Tesla signs $5 billion deal to secure nickel products from Indonesia

August 9, 2022

As automakers continue to race to secure critical minerals to meet the demand for electric vehicles (EV) Telsa made another significant move when it signed contracts worth about $5 billion to buy materials from nickel processing companies in Indonesia, a senior cabinet minister told CNBC Indonesia.

Indonesia, which is rich in nickel reserves, has reportedly been working to get Tesla to set up a production facility in the country. President Joko Widodo met with Tesla founder Elon Musk earlier this year to drum up 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 Monday.

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

Reuters reported that Indonesia is keen to develop electric vehicles and batteries industries at home and had stopped exports of nickel ore to ensure supply for investors. The move had successfully attracted investments from Chinese steel giants and South Korean companies like LG and Hyundai.

However, most nickel investment so far have gone to production of crude metal such as nickel pig iron and ferronickel.

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



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