Indonesia vows support for LG-led $9.8 bn battery project

Indonesian Minister of Investment Bahlil Lahadalia on Thursday affirmed its government’s commitment to a $9.8 billion electric vehicle battery manufacturing project led by South Korea’s LG Energy Solution Ltd., according to Yonhap News.

During a meeting with LG Energy Solution Chief Executive Kwon Young Soo, Lahadalia, who also heads the Investment Coordinating Board (BKPM), noted that the Indonesian government is ready to support the LG-led consortium so they can move forward with the project.

Indonesian ambassador to South Korea Gandi Sulistiyanto also attended the meeting.

Yonhap cited the Indonesian news agency Antara about Lahadalia’s remarks. The Korea Economic Daily could not find the relevant article from the latter’s website as of Friday afternoon.

In late 2019, LG Energy signed a memorandum of understanding with two Indonesian government-owned companies -- Antam and Indonesia Battery Corp. -- to build EV battery cell production facilities in the Karawang International Industrial City in east Jakarta for $9.8 billion.

The project involves the mining and processing of battery raw materials, as well as battery cell production and recycling.

But it has made little progress since the US Inflation Reduction Act came into effect in 2022, which requires a certain percentage of EV battery materials to be sourced in North America or its trading partners to qualify for tax credits.

The Indonesian investment minister expressed his gratitude for LG’s efforts to keep the project afloat and said the ministry will help the LG-led consortium win approval from relevant authorities, Yonhap reported.

The consortium includes LG Chem Ltd., LX International Corp., POSCO Future M Co. and China’s Huayou, along with Antam and Indonesia Battery.

In response, LG Energy’s Kwon said the consortium members could get the nod from their boards of directors to launch the project from this year.

The EV battery cell plant to be constructed in Indonesia was expected to begin commercial production in April 2024 with an annual capacity of 10 gigawatts hours.

Write to Il-Gue Kim at Black0419@hankyung.com

Yeonhee Kim edited this article.