Indonesia looks to Australia, Africa for minerals to meet its EV hub ambitions

Indonesia is assessing potential investments in Australian and African mining projects to support its own electrification as well as its plan to become a major exporter of electric vehicles and their batteries.

Indonesia aims to have 13 million electric motorcycles and 2 million electric cars on its roads by 2030 on its way to being carbon neutral by 2060 "or sooner," the country's ambassador to Australia, Siswo Pramono, told an Indonesian investment seminar at the Paydirt Battery Minerals Conference in Perth March 22.

The country has already started leveraging its status as the world's biggest nickel producer with the most reserves to develop an EV supply chain through resource nationalism. Australia is the world's largest lithium producer, while Africa is seen as the next frontier for major lithium projects and has already attracted Chinese companies, which have moved quickly to invest there.

Its lack of key battery raw materials like lithium and graphite prompted Indonesia to pursue investments in projects in African and Australian jurisdictions where governments have been in contact about supplying critical minerals, Chandra, senior vice president of project management for PT Indonesia Battery Corp. or IBC, said in an interview.

Australia is a "much safer and politically very stable" jurisdiction for metals investment in the areas of environmental, social and governance, Chandra said. "Africa is much more risky, but the price may be more economic for our investments," he said.

Critical mineral suppliers

State-owned holding company Mining Industry Indonesia or MIND ID, one of IBC's four equal-part shareholders, will make the investments, prioritizing Australia, Tanzania, the Democratic Republic of Congo and Zimbabwe for the supply of critical minerals, Chandra said.

While not presuming to speak on behalf of MIND ID, Chandra told the seminar that the group has the "intention to put some equity investment into lithium mining in Australia and have the conversion and processing facility either in Australia or Indonesia," as Indonesia's own lithium grades are "just too low to be visible."

Western Australia's state government signed a memorandum of understanding with the Indonesian Chamber of Commerce and Industry in February on critical minerals partnership opportunities. Chamber Chairman Arsjad Rasjid saw it as an opportunity to jointly develop a battery manufacturing factory in Indonesia "utilizing Australian lithium and investments... to realize the potential of Indonesia's nickel reserves and plentiful workforce," according to a Feb. 23 statement.

Representatives of the governments of Australia and Tanzania have not responded to requests for comment, while those of DRC and Zimbabwe could not be reached.

Serious battery intentions

IBC was formed in 2021 by four state-owned shareholders: export-oriented diversified mining and metals company PT Antam Tbk, MIND ID, state-owned oil company PT Pertamina and electricity generator and distributor PT PLN.

"Indonesia is very serious in its battery ambitions and IBC is the manifestation of that," Chandra told the seminar.

Indonesia's annual battery demand is set to grow to 20.1 GWh in 2030 and rise to 59.1 GWh in 2035, Chandra said. The 2035 level would require 66,000 lithium carbonate equivalent metric tons of lithium and 53,400 mt of graphite, Chandra said, along with 81,000 mt of aluminum, 42,600 mt of copper, 39,000 mt of nickel, 4,700 mt of cobalt and 4,100 mt of manganese.

However, Chandra told the seminar that "we are looking beyond those numbers, because we want to not only service the domestic market, we want to be a [battery] production base for the region and possibly worldwide." IBC also plans to develop an original equipment manufacturing base for four-wheel EVs, as well as motorcycles.

Aside from nickel, Indonesia has "not gone into the other commodities to make the batteries, so there lies the opportunity for new partners and investment, namely for lithium hydroxide, graphite anode, electrolyte and so on," Chandra said.

Seeking Australian investment

The metals sector accounted for US$1.28 billion of the US$2 billion of foreign direct investment Australia sent to Indonesia between 2018 and 2022, according to Saribua Siahaan, director of investment promotion for the government's Indonesia Investment Coordinating Board. Siahaan hopes Australia can become one of Indonesia's top three investors through metals and mining partnerships.

Pramono also appealed to Australian mining executives to consider Indonesian in-country investments.

"We understand that some parts of the Australian government believe it is politically important to have [critical minerals] processing in Australia, but please see Indonesia's 5.2% economic growth [in 2022] and inflation still below it, a young population which is a demographic bonus, and the EVs we are ready to produce by 2030," Pramono said.

"The market is there, so we really need to [focus] on how to move to [create] an economic powerhouse between Indonesia and Australia."

S&P Global Commodity Insights reporter Anthony Barich produces content for distribution on S&P Capital IQ Pro.