Jayanty Nada Shofa, Jakarta – An opportunity arises for cooperation between Indonesia and Australia on the lithium supply chain. Indonesia can process Australian lithium – a critical component for electric vehicle batteries – to be later exported to other markets such as the US, according to former Australian minister for trade, tourism, and investment Steven Ciobo.
Ciobo said the hardening positions of the US and China had created opportunities in Indonesia. He added that the Indonesian government was now alert to opportunities around the supply chain.
"The world's biggest market, the US, wants to continue to have a guaranteed supply chain, especially around critical components such as lithium and rare earth oxides," Ciobo said at the Investor Daily Summit 2022 in Jakarta on Wednesday.
This provides an opportunity to take full advantage of the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA), which aims to unlock trade and investment potential for both countries.
"What better opportunity to capitalize the IA-CEPA than to, for example, build a supply chain of lithium from Australia, from where it's mined, to be processed here in Indonesia? Then, they could be exported from Indonesia to, for example, the US," he said.
Such cooperation on lithium would align with the Indonesian government's vision of becoming a global leader in the supply of renewable energy and critical minerals. "And also help to drive the transition to electric vehicles," Ciobo told the conference.
Indonesia is abundant in nickel, another critical ingredient for batteries, but has to import its lithium. According to state-owned battery maker Indonesia Battery Corporation (IBC), Indonesia needs 70,000 tons of lithium hydroxide every year, but the Southeast Asian country still imports from China, Australia, and Chile.
Australia is the world's largest exporter of lithium. The Australian Bureau of Statistics reported that 46 percent of the world's lithium came from Australia in 2020. Exports of the silvery-white metal are forecast to contribute $9.4 billion in revenue to the Australian economy by 2023-24.
The US is actually an incredibly lithium-rich nation. The US Geological Survey 2020 data showed that the US held 6.8 million tons of lithium reserves. However, the country only has one active lithium mine in Nevada.
The US heavily depends on Chinese lithium-ion battery imports to satisfy its rising appetite for electric vehicles.
According to S&P Global Market Intelligence, China shipped 109,017 tons of lithium-ion batteries to the US in the second quarter of 2022, making up 73.5 percent of US imports. This marked a slight decline from the 77.5 percent share of Chinese battery imports, which reached 110,081 tons in the first quarter.