South Korea’s LG Energy Solution pulls out of Indonesia EV battery investment

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JAKARTA (Reuters) -South Korea’s LG Energy Solution has formally withdrawn from a 142 trillion rupiah ($8.45 billion) project to develop electric vehicle battery making in Indonesia, the company said on Monday.

LGES and the Indonesian government signed a deal on the so-called Indonesia Grand Package project in late 2020, which includes investments across the EV battery supply chain in the Southeast Asian country.

“Taking into account various factors, including market conditions and investment environment, we have agreed to formally withdraw from the Indonesia GP (Grand Package) project,” LGES said in a statement.

“However, we will continue to explore various avenues of collaboration with the Indonesian government, centering on the Indonesia battery joint venture, HLI Green Power,” it added.

HLI Green Power, a joint venture led by LGES and Hyundai Motor Group, last year inaugurated Indonesia’s first battery cell production plant with an annual capacity of 10 gigawatt hours. It has plans to expand the capacity in the second phase of investment.

Indonesia will continue to seek foreign investors to partner with local companies to develop the battery industry, leveraging the country’s rich nickel reserves, said energy ministry official Tri Winarno.

“Even though LG has exited, Indonesia remains convinced our nickel is more competitive than other countries,” he told reporters.

Indonesian state-controlled miner Aneka Tambang, which had planned to form a JV with LGES to mine nickel, said it remained committed to work with other companies to supply nickel for battery production.

State firm Indonesia Battery Corporation, which had also planned to partner with LGES, did not respond to requests for comment. 

($1 = 16,810 rupiah)

(Reporting by Heekyong Yang in Seoup and Gayatri Suroyo and Bernadette Christina in Jakarta; Editing by Martin Petty and Jan Harvey)