JAKARTA: US carmaker Tesla has signed contracts worth about US$5 billion to buy materials for their batteries from nickel processing companies in Indonesia, a senior cabinet minister told CNBC Indonesia.
Southeast Asia's biggest economy has been 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 to drum up investment.
"We are still in constant negotiation with Tesla ... but they have started buying two excellent products from Indonesia," Coordinating Minister for Maritime and Investment Affairs Luhut Pandjaitan said in an interview broadcast on Monday (Aug 8).
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.
Tesla did not immediately respond to a Reuters email seeking comment.
Indonesia is keen to develop electric vehicles and batteries industries at home and had stopped exports of nickel ore to ensure supply for investors. The move had successfully attracted investments from Chinese steel giants and South Korean companies like LG and Hyundai.
However, most nickel investment so far have gone to production of crude metal such as nickel pig iron and ferronickel.
The government plans to impose export tax on these metals to boost revenue while encouraging more domestic production of higher-value products, a senior official told Reuters last week.