A senior cabinet minister in Indonesia told CNBC Indonesia that the US carmaker Tesla signed contracts worth $5 billion to purchase minerals for electric batteries from nickel processing companies in the country.
Indonesia, the country's largest economy, has major nickel reserves and has tried to convince Tesla to establish a production facility in the past. In the past, Indonesian President Joko Widodo met with Tesla founder Elon Musk to encourage him to invest in the country.
In an interview this week, Coordinating Minister for Maritime and Investment Affairs Luhut Pandjaitan said that we are still in constant negotiations with Tesla but they have started buying two excellent products from Indonesia. The five-year contract with the nickel processing companies in Morowali in Sulawesi Island was signed by Tesla. He said that the nickel materials will be used in Tesla's lithium batteries.
As Indonesia tries to develop locally assembled electric vehicles and develop battery industries, it stopped exports of nickel ore to ensure supplies for investors, which have successfully attracted investments from South Korean companies such as LG and Hyundai and Chinese steel giants.
Most of the country's nickel investment has been used for the production of crude metals, such as nickel pig iron and ferronickel. The government plans to impose export taxes on these metals to boost revenues, as well as encourage more domestic production of higher-value products, a senior official told Reuters last week.