Indonesia starts work on SEA’s first EV battery manufacturing plant – cuts reliance on commodity exports

Indonesian President Joko "Jokowi" Widodo officiated a groundbreaking ceremony yesterday for the construction of South East Asia’s first electric vehicle battery manufacturing plant.

Operated by PT HKML Indonesia, the company is joint venture between South Korea’s LG Energy Solution and Hyundai Motor Group with PT Industri Baretai Indonesia (Indonesia Battery Industry, IBC).

The plant will be operational by 2024, with an initial production capacity of up to 10 GWh per year.

PT Industri Baretai Indonesia is a consortium of four state-owned Indonesian mining, oil, and electric power companies - Indonesia Asahan Aluminum, gold and nickel miner Aneka Tambang (Antam), Pertamina, and Perusahaan Listrik Negara (PLN). The latter two are Indonesian equivalents to Malaysia’s Petronas and TNB respectively.

The EV battery manufacturing plant is being built at Karawang New Industrial City in West Java, with a USD 1.1 billion investment.

“The factory’s construction is in line with the government's objective of establishing a downstream industry for the country's mineral resources, especially nickel," said Jokowi.

“The era of exporting raw commodities was over, and Indonesia must strive to shift from the commodity-based economic structure to one with a strong downstream industry based on the development of technological innovation. Indonesia’s current growth strategy is to reduce our dependence on exports of raw materials as well as import of finished products, which we will achieve accelerating our natural resources processing industry. This will provide our industry with a higher value,” he added.

“The government of Indonesia will work to support the growth of the battery and electric vehicle manufacturing ecosystem. Indonesia will continue to accelerate structural reforms to provide EV-related investments with the necessary certainty and legal approvals to setup their business in Indonesia.

“The groundbreaking ceremony is a direct result of my visit to Busan in South Korea two years ago to meet industry leaders there.

“I hope the collaboration between South Korea and Indonesia will continue to strengthen further, to involve Indonesian micro-, small-, and medium-sized enterprises,” added Jokowi, who visited South Korean president Moon Jae In in 2019 to invite Korean battery manufacturers to invest in Indonesia.

Also present at the groundbreaking ceremony were President of Hyundai Motor Asia-Pacific Lee Kang Hyun, CEO of LG Energy Solution Jonghyun Kim, and CEO of PT HKML Battery Indonesia William Hong.

Thailand already has EV battery manufacturing plants there, setup by BMW, Mercedes-Benz, and Toyota, but the type of the work done there is closer to assembly of battery packs using imported materials and components, while the Indonesia Battery Industry plant is an end-to-end integrated supply chain setup.

The Indonesian outfit will be responsible from the start of the supply chain, from mining of raw materials, smelting, refining, to cathode manufacturing, before producing a finished battery pack.

The batteries produced by the Indonesia Battery Industry plant will go exclusively to the Hyundai Motor Group’s electric vehicles.

Hyundai is currently building a USD 1.55 billion vehicle manufacturing plant in Cikarang, which will also make electric vehicles. When completed in 2022, it will be Hyundai’s first wholly-owned factory in South East Asia.