The investment totals US$9.8 billion or some Rp142 trillion. It is a remarkable amount because according to the BKPM data, there was no such big investment during the post-reform era
Jakarta (ANTARA) - Development of an electric-vehicle battery manufacturing plant will start in the first semester of 2021 after Indonesia's state enterprises consortium and South Korea's LG Energy Solution Ltd inked an agreement worth US$9.8 billion (Rp142 trillion).

The memorandum of understanding (MoU) was signed between Indonesia's Head of the Investment Coordinating Board (BKPM) Bahlil Lahadalia and LG Energy Solution in Seoul, South Korea, on December 18 and was borne witness by South Korea's Trade, Industry, and Energy Minister Sung Yun-mo.

"The investment totals US$9.8 billion or some Rp142 trillion. It is a remarkable amount because according to the BKPM data, there was no such big investment during the post-reform era," Lahadalia stated here on Wednesday.

Under the MoU, both parties agreed to develop a strategic investment project in the manufacturing of the electric-vehicle battery cell that is integrated to the mining industry, smelter, refining, precursor and cathode industry.

The state enterprises consortium comprised MIND ID (Inalum), PT Aneka Tambang, PT PLN (Persero), and PT Pertamina (Persero).

The agreement was a follow up of the bilateral meeting between Indonesian President Joko Widodo and his South Korean counterpart, Moon Jae-in, in Busan on November 2019.

The project will be developed at two locations, specifically North Maluku for the mining industry and smelter, while the manufacturing plant for the precursor, cathode, and some parts of the battery cell will be built in the Batang Integrated Industrial Area in Central Java.

Some of the produced batteries will be delivered to the country's electric vehicle plant that will start production in the near future.

"This is because Batang is a strategic industrial area to be developed. There will be a combination of foreign investor, state enterprises, national industry, national businessmen in regions, as well as small- and medium-scale enterprises," he remarked.

Lahadalia stated that development of the plant will commence in the first semester of 2021.

"The groundbreaking ceremony is expected to be held in the first semester of 2021," he noted.

According to Lahadalia, development of the integrated electric-vehicle battery industry is a concrete move in line with the government's target to boost economic transformation toward an Advanced Indonesia by 2045. Downstreaming in the mining sector is one form of the transformation.

Countries globally have begun to reduce fuel oil consumption and carbon dioxide emissions, with the utilization of electric vehicles to be increased to 15-100 percent of the total vehicles.

In 2040, the number of electric vehicles is expected to reach 49 million, or some 50 percent of the total vehicles globally. Some manufacturers have also begun to shift their conventional vehicle production line to electric vehicles.

Electric vehicles will constitute some 20-50 percent of the production.

The target of electric vehicle use is projected to increase in several countries. During 2020-2030, China has targeted to increase the utilization of electric vehicles to 8.75 million units; Thailand, 250 thousand; Vietnam, 100 thousand; Malaysia, 100 thousand; and India, 55 thousand electric cars and one million electric motorcycles.

Indonesia has targeted to use four million electric cars and 10 million electric motorcycles by 2035.
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Translator: Ade Irma Junida, Sri Haryati
Editor: Fardah Assegaf
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