EV battery MOU between Indonesian government and LG group was agreed
Several media including Reuter reported that Indonesian government agreed EV battery MOU with South Korean conglomerate, LG group.
JAKARTA (Reuters) -Indonesia and a unit of South Korean firm LG Group have signed a memorandum of understanding (MOU) on a $9.8 billion electric vehicle (EV) battery investment deal, the head of Indonesia’s Investment Coordinating Board said on Wednesday.
The deal was signed on Dec. 18 and includes investments across the EV supply chain, the board head, Bahlil Lahadalia, told a news conference.
An official at LG Energy Solution, a unit of LG Group, South Korea’s fourth-largest conglomerate, confirmed it had agreed an MOU but could not provide details or the deal’s value. LG Group in Seoul referred Reuters to its affiliate.
Bahlil said the agreement made Indonesia the first country in the world to integrate the electric battery industry from mining to producing electric car lithium batteries.
“We have signed an MOU for the construction of an integrated electric battery factory from upstream to downstream,” Bahlil said.
“Mines, smelters, precursors, cathodes, cars to recycling facilities will be built in Indonesia,” he said, adding that the project will be located in North Maluku and Central Java.
Under the MOU, at least 70% of the nickel ore used to produce the EV batteries must be processed in Indonesia, he said.
Indonesia aims to start processing its rich supplies of nickel laterite ore for use in lithium batteries as part of a bid to eventually become a global hub for producing and exporting EVs.
Indonesia said earlier this month that U.S. automaker Tesla, will send delegations to Indonesia in January to discuss potential investment in a supply chain for its electric vehicles.
Who is LG Energy Solutions?
Based on LG Energy Solutions’ homepage, we can see the company information of LG Energy Solutions as follows.
LG Energy Solutions leads the future eco-friendly energy industry by developing distinguished materials and next-generation batteries.
As the only chemical-based battery company in the world, we are leading the global lithium-ion battery market based on distinguished materials technology.
We have become a global powerhouse in the EV and energy storage system (ESS) battery sector. And based on our unparalleled technologies, we are actively developing new products and procuring global battery production capacities to enhance our dominance in the next-generation energy market.
According to BBC, we can see country profile of Indonesia in the following way.
Spread across a chain of thousands of islands between Asia and Australia, Indonesia has the world’s largest Muslim population and Southeast Asia’s biggest economy.
Ethnically it is highly diverse, with more than 300 local languages. The people range from rural hunter-gatherers to a modern urban elite.
Sophisticated kingdoms existed before the arrival of the Dutch, who colonised the archipelago but gave in to an independence struggle in 1949.
Indonesia has become one of the world’s major emerging economies, but faces demands for independence in several provinces and increasing attacks by Islamist armed groups.
- Republic of Indonesia
- Capital: Jakarta
- Population 261 million
- Area 1.9 million sq km (742,308 sq miles)
- Major languages Indonesian, 300 regional languages
- Major religion Islam
- Life expectancy 67 years (men), 71 years (women)
- Currency Rupiah
UN, World Bank
Try to escape middle-income trap
Some sources predict that Indonesia, which is the largest South-Asian economy, will be the world fourth largest economy by 2050 and this means that the country will be behind only China, the US and India. Even though the economy in Indonesia grew faster than any other developed countries before the pandemic, some people still hardly imagine that the country surpass other advanced industrial countries such as Japan and Germany.
In order to escape middle-income trap, the Indonesian president, Joko Widodo, decides to invest both infrastructure and education. For instance, Nadiem Makarim who is the founder of Gojek, which is the most valuable start-up in the country, was assigned as 29th Minister of Education and Culture of Indonesia in 2019. However, the pandemic makes the situation more difficult and inequality worse.
MOU boosts Indonesian government’s ambition
Thanks to MOU between Indonesian government and LG group, the country has an opportunity to promote country’s industrialization. There are three reasons why the MOU has benefits for the country.
First, electric vehicles is one of the hottest topic in 2020s. In 2020, many countries, cities and regions declared that each one wants to realize carbon neutrality until 2050. In order to realize the ambitious goal, both sales and production of EVs will be increasing.
Second, the necessity is an incentive to improve education. Human being are tend to be lazy so that they do not work hard if it is not needed. To achieve industrialization, job opportunities can be big incentive for younger generation. If people are able to gain return for their hard work, many of them want to do so.
Third, it is better for developing countries to learn from developed countries. LG group is one of the leading innovative companies all over the world, and, of course, South Korea is one of advanced countries. In addition to this, LG Group follows the current trend, “ESG Investment”, as we can see the other article. Therefore, this MOU can gives Indonesian companies and people opportunities to learn.