Tuesday, April 16, 2024

IBC develops Electric Vehicle ecosystem

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Gusty da Costa





Electric Vehicle (EV) battery holding company Indonesia Battery Corporation (IBC) is taking a close look to two foreign potential partners in developing EV upstream and downstream industries.

The government established the IBC as a holding company as the basis for establishing EV battery industry in the country. This holding consists of state-owned mining holding company PT Indonesia Asahan Aluminium (Inalum/MIND ID), mining company PT Aneka Tambang Tbk (Antam), oil-and-energy giant PT Pertamina and state-owned electricity company PT PLN. Minister of State-Owned Enterprises (BUMN) Erick Thohir said the collaboration of these 4 SOEs would actually strengthen each state-owned company, including PT PLN (Persero).

IBC Corporate Secretary Muhammad Sabik named CATL (Contemporary Amperex Technology Co. Ltd.) through CBL (Guangdong Brunp Recycling Technology Co. Ltd.) of China and LG Energy Solutions from South Korea as the potential partners to develop upstream and downstream industries, from mining, smelting, precursors and materials for cathode battery cells to battery recycling.

IBC and its two partners are exploring the possibilities to develop two-wheelers and four-wheelers. 

The total investment for the project, according to Sabik, is US$15 billion.

Based on the study, 60% of the project will be financed through loans and 40% through equity. “At this time, we are in the process of discussing debts with all shareholders and potential investors,” Sabik told Indonesia Business Post. 

Wide opportunities for foreign partners

At the beginning of the project, the Chinese and Korean partners will contribute the technology used in the batteries and EV.

Nonetheless, Sabik said IBC opened up opportunities to work together with other foreign companies if the partnership was beneficial for Indonesia.

Additionally, foreign companies and vendors also have the opportunity to supply raw materials such as anodes, separators, electrolytes and many others.

“If this kind of industry exists in Indonesia, they will support the competitiveness of lithium-ion batteries here,” said Sabik.

An EV factory will be established on Java island due to its proximity to the market and the availability of the infrastructure. There are also plans to build a battery factory to cater to domestic and global markets but the factory capacity is still being studied.

On January 21, 2022, IBC announced that Taiwanese multinational electronics contract manufacturer Foxconn would invest in this EV ecosystem with Gogoro, a Taiwanese company developing battery-swapping refueling platform for electric two-wheelers, and PT Indika Energy Tbk, an Indonesian leading diversified company.

The consortium’s investments will include EV and the components and components of an electric vehicle ecosystem, including battery cells, battery modules, batteries and the development of four-wheel electric cars, two-wheel electric vehicles and electric buses. 

This project is expected to require an investment of US$8 billion in total. According to projections, the project is expected to create a market capitalization of over US$100 million by 2030.

Abundant raw materials 

Nickel is the primary raw material used in electric battery manufacturing. There are vast reserves of nickel in Indonesia. One of the company’s shareholders, Antam, has enough nickel reserves in North Maluku provinces to supply the company’s demands. On the other hand, other minerals like lithium and graphite will be imported. 

The company will require 770 tons of nickel metal for 1 GWh (gigaWatts hour) of battery cells or equal to 20,000 units of electric cars. ICB will establish smelters with its partners in response to these demands. 

According to the 2020 government data, Indonesia is estimated to have 985 million metric tons of nickel reserves and 16 million metric tons of nickel metal reserves. The vast majority of nickel reserves are located in the eastern part of Indonesia, including Morowali island in Central Sulawesi, East Halmahera island and Ternate in North Maluku, Kolaka island in Southeast Sulawesi, Gag island in West Papua, East Luwu island and Sorowako island in South Sulawesi. 

Indonesia was the world’s largest nickel producer in 2019, with 800,000 tons produced that year. There were 19 nickel smelters in Indonesia operating in 2020, with a capacity of 12.4 million tons of nickel per year. In comparison, 15 smelters are under construction with a total capacity of 6.03 million tons per year. 

Faisal Basri, an economist at the University of Indonesia (UI), said it was impossible in the world to have such an ecosystem for EV industry. A country must develop an EV industry from upstream to downstream. According to him, it is typical of a country to be involved in a global supply chain. Citing an example, he said a battery was imported from one country while tires were from another country.

Basri believed that Indonesia’s attempt to create an EV ecosystem by banning the export of nickel is a step in isolating Indonesia from the rest of the world. When the nickel price spiked up, battery producers started looking for other raw materials to replace nickel.

On the other hand, Indonesia needs to consider its nickel reserves. Based on the United States Geological Survey data, Indonesia only had 21 million metric tons of nickel reserves in January 2021. According to some estimates, Indonesia’s nickel reserves will run out in 10 years if they are exploited as they are at the moment.

Gusty da Costa






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