Indonesia to start construction of $4 billion EV battery project in Jan 2019

Developers will begin building a lithium battery project in Morowali, on the Indonesian island of Sulawesi, on Jan. 11, Indonesia’s Coordinating Maritime Minister Luhut Pandjaitan said last week, as reported by Reuters.

The $4 billion project involves investors from South Korea, Japan and China, Pandjaitan told reporters, without naming the companies involved or providing further details on the project.

“Looking at its resources, Indonesia will become the main player in lithium batteries,” Pandjaitan told reporters, referring to forecasts for surging demand for batteries for electric vehicles.

Major nickel producers have already been eyeing Indonesia’s large nickel laterite ore reserves – prized for nickel pig iron used in stainless steel production – for use in battery materials. Nickel is also a vital ingredient for the lithium-ion batteries used to power electric vehicles, whose demand is set to accelerate over coming years.

Indonesia, with reserves of both nickel and cobalt used in lithium battery cathodes, is well positioned to meet that demand amid advancements in electric vehicle technology, the minister said.

“We will control the world market,” Pandjaitain added. The Indonesian project is starting in the third generation of lithium batteries, so it will be cheaper. Analysts, however, have cast doubts on how quickly such plans can be carried out, as some of the required nickel smelter technology is complicated.

The Morowali site where the proposed battery plant would be located currently has 20 nickel ore processing facilities that feed 1.5 million tonnes of nickel pig iron a year into a 3-million tonne-per-year stainless steel mill.

Additionally, Chinese battery firm GEM Co Ltd said in late September that it was teaming up with four companies to invest a total of $700 million in a project to produce battery-grade nickel chemicals in Morowali.

That project would be undertaken alongside units of top Chinese lithium battery maker Contemporary Amperex Technology Ltd (CATL) and Chinese stainless steel-maker Tsingshan Holding Group.

Tsingshan, already Indonesia’s biggest nickel producer, is also leading a group seeking investors for a nickel sulphate plant in a $10 billion industrial park.

Shekhar Ghosh is consulting editor, Indoasiancommodities.com. He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at shekhar.ghosh@indoasiancommodities.in.

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