Major South Korean and Chinese power battery companies compete to establish a presence in Indonesia; LG leads a $9 billion project

Chinese and South Korean battery giants compete for a foothold in Indonesia; LG leads a $9 billion project

澎湃新闻记者秦艺逍

2022-04-18 22:49 Source: The Paper

In addition to the Chinese battery giant CATL, the world's second-largest battery manufacturer, LG, led by a South Korean consortium, recently invested in a battery supply chain project worth approximately US$9 billion (approximately RMB 57.28 billion) in Indonesia, and has signed a preliminary agreement with Indonesian state-owned enterprises.
According to Yonhap News Agency, a South Korean consortium consisting of LG Energy Solution, LG Chem, and LG Solar signed a non-binding investment framework agreement on April 14 with Indonesian mining company PT Aneka Tambang (Antam) and Indonesian Battery Corporation (IBC) in Indonesia. Government officials from the Indonesian Investment Ministry and the Ministry of State-Owned Enterprises also attended the signing ceremony.LG Energy Solution said that the project with Indonesia aims to establish an "end-to-end value chain" for electric vehicle batteries, including the procurement of raw materials, production of key battery components (precursors and cathode materials, etc.), and the manufacture of power batteries. "It is hoped that through this project, the stable supply of battery raw materials can be ensured, thereby improving the competitiveness and profitability of its battery business." said LG Energy Solution.
Indonesia is the country with the richest nickel reserves in the world and the world's largest nickel producer. Data from the United States Geological Survey shows that in 2020, the world's nickel reserves were about 94 million tons, of which Indonesia's reserves ranked first, at about 21 million tons, accounting for 22%.

Data Source: United States Geological Survey (USGS)

Nickel is a key raw material used in the production of stainless steel and ternary lithium batteries. So-called ternary lithium batteries refer to "ternary precursors" whose lithium battery cathodes contain three elements: nickel, cobalt, and manganese. Because nickel has performance advantages in improving battery energy density, high-nickel batteries are gradually becoming an important development direction for ternary lithium batteries.
With the global energy transition and upgrading, and continuously improving carbon emission requirements, the high prosperity of the new energy vehicle industry continues, leading to a large increase in the demand for power batteries and battery raw material metals. Sumitomo Metal Mining, Japan's largest metal smelter, recently stated that due to strong demand for electric vehicles, global demand for nickel for batteries is expected to grow by more than 20% this year, rising from nearly 330,000 tons in 2021 to more than 410,000 tons in 2022.
Currently, the Price of lithium carbonate, a core battery raw material, has been rising for 16 months, with Price increases of nearly 10 times. Since the beginning of this year, the Prices of important metal materials such as nickel and cobalt have also shown a continuous upward trend. Under the circumstances of continuous Price increases of upstream raw materials and supply and demand imbalance, the new energy industry faces the dual pressure of supply shortages and rising costs. Establishing overseas mineral resources to ensure supply chain stability has become a consensus among major global power battery manufacturers.
On April 15, CATL, the global leader in power batteries, announced that it would invest nearly US$4 billion (approximately RMB 25 billion) through its subsidiary to build a power battery industry chain project in Indonesia. The partners are Indonesia's PT Aneka Tambang (ANTAM) and PT Industri Baterai Indonesia (IBI). Currently, the total investment amount determined for this project does not exceed US$5.968 billion (approximately RMB 38.02 billion), and the planned construction period is five years.