Jakarta’s EV battery ambitions look promising 

INDONESIAN President Joko Widodo has good reasons to be optimistic about his ambition to turn Indonesia into a major player in battery production for electric vehicles (EVs). The country has abundant nickel reserves. In 2020, he shrewdly banned raw nickel exports to get investment flowing into downstream industries.

Several Chinese refiners duly responded and have relocated their factories to Indonesia. Among others, Chinese battery giant Contemporary Amperex Technology (CATL) pledged last year to help Indonesia develop its EV battery industry. Another Chinese firm, Zhejiang Huayou Cobalt, is a partner in a US$4.5 billion deal to build a nickel refinery in Sulawesi.

Now, Indonesia is seeking a limited free trade deal with the US. This is to both diversify its sources of investments funds as well as to take advantage of available EV tax credits under the Inflation Reduction Act (IRA), which mandates that some battery components have to be produced or assembled in North America or in a free trade partner. Jakarta wants a deal similar to the one Washington signed with Tokyo last month. The US and Japan agreed on a pact that eased trade in EV battery minerals, including lithium, nickel, cobalt, graphite and manganese.