Indonesia strikes $5-billion deal with Tesla for nickel supply

Nickel mining in Indonesia US electric vehicle maker Tesla has signed contracts worth a total of about $5 billion to buy materials for its batteries from nickel processing companies in Indonesia, a senior cabinet minister told CNBC Indonesia. Indonesia has major reserves of nickel, a crucial material to make cathodes for rechargeable batteries. The country has been putting serious effort into attracting Tesla to set up a production facility. President Joko Widodo met with Tesla founder Elon Musk earlier this year to drum up such investment. “We are still in constant negotiation with Tesla… but they…

US electric vehicle maker Tesla has signed contracts worth a total of about $5 billion to buy materials for its batteries from nickel processing companies in Indonesia, a senior cabinet minister told CNBC Indonesia.

Indonesia has major reserves of nickel, a crucial material to make cathodes for rechargeable batteries. The country has been putting serious effort into attracting Tesla to set up a production facility. President Joko Widodo met with Tesla founder Elon Musk earlier this year to drum up such 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 August 8.

Nickel from Sulawesi

He said Tesla has signed a five-year contract with nickel processing companies operating out of Morowali on Sulawesi island. The nickel materials will be used in Tesla’s lithium batteries.

Tesla so far did not comment on the report.

Indonesia is keen to develop domestic electric vehicles and battery industries and has stopped exports of nickel ore to ensure supply for investors. The move had successfully attracted investments from Chinese steel giants and South Korean companies including LG and Hyundai.

So far, most nickel investment in Indonesia have gone to production of stainless steel and nickel alloy steels, but the battery industry is now the next step.

The Indonesian government plans to impose export tax on these metals to boost revenue while encouraging more domestic production of higher-value nickel products, a senior official told Reuters.