LG Energy Solution (LGES) of South Korea has exited its US$8.45 billion electric vehicle (EV) battery project in Indonesia, prompting the Indonesian government to court China's Zhejiang Huayou Cobalt Co., Ltd. (Huayou) as a potential replacement investor.
Initially launched as a joint venture between LGES and the Indonesia Battery Corporation (IBC), the project was abandoned after LGES cited shifting market dynamics and a less favorable investment climate.
Indonesia's state-owned Antara news agency reported that the Energy, Mineral and Coal Suppliers Association (Aspebindo) warned LGES's exit could derail the country's EV industry roadmap, hinder technology transfer, and heighten the nation's dependence on imports.
Aspebindo also underscored the need for Indonesia to bolster its policy framework to stay competitive amid global industrial realignments.
Singapore's Nanyang Sin-Chew Lianhe Zaobao reported that Huayou is positioned to assume control of the project. Indonesia's Ministry of Energy and Mineral Resources dismissed concerns over the shift, noting that investor reshuffles are routine in major projects and reaffirming the nation's goal to become a regional EV manufacturing hub.
Huayou, however, has taken a cautious stance on the potential takeover.
According to Chinese financial outlet CLS, Huayou confirmed during an earnings call that it has been involved in the project for five years and expressed disappointment over LGES's decision to pull out.
While Indonesian officials hope Huayou will spearhead the investment with new partners, the company noted its participation will depend on forthcoming terms. Huayou emphasized that the project must be a collaborative effort across the entire supply chain, not a solo undertaking.
Huayou operates cobalt, lithium, and copper operations across Africa and is focused on nickel smelting in Indonesia. Its customers include top-tier EV and battery manufacturers such as CATL, BYD, Tesla, and LGES.
Although LGES has withdrawn from the IBC joint venture, it reaffirmed its continued cooperation with the Indonesian government. Its other joint venture with Hyundai Motor—HLI Green Power—remains on track.
In July 2024, HLI Green Power inaugurated its first battery facility in Indonesia, designed to produce enough cells annually to power 150,000 electric vehicles.
Article edited by Jerry Chen
