LG Energy Solution (LGES) of South Korea has withdrawn from its US$8.45 billion electric vehicle (EV) battery project in Indonesia, leaving the country’s government to court Zhejiang Huayou Cobalt from China as a potential replacement investor. Initially launched as a joint venture between LGES and Indonesia’s state-backed Indonesia Battery Corporation (IBC), the project faced cancellation after LGES cited changes in market dynamics and an unfavorable investment climate.
The Indonesian Energy, Mineral, and Coal Suppliers Association (Aspebindo) warned that LGES’s exit could disrupt Indonesia’s broader EV industry strategy, hinder the transfer of technology, and make the country more reliant on imports for EV production. In response, Aspebindo urged the Indonesian government to strengthen its policy framework to maintain competitiveness as the global industrial landscape evolves.
Reports indicated that Huayou Cobalt, a key player in cobalt, lithium, and copper operations in Africa and nickel smelting in Indonesia, is positioned to take over the project. However, Huayou has expressed caution regarding the potential takeover. The company confirmed its involvement in the project for the past five years and voiced disappointment over LGES’s decision to pull out. Despite this, Indonesian officials remain optimistic that Huayou, with new partners, could lead the investment, although the company has stated that its participation will depend on the project’s terms. Huayou emphasized the importance of a collaborative effort across the entire supply chain, rather than a solo venture.
Huayou’s customer base includes major EV and battery manufacturers such as Contemporary Amperex Technology Limited (CATL), BYD, Tesla, and LGES, underscoring its crucial role in the sector. While LGES has withdrawn from the IBC joint venture, it reiterated its ongoing collaboration with the Indonesian government. The company’s other joint venture with Hyundai Motor, HLI Green Power, remains unaffected. In July 2024, HLI Green Power inaugurated its first battery facility in Indonesia, which is expected to produce enough cells annually to power 150,000 electric vehicles.
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