."

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