LG Energy Solution (LGES) of South Korea has withdrawn from its US$ 8.45 billion electric vehicle (EV) battery project in Indonesia, prompting the Indonesian government to explore Zhejiang Huayou Cobalt of China as a potential replacement investor.

The project, initially a joint venture between LGES and the Indonesia Battery Corporation (IBC), was abandoned after LGES cited shifting market dynamics and a less favourable investment climate.

Indonesia's state-owned news agency reported that the Energy, Mineral and Coal Suppliers Association (Aspebindo) raised concerns that LGES's withdrawal could affect the country's EV industry road map, hinder technology transfer, and increase reliance on imports.

Aspebindo also highlighted the need for Indonesia to strengthen its policy framework to remain competitive amid global industrial shifts.

A Singaporean news agency reported that Huayou is positioned to take over the project. Indonesia's Ministry of Energy and Mineral Resources downplayed concerns about the transition, stating that investor changes are common in large-scale projects, and reiterated the nation's goal to become a regional EV manufacturing hub.

However, Huayou has expressed caution regarding the potential takeover.

According to a Chinese financial outlet, Huayou confirmed during an earnings call that it has been involved in the project for five years and noted its disappointment about LGES's withdrawal.

While Indonesian officials hope that Huayou will lead the investment with new partners, the company stated that its participation will depend on the terms of the arrangement. Huayou emphasised that the project must involve collaboration across the entire supply chain, rather than being pursued individually.

Huayou operates cobalt, lithium, and copper projects across Africa and is involved in nickel smelting in Indonesia.

Its clients include EV and battery manufacturers such as Contemporary Amperex Technology (CATL), BYD, Tesla, and LGES.

Although LGES has withdrawn from the IBC joint venture, it has confirmed its continued cooperation with the Indonesian government.

Its separate joint venture with Hyundai Motor, HLI Green Power, remains on track.

In July 2024, HLI Green Power opened its first battery manufacturing facility in Indonesia, designed to produce enough cells annually to power 150,000 electric vehicles.