Indonesia Dropped LG from EV Battery Consortium, Not the Other Way Round, Says Minister Rosan
Minister of Investment and Downstream Industries/Head of the Investment Coordinating Board (BKPM), Rosan P. Roeslani, has revealed the reasons behind LG's departure from the electric battery consortium investment project.
The project was expected to be highly capital-intensive, with an estimated investment value of US$7.7 billion (approximately Rp 129.8 trillion, assuming an exchange rate of Rp 16,862 per US dollar). The consortium comprised LG Energy Solution, LG Chem, LX International Corp, and other partners.
The decision not to continue the partnership with LG was based on an official letter from the Ministry of Energy and Mineral Resources (ESDM) dated 31 January 2025.
Rosan clarified that it was not LG that voluntarily withdrew from the consortium, but rather the Indonesian government that decided to remove the South Korean electronics giant from the project.
Rosan said negotiations over EV battery investment with LG and its consortium had dragged on for too long, whilst the Indonesian government wanted the investment realisation process to proceed quickly. Meanwhile, China's Huayou had already expressed interest in investing in electric battery development, while LG had yet to finalise an agreement with the Indonesian government.
"The negotiations had gone on for far too long, whereas we want everything to proceed well and quickly. The negotiations had been running for five years, so it simply wasn't feasible," said Rosan, as quoted on Thursday (24 April 2025).
"It has been said that they [LG] terminated it, but to be more precise, it was actually us who terminated it, based on a letter dated 31 January 2025 issued by the Ministry of ESDM," he affirmed.
Due to the protracted negotiations between the government and LG, the Ministry of ESDM decided to send a letter to LG discontinuing the electric battery project partnership.
"The letter dated 31 January 2025 was sent by Mr Bahlil to the CEOs of LG Chem and LG Energy Solution. The letter was issued because Huayou had indeed expressed interest in investing," Rosan explained.
Previously, the consortium had been working with the Indonesian government and state-owned enterprises to build an EV battery supply chain, encompassing raw material procurement through to the production of precursors, cathode materials, and battery cell manufacturing.
Sources from South Korean industry circles indicated that the consortium had decided to withdraw from the investment project after consulting with the Indonesian government, citing a shift in the industry landscape, particularly due to a temporary slowdown in global electric vehicle demand.
"Considering market conditions and the investment environment, we have decided to withdraw from the project," said an official from LG Energy Solution. "However, we will continue our existing business in Indonesia, such as the Hyundai LG Indonesia Green Power (HLI Green Power) battery plant, our joint venture with Hyundai Motor Group," the official added.
The project was expected to be highly capital-intensive, with an estimated investment value of US$7.7 billion (approximately Rp 129.8 trillion, assuming an exchange rate of Rp 16,862 per US dollar). The consortium comprised LG Energy Solution, LG Chem, LX International Corp, and other partners.
The decision not to continue the partnership with LG was based on an official letter from the Ministry of Energy and Mineral Resources (ESDM) dated 31 January 2025.
Rosan clarified that it was not LG that voluntarily withdrew from the consortium, but rather the Indonesian government that decided to remove the South Korean electronics giant from the project.
Rosan said negotiations over EV battery investment with LG and its consortium had dragged on for too long, whilst the Indonesian government wanted the investment realisation process to proceed quickly. Meanwhile, China's Huayou had already expressed interest in investing in electric battery development, while LG had yet to finalise an agreement with the Indonesian government.
"The negotiations had gone on for far too long, whereas we want everything to proceed well and quickly. The negotiations had been running for five years, so it simply wasn't feasible," said Rosan, as quoted on Thursday (24 April 2025).
"It has been said that they [LG] terminated it, but to be more precise, it was actually us who terminated it, based on a letter dated 31 January 2025 issued by the Ministry of ESDM," he affirmed.
Due to the protracted negotiations between the government and LG, the Ministry of ESDM decided to send a letter to LG discontinuing the electric battery project partnership.
"The letter dated 31 January 2025 was sent by Mr Bahlil to the CEOs of LG Chem and LG Energy Solution. The letter was issued because Huayou had indeed expressed interest in investing," Rosan explained.
Previously, the consortium had been working with the Indonesian government and state-owned enterprises to build an EV battery supply chain, encompassing raw material procurement through to the production of precursors, cathode materials, and battery cell manufacturing.
Sources from South Korean industry circles indicated that the consortium had decided to withdraw from the investment project after consulting with the Indonesian government, citing a shift in the industry landscape, particularly due to a temporary slowdown in global electric vehicle demand.
"Considering market conditions and the investment environment, we have decided to withdraw from the project," said an official from LG Energy Solution. "However, we will continue our existing business in Indonesia, such as the Hyundai LG Indonesia Green Power (HLI Green Power) battery plant, our joint venture with Hyundai Motor Group," the official added.