The Indonesia Battery Corporation (IBC) is pursuing a stake of approximately 30% to 40% in the electric vehicle battery plant jointly developed by Hyundai and LG in Karawang, West Java.
Adhietya Saputra, SVP Corporate Strategy & Business Development at IBC, stated that the negotiation process for acquiring shares in the project known as “Project Omega” is aimed to be completed by April 2023.
By that time, the joint venture plant, established by South Korean companies, is expected to have commenced production of battery cells with an initial capacity of 1 gigawatt-hour (GWh), with plans to increase production capacity up to an optimal 10 GWh.
“We are currently in negotiations, initially entering with a 5% stake, and our hope is to secure a stake between 30% and 40%,” Adhietya mentioned during an interview in Jakarta on October 18, 2023.
Adhietya explained that the negotiations with Hyundai and LG regarding the acquisition of shares in the battery plant have recently encountered some back-and-forth. Nevertheless, he remains optimistic about IBC’s strong position in the negotiations, given the substantial upstream mining shares of the larger joint venture.
“As there are negotiations both upstream and downstream, it’s a bit of a tug-of-war. If we provide the mining assets to that extent, naturally, we request a larger share below, indicative of 5%, but it’s not certain yet,” he added.
On the other hand, he confirmed that, through the negotiations that have taken place, Hyundai and LG have agreed to increase the production capacity of Project Omega to 20 GWh in the second phase of development.
He assured that the company possesses strong financial capabilities to acquire shares of up to 40%.
Previously, the project with a total investment of $1.1 billion from LG Energy Solution (LGES) and Hyundai Motors Corp was set to commence production in April of the following year. The batteries produced will supply Hyundai electric vehicles not only in Indonesia but also for export to foreign markets.
“Project Omega in Karawang, targeting 10 GWh, is the result of the last phase [of construction]. The investment value from LGES and Hyundai stands at $1.1 billion, and this marks the beginning of Indonesia becoming an integrated EV Production HUB with Hyundai electric vehicles,” stated IBC’s CEO, Toto Nugroho, during a hearing with the VII Commission of the House of Representatives on April 12, 2023.
However, Toto acknowledged that the plant does not have its own cathodes, meaning this component needs to be imported. Nevertheless, the raw materials, such as nickel, are sourced from Indonesia.
