LG Energy Solutions and CATL of China will have a face off in Indonesia. The world’s No.1 and 2 in all aspect from procurement of local minerals to the expansion of battery plants in local sites meet head-on. LG Energy Solution formed a LG consortium with LG Chem, LX International, POSCO, and Huayou (China). On the 18th, LG Energy Solution announced that it had recently signed a ‘non-binding investment agreement’ (Framework Agreement) with Indonesia’s nickel mining company Antam and battery investment company IBC in order to establish an electric vehicle battery value chain.

Indonesia is the No.1 in both reserves and mining of nickel, which is a key material for battery cathode materials. The LG consortium will set up a value chain in Indonesia from mineral extraction and refining to precursors, cathode materials, and battery cells. The total business size of the LG consortium is estimated around $9 billion (KRW 11.77 trillion).
The recent surge in price of raw materials for lithium-ion batteries, such as nickel and lithium, has put a great burden on battery manufacturers, and the LG consortium is combatting the situation by stably securing raw material supply through this project. LG Energy Solution and Hyundai Motor Group built a battery plant with an annual capacity of 10GWh in Karawang, Indonesia in September last year. The capacity is able to produce 130,000 EVs.

Chinese CATL recently confirmed to build a large-scale battery plant in Indonesia as well. CATL will invest KRW 7.3 trillion to build a battery factory for EVs, and plans to operate by 2026. The plant’s annual capacity is estimated to be 10GWh.

The Indonesian plant is the second plant in overseas for CATL following the one in Germany. CATL will build the plant along with a consortium contract with Indonesia’s state-owned mineral company ‘PT ANTAM’ and battery company ‘PT IBI.’  The company plans to not only build the production plant, but also acquire raw materials locally for cathode materials such as nickel, similar to LG Energy Solution.

LG Energy Solution and CATL will obtain key raw materials for cathode materials, which have the highest material price among lithium-ion batteries, produce finished products of battery cells locally. Their strategy is to increase price competitiveness having the stable supply of raw material.

Source: etnews, April 19, 2022