Bahlil Brings Good News, LG Lays The First Stone For Electric Car Battery Investment Next Week: A Strategy Adopted By Faisal Basri's Thoughts

Investment Minister Bahlil Lahadalia (Photo: Doc. Antara)

JAKARTA - The Ministry of Investment / Investment Coordinating Board (BKPM) ensures that the LG Consortium will do the groundbreaking or groundbreaking for battery factory investment for electric vehicles next week. The value of the project that has been agreed is 9.8 billion US dollars or equivalent to Rp. 142 trillion.

The Minister of Investment/Head of BKPM Bahlil Lahadalia said that the investment was a government commitment that wanted Indonesia to become a world electric car producer in the future. Moreover, said Bahlil, Indonesia has quite large nickel reserves or as much as 25 percent of the world's total nickel reserves.

"Thank God, now we want to be the largest producing country for car battery development and yesterday I reported that on September 15, 2021, we have started the groundbreaking of the LG factory construction which we signed in early 2021 for 9.8 billion US dollars," he said in a virtual dialogue, at Jakarta, Wednesday, September 8th.

To realize the dream of becoming a world car battery producer, said Bahlil, the government must first develop the upstream industry. One way is to attract investment in cell battery factories.

After the construction is underway, continued Bahlil, the government is also working on the construction of a smelter. Bahlil said, this step was taken so that there are no more individuals who actually export raw nickel abroad so that it does not provide added value.

Bahlil said, the strategy implemented in the development of the vehicle battery industry adopted the thoughts of experienced economists and academics in Indonesia.

"We beat him first to build a battery cell, so it's not from the smelter because if it's from the smelter, it's possible to send the semi-finished goods abroad. Now this is in order to adopt Pak Faisal Basri's way of thinking (Economist at the University of Indonesia) for how The added value is really being fully utilized in Indonesia," he said.

Efforts to increase the added value of domestic industry is a way that is applied in order to carry out economic transformation. Bahlil said, this was in accordance with President Joko Widodo's (Jokowi) order to prosper the nation.

"The President asked for economic transformation. One of the indicators in our opinion is how to provide added value with industrialization instruments," he said.

Winding process

Previously, Bahlil said that strategic efforts to build downstream metal mining industry was a long and not easy process, because it involved various stakeholders, both at home and abroad. However, the government's efforts to build an integrated electric battery industry are increasingly finding a bright spot with the groundbreaking plan.

The first phase of construction has a battery production capacity of up to 10 gigawatt hour (GWh), which will later be used for electric vehicles from Hyundai.

As is known, the forerunner of the cooperation between PT Industri Battery 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 assessment, negotiation and study processes, the Memorandum A Memorandum of Understanding (MoU) was signed on December 18, 2020 in Seoul, South Korea between the Minister of Investment/Head of BKPM and CEO of LG Energy Solution.

"The MoU negotiation process went through 25 document revisions, which we compiled and consulted with SOE Minister Erick Thohir and agreed 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 times intensive meetings both at the leadership level and at the technical level. We really appreciate the dedication of the extraordinary team," he said in a written statement, Tuesday, May 25.

After the HoA was agreed on April 29, 2021, the consortium then carried out a joint study, drafting a shareholder agreement, and establishing a company agreement. The three processes are targeted to be completed soon, so that the factory groundbreaking can be carried out in the near future.

Currently, the Ministry of Investment is finalizing an MoU between parties in Cikarang (Hyundai) to finalize a joint venture (JV) plan to build a cell battery factory for electric vehicles. The investment that will be disbursed for the construction of this factory is 1.2 billion US dollars. The factory is planned to occupy an area of 33 hectares and absorb 1,000 Indonesian workers.

For your information, PT Industri Battery 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 have a special mandate to manage the industrial ecosystem. an integrated electric vehicle (EV battery) from upstream to downstream.

Meanwhile, the LG consortium consists of LG Energy Solution, LG Chem, LG International, POSCO and Huayou Holding. LG Energi Solution is currently one of the largest electric car battery manufacturers in the world. LG Electronics (LG Group) is the fifth largest company in South Korea in 2020 according to Fortune magazine.