LG Energy Solutions signs $9 billion EV battery deal

The Financial Times is reporting that a South Korean consortium is to invest $9 billion in Indonesia to create a ‘mines to manufacturing’ battery supply chain.

Nickel ore Photo: Antam

LG Energy Solution, said to be the world’s second-largest EV battery producer, has signed the agreement with Indonesia Battery Corporation, a subsidiary of mining company PT Aneka Tamban (Antam).

The goal is for the project to cover the entire battery production process, including mining, smelting and refining of nickel, together with sourcing precursors, cathode materials and cells.

The investment will include a $1.1 billion battery cell assembly plant in Karawang Regency, about 65 km from Jakarta. This will be part of a joint-venture with Hyundai Motor.

Other investing companies include steel maker Posco, commodity trader and mining company LX International and the Chinese company Zhejiang Huayou Cobalt.

Indonesia is the world’s largest nickel producer. According to US Geological Survey data the country has about 21 million tonnes of reserves.

It is hoped that the mines-to-manufacturing model will reduce dependence on Chinese raw material suppliers and help to off-set material price increases since the Russian invasion of Ukraine.

Russia is said to produce 11% of global nickel output and prices have increased significantly since the start of the war.

As of April 14, nickel prices had increased about 60% to around $33,000 per tonne. The increase in raw material costs has put the brakes on plans to further reduce per kWh price reductions for finished batteries through mass production.

A release issued by Antam states that on the same day the deal with LG Energy Solution was agreed, a similar deal was completed with China’s Contemporary Amperex Technology (CATL), reported to be the world’s largest EV battery producer, and a series of other partners. The value of that JV is said to be around $6 billion.