IBC Battery Factory And LG Consortium Soon To Be Built In Eka Tjipta Widjaja Conglomerate's Area, Deltamas City

Illustration. (Photo: Doc. Between)

JAKARTA - The Ministry of Investment / Investment Coordinating Board (BKPM) stated that a battery cell plant for electric vehicles owned by PT Industri Baterai Indonesia or Indonesia Battery Corporation (IBC) and the LG Consortium from South Korea (South Korea) will soon be built in Deltamas City, Bekasi, West Java.

Deltamas City is a property area owned by the late conglomerate Eka Tjipta Widjaja, the boss of Sinar Mas Group. The Ministry of Investment / BKPM is currently finalizing to complete the joint venture plan (JV) for the construction of battery cell plants for electric vehicles.

"After a long process, we are grateful that this groundbreaking process will finally begin soon. The work ahead will be even greater to build an integrated battery industry in Indonesia. We are committed to continuously oversee this process and ask for support from all parties to realize an integrated and export-oriented electric battery industry in Indonesia," said Minister of Investment / Head of BKPM Bahlil Lahadalia in a written statement quoted from Antara, Monday, May 24.

The investment that will be invested for the construction of an electric vehicle battery cell plant is said to reach 1.2 billion U.S. dollars.

The factory is planned to occupy an area of 33 hectares and absorb 1,000 Indonesian workers. The first phase of development has a battery production capacity of up to 10 gigawatt hours (GWh), which will be used for electric vehicles from Hyundai.

Bahlil said that strategic efforts to build downstream metal mining industry is a long process and not easy, because it involves various stakeholders, both at home and abroad.

The forerunner of cooperation between PT Industri Baterai Indonesia and the LG Consortium began in 2019 when President Joko Widodo and South Korean President Moon Jae In met in Busan, South Korea on November 25, 2019.

After going through a series of research, negotiation and study processes, a Memorandum of Understanding (MoU) was signed on December 18, 2020 in Seoul, South Korea between the Minister of Investment/Head of BKPM and the CEO of LG Energy Solution.

"The mou negotiation process is through 25 revisions of the document, which we compiled and we consulted with the Minister of SOEs Erick Tohir and approved by both parties. This is one of the longest document drafting processes ever carried out by the Ministry of Investment / BKPM. After that, it takes 15 intensive meetings both at the leadership level and at the technical level. We really appreciate the dedication of the team," Bahlil said.

After the Head of Agreements (HoA) or The Principal Agreement of the investment project is agreed on April 29, 2021, the consortium then conducts a Joint Study, the preparation of shareholder agreements, and the company's establishment agreement.

All three processes are targeted to be completed soon, so that the groundbreaking of the plant can be carried out immediately in the near future. Because it involves Hyundai, the finalization related to the development plan is also discussed with the South Korean company.

"Not only opening jobs in the region, this investment cooperation project is projected to make Indonesia up the class of raw material manufacturers and exporters, becoming an important player in the world supply chain for the electric vehicle battery industry," bahlil said.

PT Industri Baterai Indonesia was formed by four SOEs namely Mining and Industry Indonesia (MIND ID), PT Pertamina (Persero), PT PLN (Persero), and PT Aneka Tambang Tbk (Antam), which has a special mandate to manage the ecosystem of electric vehicle (EV battery) industry that is integrated from upstream to downstream.

Meanwhile, LG's consortium consists of LG Energy Solution, LG Chem, LG International, POSCO and Huayou Holding. LG Energy Solution is currently one of the largest electric car battery manufacturers in the world.

This strategic investment in the electric vehicle battery cell industry is the first made in the history of the Republic of Indonesia.

Integrated with mining, smelter, refining and cathode industries, this electric battery production facility will be the first in Asia and even the world. The investment value is estimated at USD9.8 billion (around Rp140 trillion).