LG has signed a massive agreement to reportedly invest close to $10 billion in Indonesia to make batteries in the country.
Indonesia is one of the world’s biggest nickel producers, but it has also recently put a ban on exporting nickel ore in order to encourage the industry to process it locally.
The new protectionist move has resulted in high interest to invest in battery production in the country with companies like Tesla currently evaluating a potential investment.
Now the country has reportedly landed its first big fish, or even whale, with this move.
The Indonesian government announced today that LG Energy Solution, the new battery production unit of LG Group that spun out of LG Chem this month, has signed a memorandum of understanding (MOU) on a $9.8 billion deal to make electric car batteries in the country.
Bahlil Lahadalia, the head of Indonesia’s Investment Coordinating Board, said today (via Reuters):
“We have signed an MOU for the construction of an integrated electric battery factory from upstream to downstream. Mines, smelters, precursors, cathodes, cars to recycling facilities will be built in Indonesia,”
LG confirmed that they signed a MOU in Indonesia without confirming the value.
Almost $10 billion sounds like a massive deal, but it’s also not impossible when you consider that it goes from mining the ore to producing the batteries.
Recently, Tesla CEO Elon Musk pleaded with mining companies to increase their nickel production as the resource is becoming increasingly critical in ramping up battery production for electric vehicles.
When we take into account the rumors that Tesla was interested in a stake in LG Chem’s battery business and their confirmed interest in Indonesia, it’s not too farfetched to speculate that they could have a hand in that deal.
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