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Government Boosts Investment in Electric Car Batteries

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By: Abdul Razak)*

Energy transformation has turned out to be a separate focus for the government, moreover the government is also serious about investing in the electric car battery cell industry sector. This can be seen in the collaboration between the State-Owned Enterprises (BUMN) and the Ministry of Investment with the Hyundai Consortium, in which the cooperation has paved the way for the development of electric vehicle battery cells in Indonesia.

The Ministry of SOEs also announced the formation of a battery company called PT. Indonesian Battery Industry (IBI). Holding IBI consists of Indonesian Mining Industry (Mind ID), PT Indonesia Asahan Alumunium (Inalum), PT Aneka Tambang Tbk. (Antam), PT Pertamina and the State Electricity Company (PLN). In addition to cooperation with the Hyundai Consortium, the formation of this company also involves the KIA Corporation, Mobis Hyundai and LG Energy Solution.

This collaboration aims to make Indonesia a center for the development of a battery-based electric vehicle ecosystem. Therefore, IBI must be able to produce batteries competitively to meet Indonesia’s needs and be able to export battery cells abroad.

Each BUMN involved in holding IBI has its own roles and responsibilities. Mind ID and Antam will play a role in mining and processing raw minerals. Meanwhile, PLN and PT Pertamina will be responsible for the manufacture of battery cells and battery packs, as well as the construction of Public Electric Vehicle Charging Stations (SPKLU) in Indonesia.

IBI plans to have a production capacity of 140 gigawatt hour (GWh). It is estimated that the 50 GWh of battery cells produced by IBI will be exported overseas. Then, the rest will be used by the battery industry in Indonesia to produce electric cars. Once built, the company is expected to employ around 1,000 people.

Deputy Minister of SOEs, Pahala Nugraha Mansury stated that this collaboration will not only produce factories. But also make IBI an integrated battery cell industry. In the future, Indonesia will have mining facilities, such as smelting, precursor production, batteries, building energy storage stabilizers, and recycling facilities.

Previously, the government had made a visit to SpaceX, to meet Elon Musk. At the first meeting, the government was represented by the Coordinating Minister for Maritime Affairs and Investment (Menko Marves) Luhut Binsar Panjaitan. It was only on the second visit that President Joko Widodo (Jokowi) came directly to meet with Elon Musk.

President Jokowi’s visit to SpaceX was to convince Tesla in exploring cooperation with Indonesia regarding the supply and processing of nickel as raw material for electric batteries. This is in line with what Bahlil Lahadalia as the Minister of Investment said, that there will be investment from the United States entering Indonesia.

There seems to be a sense of optimism regarding the development of the electric vehicle battery cell industry within Jokowi, who believes that Indonesia has great potential in this industry. President Jokowi is also optimistic that Indonesia will become a major producer of nickel-based goods such as lithium batteries, electric batteries and electric vehicle batteries. To achieve this target, the government has gradually stopped exports of raw materials from natural resources. For example, such as steps to stop nickel ore raw materials since 2020.

It should be noted that Indonesia is known as the world’s largest nickel producer. This achievement was obtained in 2018 after overtaking the Philippines. Indonesia’s nickel exports in 2019 reached 17 billion US dollars or 37.2 percent of the world’s export value. In the same year, Indonesia succeeded in producing 29.6% of the world’s total nickel ore production.

Indonesia has the largest nickel ore reserves in the world with a share of 23.7% of all world reserves, so that it is able to produce nickel ore in large quantities in a sustainable manner. In addition, Indonesia also has large reserves of cobalt. Cobalt is one of the main ingredients needed to make batteries. Large nickel and cobalt reserves will affect battery production, because cobalt and nickel components account for approximately 90% of the total battery components.

In this case, Indonesia has easy access to raw materials for producing batteries in Indonesia. In addition to raw materials, production costs are also one of the important things to consider when investing, because production costs that are too high can actually be a burden for the company.

With Indonesia’s existing natural wealth, it is certainly very possible that in the future Indonesia will sell electric cars at more competitive prices. Thus, electric cars will be accessible to more people in Indonesia. The government is not playing games in terms of battery investment for vehicles, especially electric vehicles, this has become the government’s focus for the transformation of fuel.

)* The author is a contributor to the Nusa Bangsa Institute

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