With the world’s two largest suppliers of EV batteries recently launching substantial projects in Indonesia, the country has undertaken another step toward becoming a major electric vehicle (EV) player. Notwithstanding hopes that the process may be further decarbonized, these advancements have underlined the carbon-intensive aspect of mining to EV production.
A South Korean consortium led by LG Energy Solution, the world’s second-largest EV battery manufacturer, is scheduled to invest $9 billion in an Indonesian mines-to-manufacturing EV project.
The project will cover every step of the battery manufacturing process, from refining and smelting nickel to final assembly, and is part of a larger attempt to minimize reliance on Chinese EV battery suppliers.
The automobile industry’s transition to electric vehicles has been hampered in recent years owing to well-documented distribution network concerns, with China producing over 80% of battery materials.
Indonesia is well-positioned to take over part of China’s manufacturing. As OBG recently stated, the country has been working for some time to establish itself as a center for EV battery manufacture.
For example, the nation issued its Electric Vehicle Roadmap in September 2020, outlining intentions to manufacture 600,000 4-wheeled Electric Vehicles and 2.45 million two-wheeled EVs yearly by 2030.
The IBC (Indonesia Battery Corporation), charged with overseeing the EV battery sector, was created in March 2021 by four state-owned firms.
The IBC is a crucial local stakeholder in the new development, alongside local mining business Aneka Tambang.
Around a quarter of the world’s total supply of nickel, a vital component in electric vehicle batteries is held in Indonesia, which accounts for around a third of EV production expenses.
As a result, Indonesia is well-positioned to increase its EV battery manufacturing footprint. Indeed, in addition to the consortium’s agreement, China’s CATL (Contemporary Amperex Technology) – the world’s largest EV battery manufacturer – and Indonesian firms announced a $6 billion agreement to work on a similar project last month.
In other news, the continuing conflict in Ukraine has bolstered Indonesia’s potential in this area; Russia produces about 11% of global nickel, which has caused prices to skyrocket since the invasion.
Indonesia’s attitude, on the other hand, reveals a perplexing feature of the car industry’s shift away from fossil fuels.
According to recent research by LGIM, which is an asset management company, and BHP, which is a multinational mining company, the globe will need to extract substantially more metals if global warming is to be kept to 1.5°C over pre-industrial levels.
According to the analysis, nickel consumption will have to treble in the next 30 years, with EVs accounting for a large portion of that demand.
The mining industry emits a lot of carbon at every level of the process, which has an effect on the climate change footprint of electric vehicles. While the pollution saved from exhausts make vehicles less carbon-heavy, research company Berylls Strategy Advisors discovered that the manufacturing of an Electric Vehicle battery weighing 500 kg produces 74 percent more CO2 than the manufacturing of a conventional car in Germany.