A senior cabinet minister told CNBC Indonesia that Tesla has signed contracts worth $5 billion to buy materials for their batteries from nickel processing companies in Indonesia.
Southeast Asia's biggest economy is trying to get Tesla to set up a production facility in the country, which has major nickel reserves. President Joko Widodo met with Tesla founder Elon Musk earlier this year in order to drum up investment.
The Coordinating Minister for Maritime and Investment Affairs Luhut Pandjaitan said in an interview on Monday that we are still in constant negotiations with Tesla but they have started buying two excellent products from Indonesia.
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.
Indonesia is keen to develop electric vehicles and batteries industries at home, and has stopped exports of nickel ore to ensure supply for investors. The move attracted investments from Chinese steel giants and South Korean companies like LG and Hyundai.
Most of the nickel investment has gone to the production of crude metal, such as nickel pig iron and ferronickel.
A senior official told Reuters last week that the government plans to impose export tax on these metals to boost revenue while encouraging more domestic production of higher-value products.