Indonesia says Tesla struck $5 billion deal to buy nickel products

Tesla cars are seen parked at the construction site of the new Tesla Giga electric car plant in Gruenheide, Germany, March 20, 2022. REUTERS/Hannibal Hanschke/

JAKARTA (Reuters) – American car maker Tesla (TSLA.O) It has signed contracts worth about $5 billion to purchase materials for its batteries from nickel processing companies in Indonesia, a senior cabinet minister told CNBC Indonesia.

Southeast Asia’s largest economy was trying to persuade Tesla to set up a production facility in the country, which has large nickel reserves. President Joko Widodo met with Tesla founder Elon Musk earlier this year to drum up investment. Read more

“We are still in ongoing negotiations with Tesla…but they have started buying premium products from Indonesia,” Coordinating Minister for Maritime Affairs and Investment, Luhut Panjitan, said in an interview broadcast on Monday.

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

Tesla did not immediately respond to an email from Reuters seeking comment.

Indonesia is keen to develop electric car and battery industries at home and has halted the export of nickel ore to ensure supply for investors. The move succeeded in attracting investment from Chinese steel giants and South Korean companies such as LG and Hyundai.

However, most of the nickel investment to date has gone into the production of ores such as iron ore, nickel and ferronicial.

A senior official told Reuters last week that the government plans to impose an export tax on these minerals to boost revenue while encouraging more local production of high-value products.

Reporting by Francesca Nanjoy; Editing of Kanupriya Kapoor

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