According to Wechat Official Account @qd-Lib, the LG Group is reportedly planning to cancel an investment exceeding RMB 60 billion in Indonesia. The project, agreed upon in late 2020, originally encompassed multiple stages of the battery manufacturing process.
The consortium, which includes LG Energy Solution, LG Chem, LX International, and other partners, had been collaborating with the Indonesian government and state-owned enterprises to establish an "end-to-end value chain" for electric vehicle batteries.
The Indonesian EV battery supply chain project now facing withdrawal is valued at 142 trillion Indonesian Rupiah (approximately USD 8.45 billion or RMB 61.7 billion). The plan covered the entire process from raw material procurement to the production of precursors, cathode materials, and battery cell manufacturing.
Currently, due to a temporary slowdown or stagnation in global electric vehicle demand, the consortium has reportedly consulted with the Indonesian government and decided to withdraw from the project.
In response, LG Energy Solution stated that the company decided to exit the project considering market conditions and the investment environment. However, it will continue its existing operations, such as the HLI Green Power battery factory, a joint venture with Hyundai Motor Group.
The HLI project is located in the Karawang industrial cluster near Jakarta, adjacent to Hyundai's existing automobile production base. The joint venture factory officially commenced operations in July 2024, becoming Indonesia's first electric vehicle battery cell production plant with a battery capacity of 10GWh. Additionally, LG Energy Solution and Hyundai plan to launch a second phase project to expand battery capacity, potentially increasing it to 20GWh.
Looking at the broader Southeast Asian market, Indonesia possesses advantages in both geographical location and mineral resources.
In terms of geographical transportation, Indonesia is centrally located within Southeast Asia, allowing it to effectively辐射 the entire Southeast Asian market. Externally, it is situated on the Strait of Malacca, a crucial transportation hub connecting Asia and Oceania, and the Pacific and Indian Oceans, facilitating convenient maritime transport and product export.
Regarding mineral resources, Indonesia is one of the most resource-rich countries globally, possessing mineral resources such as nickel, copper, gold, and coal, energy resources like oil and natural gas, and biological resources including palm oil and tropical wood. Notably, Indonesia has the world's largest nickel ore reserves (accounting for 23%), mainly distributed in the Maluku Islands and South Sulawesi. 2025 data shows its production accounts for 29% of the global total. Furthermore, Indonesia is the world's second-largest cobalt producer.
However, it is important to note that Indonesia has banned the export of unprocessed nickel ore since 2020 and plans to ban the export of raw nickel ore from June 2025. This measure compels foreign companies to invest and build factories domestically in Indonesia, thereby increasing Indonesia's attractiveness to companies in the lithium battery industry chain.
Observations indicate that besides South Korean battery companies, several Chinese lithium battery companies are also establishing a presence in Indonesia to utilize local resources and achieve local production.
In the upstream sector, companies like Tsingshan Holding Group, GEM Co., Ltd., Huayou Cobalt, and CNGR Advanced Material Co., Ltd. have invested in nickel resource projects in Indonesia.
In the battery cell sector, REPT Battero and CATL have announced plans. Once its first phase of the Indonesian battery factory is operational, REPT Battero is expected to have an annual production capacity of 8 GWh for power and energy storage batteries. CATL will establish a joint venture to build a battery cell factory with an annual capacity of 15 GWh, expected to commence commercial operations in 2027.
In the materials sector, companies such as Changzhou Lithium Source, BTR New Material Group Co., Ltd., Shandong Shida Shenghua Chemical Group Co., Ltd., and Shanshan Corporation have made investments.
Overall, backed by its resource and transportation advantages, Indonesia is attracting related companies to invest and establish operations. Under this trend, the lithium battery industry chain will be further improved, positioning Indonesia as one of the highlands of the Southeast Asian lithium battery industry.
Source：https://mp.weixin.qq.com/s/_lc36tznFWqip5r1TNLgJQ
