Battery corporations including LG Energy Solution and EcoPro are strengthening their on-site operations in Indonesia, the world's No. 1 country for nickel reserves. Nickel is a key mineral needed for producing stainless steel and batteries for electric vehicles.
On the 14th, according to the battery industry, EcoPro Group plans to secure nickel for batteries for 1.5 million electric vehicles by making an additional investment in the BNSI (Bahodopi Nickel Smelting Indonesia) nickel smelter in Indonesia.
The BNSI smelter is under construction in Sulawesi, Indonesia, and is a joint venture that EcoPro Group is pursuing with global corporations including the Indonesian state-run mining corporation PTVI (PT Vale Indonesia). EcoPro Group invested about 800 billion won over the past four years as a first-phase investment. Through this, it secured 29,000 tons of nickel annually.
What is being carried out now is the second-phase investment. To fund this investment, EcoPro BM, which handles the cathode manufacturing and sales business within EcoPro Group, is pushing a paid-in capital increase. The size of the paid-in capital increase is about 1.2 trillion won. Of this, 765 billion won will be used to secure equity in Indonesia's BNSI. In addition, EcoPro Co., Ltd. will add 800 billion won to raise the equity ratio in the BNSI nickel smelter to 39%. The current ratio is 18.35%.
The additional nickel that EcoPro Group will secure through the second-phase investment amounts to 36,000 tons. This opens the possibility that the group will have the right to source a total of 65,000 tons of nickel from Indonesia. EcoPro Group plans to send the nickel secured in Indonesia to its Debrecen, Hungary, cathode plant to respond to the European Union (EU) Critical Raw Materials Act.
Hyundai Motor Group and LG Energy Solution built HLI Green Power, a joint battery cell plant, in Indonesia in 2024. The battery cells produced there are installed in electric vehicles manufactured at Hyundai Motor's Indonesia plant. The two companies said they considered not only growing demand in the Southeast Asian EV market, including Indonesia, but also the smooth sourcing of nickel in Indonesia when selecting the plant site.
POSCO Holdings earlier, in 2023, pursued a project to establish a new nickel smelting plant in Indonesia. At the time, POSCO Holdings drew up plans to produce 52,000 tons of nickel annually at its Indonesian plant, enough to make batteries for 1 million electric vehicles, but it has halted the review.
Indonesia is in the spotlight because it is both the largest producer and the largest holder of nickel reserves. According to the U.S. Geological Survey, of the 130 million tons of confirmed global nickel reserves, Indonesia holds 55 million tons, or 41%, ranking first. The gap with second-place Australia (18%) is also large. Indonesia accounts for 65% of global nickel production, giving it a dominant position in the nickel market.
Indonesian government policy is also a driver of localization strategies. Saying it would grow the nickel industry, the Indonesian government has, since 2014, banned exports of nickel ore while moving to mandate local smelting. The government also lowered this year's nickel mining quota to 260 million–270 million tons, about 30% less than last year's 379 million tons.
The most common use of nickel is in making stainless steel. When nickel and other elements are mixed with iron, a protective layer forms on the surface, creating stainless steel that does not rust and is resistant to impact. It is used for kitchen sinks, pots, and cutlery, as well as building exteriors and automobile parts.
Where nickel use has been increasing recently is in cathode materials for electric vehicle batteries. In lithium-ion batteries, nickel is a key raw material that determines battery capacity. The higher the nickel content, the longer the driving range an electric vehicle can achieve on a single charge. Lithium is a main raw material for the ternary batteries—nickel-cobalt-manganese (NCM) and nickel-cobalt-aluminum (NCA)—in which Korea's three battery corporations have strengths.