The Indonesian government has ordered three leading state owned enterprises (SOEs) to establish a joint holding company to drive the development of a local electric vehicle (EV) battery manufacturing and service industry, according to local reports.

A new company, to be called PT Indonesia Battery Holding, will be jointly established by mining holding company Mind ID, oil and gas giant Pertamina and national electricity company PLN to develop an “end to end domestic supply chain for EV batteries”.

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Indonesia is keen to be part of the increasingly globalised EV revolution and is competing head on with neighbouring countries, such as Thailand, to attract inward investment in this segment. The government sees the country’s abundance of natural resources, such as cobalt, zinc and manganese, all raw materials for EV batteries, as a key strength in attracting foreign investment. 

Government policy is to encourage the development of downstream processing industries, including a ban on some types of unprocessed mineral ore, and plans to ban all metal ore exports by 2022. It is also offering incentives for investments in electric vehicle production but has stipulated minimum local content levels of 80% by 2029 which would require local battery production.

According to local reports, the three state owned companies have been in talks with the world’s two leading EV battery manufacturers, China’s Contemporary Amperex Technology Company Limited (CATL) and South Korea’s LG Chem, with a target of attracting investment of between US$12bn and US$20bn to develop a complete EV battery supply chain and aftersales network. 

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Mind ID president director Orias Petrus Moedak told reporters the aim of PT Indonesia Battery Holding was to produce between eight and 10 gigawatt hours (GWh) of batteries per year, starting in 2022 or 2023.

Currently there is no electric or hybrid vehicle production in Indonesia and domestic sales volume is negligible. With little in the way of EV recharging infrastructure in the country, domestic demand for EV batteries is expected to be limited for some time.

PT Indonesia Battery Holding will need to target exports to achieve its medium term output targets.