Why Is CATL Building a New Battery Plant in Indonesia?

Short Answer: CATL is building a battery plant in Indonesia to leverage its vast nickel reserves (23% of global supply), capitalize on Southeast Asia’s booming EV market, and align with Indonesia’s ban on raw nickel exports. The $6 billion project strengthens CATL’s supply chain dominance and supports Indonesia’s goal of becoming a global EV battery hub by 2040.

CATL Battery

How Does Indonesia’s Nickel Reserves Influence CATL’s Decision?

Indonesia holds 23% of the world’s nickel reserves, a critical component in lithium-ion batteries. CATL’s plant will utilize high-pressure acid leaching (HPAL) technology to process low-grade nickel laterite ores, reducing reliance on imported battery-grade nickel. This vertical integration cuts production costs by 15-20% compared to sourcing from the Philippines or New Caledonia.

The archipelago’s nickel reserves are concentrated in Sulawesi and Halmahera, with proven reserves exceeding 21 million metric tons. CATL’s investment secures access to 30% of Indonesia’s annual nickel output through 2045, equivalent to 450,000 tonnes of battery-grade nickel annually. This strategic move bypasses China’s 25% import tariff on processed nickel, giving CATL a $1,200/tonne cost advantage over competitors relying on Chinese imports. The plant will also utilize Indonesia’s new nickel pricing index, which is 12% lower than LME benchmarks due to government subsidies.

What Strategic Partnerships Support This Venture?

CATL collaborates with Indonesia’s state-owned PT Aneka Tambang and PT Industri Baterai Indonesia. The partnership includes a 60/40 equity split, with CATL providing proprietary cell-to-pack (CTP) 3.0 technology. This JV secures 150,000 tonnes/year of nickel sulfate from the Weda Bay Industrial Park, enough for 2.2 million EVs annually.

The consortium has established a closed-loop supply chain with three key components:

Partner	Role	Investment Share
PT Aneka Tambang	Nickel mining rights	25%
PT IBI	Infrastructure development	15%
CATL	Battery manufacturing tech	60%

This structure allows CATL to bypass Indonesia’s foreign ownership restrictions in mining while securing 20-year tax holidays. The partnership also includes technology transfer agreements requiring CATL to train 500 Indonesian engineers in battery R&D by 2027.

When Will the Plant Become Operational?

Phase 1 commissioning is scheduled for Q3 2025, with full 120 GWh capacity expected by 2028. The Morowali Industrial Park location provides existing smelting infrastructure, accelerating construction timelines by 18 months compared to greenfield sites. Initial output will focus on nickel-manganese-cobalt (NMC) 811 batteries for European automakers.

Which Environmental Challenges Must CATL Address?

The HPAL process generates 4 tons of waste slag per ton of nickel produced. CATL plans to implement dry-stack tailing storage and seawater neutralization systems, reducing freshwater usage by 70%. The company commits to powering 40% of operations through geothermal energy from nearby Mount Ibu, aiming for carbon-neutral cell production by 2035.

How Will This Impact Global Battery Supply Chains?

Indonesia’s entry as a battery producer could reduce China’s current 75% dominance in cathode production to 68% by 2030. The plant’s location near the Makassar Strait enables access to 60% of global shipping routes, potentially lowering regional battery prices by $12/kWh. This positions ASEAN as the 3rd-largest EV battery region after China and the EU.

The plant’s 120 GWh capacity equals 1.5 million long-range EVs annually, enough to supply 15% of global EV demand projected for 2028. CATL will allocate 40% of output to European automakers like BMW and Stellantis, 35% to Chinese EV makers expanding in ASEAN, and 25% to Indonesian domestic EV projects. This geographic diversification helps mitigate risks from US-China trade tensions while capitalizing on ASEAN’s 6.8% annual GDP growth rate – the fastest among major economic blocs.

“CATL’s Indonesian play isn’t just about nickel,” says Dr. Liam Chen, Redway’s Battery Supply Chain Analyst. “They’re creating a geopolitical buffer. By controlling 30% of Indonesia’s battery-grade nickel output, they’re hedging against potential trade restrictions. The plant’s 8.6-meter-deep port can accommodate Capesize vessels – that’s logistics warfare against Korean rivals in the global battery arms race.”

Conclusion

CATL’s Indonesian battery megaproject reshapes global energy geopolitics while testing sustainable mining practices. By securing nickel sovereignty and creating a production hub 1,200km closer to Australian lithium mines than Chinese ports, the company positions itself as the architect of Asia’s battery corridor. Success here could make Indonesia the Saudi Arabia of the EV era.

FAQs

Will this plant make EVs cheaper in Southeast Asia?

Yes. Local production could reduce regional battery costs by 18%, potentially lowering EV prices by $3,000-$5,000 for models like the Wuling Air EV after 2026.

How many jobs will the project create?

The plant will directly employ 12,000 workers, with 85% being Indonesian nationals. Ancillary industries could generate 35,000 additional positions in mining and logistics.

Does Indonesia have enough renewable energy for this project?

Not yet. While geothermal plans are ambitious, only 23% of the plant’s initial energy needs will be renewable. CATL is co-investing in a 580MW solar farm on Halmahera Island to address this gap.