Karawang. President Joko "Jokowi" Widodo has broken the construction ground of the first electric vehicle battery factory in Southeast Asia, marking an important milestone in the country's drive to establish itself as a key global battery supplier.
HKML Indonesia, controlled by a consortium of South Korea’s companies and Industri Baterai Indonesia, a subsidiary of a state-controlled miner, will build and operate the $1.1-billion factory is located in Karawang New Industrial City, West Java.
"We are grateful today to witness the groundbreaking of the first electric vehicle battery factory in Indonesia, and the first in Southeast Asia, with an investment value of $1.1 billion," said President Jokowi on Wednesday.
The factory construction the government's objective to establish a downstream industry for the country's mining resources, especially nickel, Jokowi said. 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, he said.
"Indonesia’s current business strategy is to escape our dependence on countries exporting raw materials and their imported products by accelerating the revitalization of the processing industry. This will provide our industry with a higher value,” Jokowi said.
The first phase of development within the Karawang factory sees a battery production capacity of up to 10-gigawatt hour (GWh) per year.
“One factory will become operational in 2022 to produce 10-gigawatt hours of battery,” Toto Nugroho, president director of Industri Baterai Indonesia, told the audience in the 2021 Investor Daily Summit last July.
The factory would supply electric vehicles from Hyundai, a South Korean automaker. Hyundai was also the first company to announce plans for electric vehicle productions in Indonesia, with a $1.5 billion factory set up in Cikarang.
The groundbreaking followed to the Head of Agreements on battery investment project between Industri Baterai Indonesia and the LG-led consortium in April 2021. LG Energy Solution, LG Chem, LG International, Posco, and Huayou Holding were all involved in the consortium.
The companies have the vision to build an integrated supply chain for lithium-ion battery production in Indonesia, from the mining of raw materials, smelting, refining, precursor, and cathode industries.
Bahlil Lahadahlia, the head of the Investment Coordinating Board (BKPM) said earlier that total investment for the integrated supply chain project could reach $9.8 billion.
The forerunner of the collaboration between Industri Baterai Indonesia and the LG Consortium began in 2019 when President Jokowi and President of South Korea, Moon Jae In, met in Busan, South Korea.
After going through a series of assessment processes, negotiations, and service studies, the two parties finally agreed to sign a memorandum of understanding on December 18, 2020, in Seoul, South Korea.
Industri Baterai Indonesia is a consortium of four prominent state-run mining and energy companies — Indonesia Asahan Aluminum (MIND ID), gold and nickel miner Aneka Tambang (Antam), energy company Pertamina, and utility firm Perusahaan Listrik Negara (PLN).