Sabrin Chowdhury, head of commodity analysis at BMI, a research arm of Fitch Solutions, said the Australian and Indonesian mining giants had signed a “win-win” EV battery agreement.
Indonesian President Joko Widodo met his Australian counterpart Anthony Albanese on Tuesday during a three-day state visit to Australia.
In addition to their commitment to regional peace and security, the two countries discussed an economic partnership that includes cooperation on electric vehicle batteries, longer business visas and investments in green economies.
The two countries welcomed “new trade agreements between Australian and Indonesian businesses in the areas of health, mining and the digital economy,” according to government press release.
“[Indonesia] whose main goal is to develop its EV manufacturing industry. And they really need lithium for that,” Chowdhury said.
“Lithium and nickel together, they’re very important parts of EV batteries. So it’s definitely a win-win,” she told CNBC on Wednesday.
Australian Prime Minister Anthony Albanese (left) and Indonesian President Joko Widodo sail to the Annual Leaders’ Meeting at Taronga Zoo in Sydney on July 4, 2023.
David Swift | afp | beautiful pictures
Australian exports to Indonesia, Southeast Asia’s largest economy, reaching $14.6 billion by 2022. Two-way investment in minerals and mineral processing between countries has also developed.
During the trip, the Indonesian and Western Australian Chambers of Commerce and Industry also signed the Action Plan in its commitment to bring both sides closer together and participate more in each other’s important mineral sectors.
“The partnership between Indonesia and Western Australia could open up great opportunities in the key minerals sector,” Indonesian Ambassador to Canberra, Siswo Pramono said.
“Australia will become a supplier of lithium and Indonesia will become a supplier of nickel, both of which are key components in the production of electric vehicles,” he added.
Australia is largest lithium supplier in the world. Indonesia, similarly, has the largest nickel reserves in the world and is aimed to establish itself as a major global supplier of EV batteries. Both metals are key ingredients in the production of EV batteries.
Chowdhury said demand for nickel is “very strong” because it is used in the production of electric vehicle batteries. “The long-term price outlook is very good so this will definitely benefit Indonesia,” she said.
Chowdhury said Australia is also a major producer of both nickel and lithium, so it was “impossible to say” there would be no scenario where the country would not be able to set up its own production hub either.
However, she stressed that there is “growing demand” for electric vehicles in the coming decades and so there is “a lot of space” for both countries to coexist and meet this demand.
In addition to strengthening nickel and lithium mining cooperation, both countries also announced more cooperation on climate and infrastructure.
Albanian investment announcement valuable 50 million Australian dollars ($33 million) to attract private climate finance into Southeast Asia’s largest economy.
