(IANS) Indonesia has inaugurated its first electric vehicle (EV) battery factory, which will operate entirely on renewable energy at the Neo Energy Morowali Industrial Estate in Central Sulawesi.

Coordinating Minister for Economic Affairs Airlangga Hartarto said on Saturday that the factory was part of the critical minerals downstream policy aimed at boosting national economic competitiveness, improving public welfare and utilising environmentally friendly technology, Xinhua news agency reported.

“Successful downstream processing of nickel has significantly boosted the export value of nickel derivatives, rising from USD 4.31 billion in 2017 to USD 34.44 billion in 2023,” Airlangga said at the event.

With abundant mineral resources especially nickel, Indonesia holds substantial potential for EV battery production, with an estimated annual capacity of 210 GWh.

The factory’s high-pressure acid-leaching smelter will process nickel ore into mixed hydroxide precipitate (MHP), a key material for EV battery cathodes, adding 120,000 tons of MHP to the country’s production capacity each year.

The Investment Ministry revealed that as of June 2024, the total investment in nickel downstream activities, particularly smelter and EV battery factory development, has reached USD 30 billion in the country.

On May 6, Indonesian President Joko Widodo had told the media that the first electric vehicle (EV) battery factory in the country will begin operating in June.

Speaking at the EV exhibition of the Indonesian Electric Vehicle Industry Association or Periklindo Electric Vehicle Show in 2024, he emphasised that the factory’s operation signals that the domestic environmentally friendly vehicle ecosystem is starting to form in the country.

The factory which is said to be owned by PT Hyundai LG Industry (HLI) Green Power, is located in Karawang, West Java, with a maximum capacity of up to 10 GW per hour and is capable of producing 32.6 million battery units.

The Indonesian President said that Indonesia currently hosts 59 electric vehicle manufacturers, with plans for expansion in the pipeline.

According to him, with current infrastructure, Indonesia can make up to 1.6 million electrical motorbikes yearly.

However, the production of new electric motorbikes is 100,000 motorbikes now, so Indonesia sees room to develop the industry.