America Worries About China's Dominance in Indonesia's Battery Industry

Indonesia's strategic value means it can position itself as a one-stop source from mines to precursor chemicals.

Lacking the mining and processing capabilities for many critical minerals domestically, the U.S. urgently needs to ensure reliable battery supply chains. A promising path is to deepen partnerships with a quietly rising country that will become central to future battery technology - Indonesia. With the world's largest nickel reserves, Indonesia has recently become the global top nickel producer, transforming from a raw nickel exporter into an important processing and manufacturing hub.

The Indonesian government plans to rank among the top three global electric vehicle battery producers by 2027, with expected capacity reaching 140 gigawatt-hours by 2030. It offers generous incentives such as up to 20 years of tax breaks for major projects to attract investors.

Chinese enterprises lead in Indonesia's foreign direct investment, followed by South Korean and Japanese firms. By 2021, Indonesia's first High Pressure Acid Leaching (HPAL) plant began operations, filling a key midstream gap in the supply chain aimed at producing battery-grade nickel chemicals. As of 2023, six HPAL projects have been launched.

This means Indonesia can not only supply raw ores but also the refined materials needed for lithium-ion battery cathodes. In other words, Indonesia is positioning itself as a one-stop supplier from mines to precursor chemicals, which is considered the most challenging link in the supply chain by the U.S. and its allies.

China controls up to 90% of the global lithium-ion battery supply chain. In 2023, China produced about 480 gigawatt-hours of battery packs, while the U.S. produced only 58 gigawatt-hours. Cooperation with Indonesia presents an opportunity to narrow this gap.

Strategically, Indonesia is building a comprehensive electric vehicle supply chain center in the Indo-Pacific region. If the U.S. continues to stand idly by, it will be virtually powerless against the standards, pricing, or supply flows generated by one of the most strategically significant hubs in the world.

Source: The National Interest

Original article: https://www.toutiao.com/article/1833427394175177/

Disclaimer: This article represents the views of the author alone.