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August 9, 2022

Tesla signs $5bn nickel products supply contracts with Indonesian firms

Indonesia has been looking to attract investments from Tesla and boost domestic development of electric vehicles and batteries.

US-based Tesla has reached contracts, valued at nearly $5bn, to purchase battery materials from Indonesian nickel processing companies, reported Reuters citing a senior cabinet minister as saying to CNBC Indonesia.

Claiming to hold major nickel reserves, Indonesia has been looking to attract investments from US electric vehicle maker Tesla.

Indonesian Coordinating Minister for Maritime and Investment Affairs Luhut Pandjaitan was cited by the news agency as saying in an interview broadcast: “We are still in constant negotiation with Tesla…but they have started buying two excellent products from Indonesia.”

Pandjaitan said a five-year contract has been signed by Tesla with nickel processing companies operating out of Morowali in Sulawesi island.

Tesla uses nickel materials for the production of lithium batteries, which are required for electric vehicles.

Indonesia had suspended nickel ore exports to ensure supply for investors and is looking to support the domestic development of electric vehicles and batteries industries.

The country attracted investments from steel giants from China and South Korean companies, including Hyundai and LG.

In June, Reuters reported that Korean battery manufacturer LG Energy Solution commenced building two nickel processing plants in Indonesia as part of its wider $9.8bn investment plan to produce electric vehicle batteries in the country.

The majority of nickel investments in Indonesia have so far been allocated to crude metal production such as nickel pig iron and ferronickel, reported Reuters.

Last year, Indonesia commissioned a new 1.8Mt capacity nickel smelter factory at PT Virtue Dragon Nickel Industry park in Morowali Utara county, Central Sulawesi province.

The facility was developed by PT Gunbuster Nickel Indonesia, a unit of China’s Jiangsu Delong Nickel Industry.

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