Jakarta, CNBC Indonesia - Coordinating Minister for Maritime Affairs and Investment (Menko Marves) Luhut Binsar Pandjaitan inaugurated the start of the first phase of production and expansion plans for production facilities for electric vehicle (EV) battery cathode materials based on Lithium Iron Phosphate (LFP) by PT LBM Energi Baru Indonesia, in the Kendal Industrial Area, Central Java.

This is the result of a strategic investment partnership between the Indonesia Investment Authority (INA) Consortium and Changzhou Liyuan New Energy Technology Co., Ltd., one of the world's largest LFP producers. This investment is expected to play an important role in meeting global demand for LFP batteries, which is driven by the increasing penetration of electric vehicles (EVs) worldwide.

Luhut emphasized the importance of downstream industry as part of President Joko Widodo's (Jokowi) grand vision. According to him, Indonesia can no longer just be an exporter of raw materials.

"We must create added value in our own country, build a strong downstream industry, and position ourselves as key players in the global supply chain," said Luhut, quoted from the official statement from the Coordinating Ministry for Maritime Affairs and Fisheries, Tuesday (8/10/2024). This facility is located in the Kendal Industrial Area and is projected to become the largest LFP cathode producer in the world outside China.

The planned joint investment is up to US$ 200 million to increase production capacity from 30,000 tons in phase I to 90,000 tons in phase II, which is expected to start in 2025.

LFP is one of the two main chemicals in lithium-ion batteries, alongside Nickel Cobalt Manganese (NCM). Known for its cost effectiveness, LFP is well suited for electric vehicles and energy storage systems.

Based on Bain's study of the EV1 Battery Ecosystem, global battery demand is expected to grow approximately fourfold between 2023 and 2030, driven by increasing EV adoption, positioning LFP to play a critical role in meeting that demand.

By 2030, NCM is projected to represent approximately 50% of lithium-ion battery demand, while LFP is expected to account for approximately 35%, with both expected to remain central to the battery industry's future growth.

This strategic partnership focuses on LFP cathode materials that represent the highest added value in the battery value chain, enabling the facility to capitalize on the opportunities presented by this growing market.

By 2030, Indonesia is expected to serve an estimated US$ 10 billion market in LFP cathode active materials, thereby making a meaningful contribution to the global transition to clean energy. This investment is also proof of Indonesia's attractiveness as a country for downstream supply chains.

"This is not just a factory, but also the foundation of Indonesia's integrated EV ecosystem. Through improving the lithium battery production chain, no less than 3 million electric vehicle units throughout the world will have their lithium battery needs met by industry in Indonesia," he said.

Chairman of the INA Board of Directors, Ridha Wirakusumah, stated that the rapid growth in LFP demand, driven by the global shift towards EVs and renewable energy, presents a huge opportunity for Indonesia.

According to him, along with the emergence of LFP as one of the main chemicals in battery technology, his party believes that this initiative can help position Indonesia as an important player in the global battery ecosystem. By building strong production capabilities, Indonesia is better prepared to meet the growing demand for LFP cathode materials in the future.

"The extensive operational expertise and solid track record of the INA and Changzhou Liyuan consortium are key factors that strengthen this initiative, and bring great potential to increase Indonesia's role in the global battery supply chain," he said.

Meanwhile, CEO of Changzhou Liyuan, Shi Junfeng, stated that PT LBM Energi Baru Indonesia is the first cathode producer outside China, where the initial stage of operation is important for increasing supply security in the global new energy supply chain.

Apart from that, this cooperation is also another important achievement of comprehensive strategic cooperation between China and Indonesia. Proposed strategic investment in LBM New Energy (AP) Ptd. Ltd. also fully demonstrates INA's foresight and long-term commitment to the global new energy industry.

"This project will enable Changzhou Liyuan and INA to achieve closer strategic cooperation. In the future, Changzhou Liyuan will make a meaningful contribution to Indonesia's development and the global new energy industry," he said.

(SOURCE)