(Bloomberg) — Contemporary Amperex Technology Co. Ltd. and LG Chem Ltd., two of the world’s top producers of batteries for electric vehicles, have signaled they may join projects that could see $20 billion more invested in supply chains in Indonesia, according to the country’s government.
The firms signed separate heads of agreement with Aneka Tambang Tbk last month aimed at manufacturing higher value products for batteries from the state-owned miner’s nickel output, said Septian Hario Seto, deputy for investment coordination and mining at the coordinating ministry for maritime affairs and investments.
It’s a strategy that would involve development of new capacity for metals processing to battery pack assembly, according to Seto. “This is a race on technology,” he said in an interview. “LG Chem and CATL are two front-runners in lithium battery technology.”
Indonesia holds almost a quarter of global reserves of nickel, a key metal for electric cars, and is seeking to use that advantage, along with cheap power prices and low-cost manufacturing, to build a domestic battery industry.
LG Chem and Aneka Tambang have agreed to explore joint venture options, though the plan is at a very early stage, a spokesperson for the South Korean battery maker said. A full agreement would help provide LG Chem with stable access to nickel, according to the company.
China’s CATL, already part of a consortium building a nickel processing plant and other battery supply chain infrastructure in central Sulawesi, declined to comment. Aneka Tambang is examining cooperation with third parties, and studying plans to develop a downstream industry for nickel ores, the firm said.
Aneka Tambang rose as much as 18% in Wednesday trading, as of 12:52 pm in Jakarta.
Projects worth more than $30 billion have already been announced under Indonesia’s bid to become a hub for production of battery materials, the packs themselves and electric vehicles, including existing commitments from LG Chem and CATL. Additional investments would offer further support to President Joko Widodo’s ambition of developing the country as a key regional center in the industry.