Energy and Mineral Resources Minister Bahlil Lahadalia announced that President Prabowo Subianto approved a US$9.8 billion battery downstream project now led by Huayou.

Danantara, a state-backed investment firm, has also joined the project to support funding and operations.

He said that LG’s exit was a strategic decision aimed at expediting progress through Huayou’s involvement.

Additionally, Bahlil highlighted a US$6 billion collaboration with CATL, known as the Dragon Project.

This initiative encompasses various stages, from mining to battery recycling, and is managed by PT Industri Baterai Indonesia (IBC) and CATL subsidiary Ningbo Contemporary Brunp Legend Co Ltd (CBL).

The Minister of Investment and Downstreaming/Head of BKPM, who is also the Head of BPI Danantara, Rosan Roeslani, highlighted the importance of Danantara’s involvement in strengthening Indonesia’s position in the project.

.source-ref{font-size:0.85em;color:#666;display:block;margin-top:1em;}a.ask-tia-citation-link:hover{color:#11628d !important;background:#e9f6f5 !important;border-color:#11628d !important;text-decoration:none !important;}@media only screen and (min-width:768px){a.ask-tia-citation-link{font-size:11px !important;}}

🔗 Source: Kontan

🧠 Food for thought

1️⃣ Indonesia’s strategic pivot to Chinese battery champions reflects global EV industry realignment

Indonesia’s transition from South Korean LG to Chinese Huayou for its $9.8 billion battery project represents a broader shift in global EV supply chains dominated increasingly by Chinese firms.

China currently produces nearly two-thirds of the world’s electric vehicles and over three-quarters of EV batteries, demonstrating its market dominance1.

The replacement of LG with Huayou in the major “Titan Project” coincides with Huayou’s ambitious plans to invest an additional $20 billion in Indonesia’s EV ecosystem, bringing its total commitment to $28.8 billion2.

This pivot is further reinforced by Indonesia’s parallel “Dragon Project” with CATL, China’s battery giant, creating a two-pronged strategy with Chinese manufacturers at the center.

The influx of Chinese investment provides Indonesia with immediate access to advanced battery technology, as Chinese companies have made significant breakthroughs in battery chemistry, particularly with cost-effective lithium-iron-phosphate (LFP) batteries1.

Indonesia’s strategy aligns with market realities where Chinese battery manufacturers have established technological leadership and scale advantages that few competitors can match.

2️⃣ Resource nationalism shapes Indonesia’s EV battery strategy

Indonesia’s approach to developing its EV battery industry demonstrates a sophisticated form of resource nationalism, where state-owned enterprises maintain majority control of upstream resources while partnering with foreign companies for technology and investment.

The government has explicitly structured both the Huayou and CATL projects to ensure that Indonesian state-owned companies hold 51% ownership in the mining operations, as confirmed by Minister Bahlil Lahadalia3.

This ownership structure represents Indonesia’s strategic response to earlier experiences where raw materials were exported with minimal domestic benefit. The country has now banned exports of raw nickel ore to force value addition domestically4.

The creation of PT Industri Baterai Indonesia (IBC) and Danantara as investment vehicles allows the government to maintain strategic control while addressing previous financing constraints that had slowed progress with earlier partners.

Indonesia’s strategy leverages its position as the world’s largest nickel producer, controlling resources essential for battery production at a time when global demand for these materials is soaring5.

This balanced approach aims to maximize domestic economic benefits from Indonesia’s natural resources while still attracting the foreign expertise and capital needed to build a complete EV supply chain.

3️⃣ Indonesia’s comprehensive “mine-to-battery” approach aims to capture maximum value in EV transition

Indonesia is implementing an integrated strategy covering the entire EV battery value chain from mining to finished batteries, distinguishing it from countries that focus on isolated segments of production.

Both the Huayou and CATL projects encompass the complete production ecosystem, from nickel mining through processing (HPAL, smelters), component production (precursors, cathodes), battery cell manufacturing, and even recycling3.

This vertical integration strategy is designed to capture maximum economic value, with Minister Rosan Roeslani highlighting the projects’ benefits in terms of returns, job creation, and broader economic impact for Indonesia.

Indonesia’s approach leverages its abundant nickel resources, which are essential for lithium-ion batteries, positioning the country as a potentially key player in global battery manufacturing6.

Huayou’s IPIP Park exemplifies this comprehensive approach, covering 9,384 hectares with production facilities for various battery materials and aiming to create between 50,000 to 100,000 jobs while establishing a closed-loop supply chain7.

This strategy represents Indonesia’s ambition to transform from merely a raw material supplier to a major player in the high-value EV supply chain, similar to how other resource-rich countries have attempted to move up the value chain in strategic industries.

Recent Huayou developments

……