Nam Hyun-woo has worked as a staff writer at The Korea Times since 2013, mostly covering business and politics. He currently belongs to the Business Desk where he covers topics such as emerging tech, AI, ICT and Korea's chaebol community. Prior to joining the team, he was the paper's correspondent for the presidential office of Korea during the Yoon Suk Yeol and Moon Jae-in administrations.
LG Energy Solution signs MOU for Indonesian investment
LG Energy Solution headquarters at the LG Twin Towers on Yeouido, Seoul / Courtesy of LG Group
By Nam Hyun-woo
By Nam Hyun-woo
LG Energy Solution, the battery spinoff from LG Chem, signed a memorandum of understanding (MOU) with the Indonesian government investment authority Friday for investments into the Southeast Asian country.
According to the industry ministry and LG Energy Solution, the electric vehicle (EV) battery maker held a closed-door signing ceremony for the MOU at the Lotte Hotel in Seoul. The ceremony was attended by LG Energy Solution President Kim Jong-hyun, Indonesian Investment Coordinating Board Chairman Bahlil Lahadalia and Minister of Trade, Industry and Energy Sung Yun-mo.
Indonesia has been aggressive in seeking LG Energy Solution's investment, with its ministers telling local news outlets that the battery maker would soon sign a deal on investing in the country. Sources said the MOU was signed after Indonesian ministers' expressed strong hopes of signing a deal with the company during their visit to Seoul to sign the Comprehensive Economic Partnership Agreement between the two countries.
LG Energy Solution confirmed the signing of the MOU, but refused to disclose any details, saying it was “a non-binding MOU regarding local investment” and specifics had yet to be confirmed.
According to officials familiar with the matter, however, the MOU is about launching a package of battery-related businesses in Indonesia, ranging from mining raw materials to manufacturing battery cells. LG Energy Solution will lead a consortium comprised of both Korean and Indonesian companies to do this. The alleged total value of the projects will likely reach the trillion-won level.
Companies including LG International and POSCO were mentioned as stakeholders in the projects, but the companies refused to comment on the matter.
“LG Energy Solution has been exploring investment opportunities in Indonesia for a while, with a plan to engage in multiple processes of battery making through joint ventures in the country,” a source said. “The MOU is showing that the company and the country have reached common ground from a broad perspective, but are still narrowing their differences over the details.”
Indonesia has been frequently mentioned as an investment destination for battery and electric vehicle firms due to the country's abundant resources for battery materials. The country, which has the largest nickel reserves in the world, banned all nickel exports in January to have more processed in the country. Nickel is one of the most important materials in manufacturing batteries.
Due to the country's importance, not only LG Chem but also a number of global giants have tapped into the country. Overseas news outlets reported that Tesla will send a delegation to Indonesia next month to discuss a potential investment in the country, and CATL, the biggest rival of LG Energy Solution, plans to invest $5 billion in a lithium battery plant there.
Though not included in Friday's MOU, sources said a joint venture between LG Energy Solution and Hyundai Motor is under way, with an outcome expected next month.
Currently, Hyundai Motor is building a vehicle plant capable of manufacturing up to 250,000 vehicles ― including EVs ― annually in Indonesia, with a plan to launch commercial operations at the end of next year. For a stable battery supply to the plant, the two sides reportedly agreed on setting up a joint venture and are now fine tuning details of the project.