A Strategic Partnership: Australia and Indonesia's Landmark EV Battery Deal
A Strategic Partnership: Australia and Indonesia's Landmark EV Battery Deal

A Strategic Partnership: Australia and Indonesia’s Landmark EV Battery Deal

July 7, 2023

In a significant development for the electric vehicle (EV) industry, Australia and Indonesia, two mining powerhouses, have inked a mutually beneficial agreement concerning EV batteries. This strategic partnership, described as a “win-win” deal by Sabrin Chowdhury, head of commodities analysis at BMI, a research unit of Fitch Solutions, is set to reshape the global EV battery market.

The Meeting of Leaders

The deal was signed during a state visit by Indonesian President Joko Widodo to Australia, where he met with his Australian counterpart, Anthony Albanese. The three-day visit was marked by discussions on various topics, including regional peace and security, economic partnerships, and notably, cooperation on electric vehicle batteries. The leaders also discussed longer business visas and investment in the green economy, signalling a strengthening of ties between the two nations.

The meeting resulted in the announcement of new commercial deals between Australian and Indonesian businesses across several sectors, including health, mining, and the digital economy. This collaboration is a testament to the growing economic partnership between Australia and Indonesia, and it sets the stage for further cooperation in the future.

The Importance of Lithium and Nickel

The EV battery deal is particularly significant for Indonesia, which has ambitious plans to develop its EV manufacturing industry. Key to this endeavour is lithium, a crucial component of EV batteries. Australia, being the world’s largest supplier of lithium, is an ideal partner for Indonesia in this regard.

Nickel is another essential component of EV batteries, and Indonesia boasts the world’s largest nickel reserves. The synergy between Australia’s lithium supply and Indonesia’s nickel reserves makes this partnership a “win-win” situation, as Chowdhury pointed out in her comments to CNBC.

The Economic Impact

The economic implications of this deal are substantial. Australia’s exports to Indonesia, Southeast Asia’s largest economy, reached $14.6 billion in 2022. The EV battery deal is expected to further boost trade between the two countries, particularly in the minerals and mineral processing sectors.

During President Widodo’s visit, the Indonesian Chamber of Commerce and Industry and Western Australia signed an Action Plan aimed at fostering closer ties and greater involvement in each other’s critical minerals sector. Indonesian Ambassador to Canberra, Siswo Pramono, highlighted the potential opportunities this partnership could open up in the critical minerals sector.

The Future of EV Production

The partnership between Australia and Indonesia could have far-reaching implications for the global EV market. With Australia as a lithium supplier and Indonesia as a nickel supplier, both countries are poised to become major players in EV production.

The demand for nickel is “very strong,” according to Chowdhury, due to its use in EV battery manufacturing. This demand is expected to remain strong in the long term, benefiting Indonesia. Australia, as a major producer of both nickel and lithium, could also potentially establish its own manufacturing hub.

However, Chowdhury noted that there is an “accelerating demand” for EVs over the coming decades, suggesting that there is “a lot of space” for both countries to coexist and cater to this demand. This partnership, therefore, represents not just a bilateral agreement, but a strategic move in a rapidly evolving global market.

Climate and Infrastructure Collaboration

In addition to the EV battery deal, Australia and Indonesia also announced greater collaboration in climate and infrastructure. Albanese announced an investment worth 50 million Australian dollars ($33 million) to attract private climate finance into Southeast Asia’s largest economy. This investment underscores the commitment of both countries to sustainable development and the fight against climate change.

Frequently Asked Questions

Q: What is the global demand for EV batteries?

The global demand for EV batteries is rapidly increasing due to the growing popularity of electric vehicles. This demand is expected to continue to rise in the coming decades.

Q: What is the EV battery market worth?

The EV battery market is worth billions of dollars and is expected to grow significantly in the future due to the increasing adoption of electric vehicles.

Q: What country makes electric car batteries?

Several countries manufacture electric car batteries, including China, South Korea, and Japan. With the new deal, Australia and Indonesia are set to become major players in this market.

Q: Where will EV batteries be made?

Under the new deal, EV batteries will be made in both Australia and Indonesia, leveraging each country’s resources to meet the growing global demand for EV batteries.

The strategic partnership between Australia and Indonesia in the EV battery market is a significant development in the global EV industry. As the demand for electric vehicles continues to rise, this partnership positions both countries to become major players in the market, benefiting not only their economies but also the global shift towards sustainable transportation.


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