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Tesla tells nickel-rich Indonesia it wants to join battery project

Electric vehicle maker joins CATL and LG Chem to create supply chain

According to a senior Indonesian government official, Tesla has proposed joining the country’s plans to create an EV battery supply chain.   © Reuters

JAKARTA -- U.S. electric vehicle maker Tesla has proposed joining Indonesia's plans to create an EV battery supply chain within the country, a senior Indonesian government official said on Friday.

The government received Tesla's proposal on Thursday, Septian Hari Seto, deputy for investment and mining at the Coordinating Ministry of Maritime Affairs and Investment, said in a news briefing on Friday.

The nickel-rich country is already in talks with China's Contemporary Amperex Technology, better known as CATL, and South Korea's LG Chem regarding the plans to create its own EV battery supply chain covering the whole breadth from upstream to downstream.

"We are very excited because this Tesla lithium battery technology is among the best in the world," Seto said. "If we have investment from CATL, LG ... plus Tesla, we can learn a lot from here. Because what we ask is a transfer of technology. This is an opportunity to collaborate with three world-class companies with advanced lithium battery technology."

The deputy said there is "potential for cooperation over energy storage system[s]" with Tesla, such as "power banks of up to tens of megawatts with the idea of being able to replace peaking power plants when electricity demand far exceeds average usage."

"We can't allow [Tesla involvement] if they only want to take raw materials. [This proposal] is going beyond just taking raw materials," Seto said.

Indonesia accounts for 23% of global nickel reserves, the world's biggest. Nickel is a key material in EV batteries, and the government is hoping the reserves, along with investments from the world's leading battery and chemical companies, can help position the country as a key player in the global electric vehicle market. It is also keen to make the archipelago a hub for production of electric vehicles themselves.

Indonesia's plans for creating a competitive EV battery industry, as well as the prospect of investment by leading foreign companies, has led to a rally in shares of country's nickel producers in the past several months. State-controlled Aneka Tambang has seen its share price skyrocket 230% since the start of October, while shares in Vale Indonesia, the country's largest nickel producer by output, rose 60% in the same period.

State-owned mining holding company Mind Id acquired a 20% stake in Vale Indonesia last year for 5.52 trillion rupiah ($374 million). Aneka Tambang is also under Mind Id.

The Indonesian government reinstated its ban on exports of nickel ore in January last year, two years ahead of its planned date, to support the development of a downstream nickel industry.

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