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LG Energy Solution (LGES) has signed a preliminary agreement with Indonesian state run companies to establish an electric vehicle (EV) battery supply chain in the country, according to local reports.

South Korea’s top EV battery manufacturer said it was leading a consortium which included LG Chem, LX International and other companies to establish the US$9bn integrated EV battery project.

The reports, citing an unnamed LGES official, suggested an initial, non binding agreement had been signed with Indonesian state owned EV battery investment company PT Industri Baterai Indonesia and also state owned gold and nickel mining company PT Aneka Tambang.

It cames just days after China’s Contemporary Amperex Technology (CATL), the world’s largest EV battery manufacturer, said it had signed a similar agreement with the same local state-owned companies to also establish a US$6bn integrated EV battery supply chain project – which has been reported separately by Just Auto.

Global battery manufacturers are under mounting pressure to secure input materials after a year of soaring prices, as they scale up battery production to fulfil growing global demand for EVs.

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By GlobalData

The LGES executive was quoted as saying: “The project seeks to establish an end to end value chain for EV batteries, including the procurement of raw materials, production of key components such as precursors and cathode materials and ultimately the manufacturing of battery cells.”

While Indonesia still has a negligible internal market for EVs, the government has a policy of requiring companies to establish local raw material processing and manufacturing operations.

Like CATL, LGES is keen to tap into substantial reserves of nickel ore in Indonesia to support its growing global EV battery manufacturing. The company official added: “With this project we expect to be able to enhance our battery business capabilities and profitability by stably securing competitive raw materials.”