Indonesia says Tesla inks $5 billion nickel deal

According to CNBC Indonesia, a top cabinet official said that the American automobile manufacturer Tesla has inked contracts with nickel processing companies in Indonesia to purchase components for their batteries. These contracts are valued approximately $5 billion USD.

The nation with the most significant economy in Southeast Asia has been making efforts to get Tesla to establish a production plant in the nation, which possesses significant nickel reserves. Earlier this year, President Joko Widodo held a meeting with Elon Musk, the founder of Tesla, to discuss increasing investment.

“We are still in constant negotiation with Tesla… but they have started buying two excellent products from Indonesia,” Coordinating Minister for Maritime and Investment Affairs Luhut Pandjaitan said in an interview broadcast on Monday. The statement was made in reference to Tesla’s recent purchase of Indonesian-made electric vehicles (Aug 8).

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According to him, Tesla entered into a contract with nickel processing firms based in Morowali on the island of Sulawesi for a period of five years. The lithium batteries developed by Tesla will make use of the nickel materials.

An email sent by Reuters seeking a comment was not met with an immediate response from Tesla.

The export of nickel ore was halted in order to guarantee a sufficient supply for potential investors in Indonesia’s electric vehicle and battery industries, which the country is eager to grow domestically. The approach had been effective in attracting investments from large steel businesses in China as well as South Korean corporations such as LG and Hyundai.

However, the vast majority of investments in nickel have been made so far in the production of crude metal, such as ferronickel and nickel pig iron.

According to a senior official who spoke with Reuters last week, the government intends to impose an export tax on certain metals in order to increase revenue while simultaneously promoting more domestic manufacturing of products with higher values.