Tesla signs deals worth $5 billion with Indonesian companies to buy nickel

Tesla has signed contracts worth $5 billion with nickel processing Indonesian companies to purchase materials for batteries for its electric vehicles. The announcement was shared by a senior cabinet minister from the country. Indonesia has been trying to get Tesla set up a manufacturing unit in the company as the country is rich in nickel reserves. Tesla chief Elon Musk met President Joko Widodo earlier this year to discuss investment plans in the country.

Coordinating Minister for Maritime and Investment Affairs Luhut Pandjaitan shared Tesla signed a five-year contract with nickel processing companies operating out of Morowali in Sulawesi island and the nickel that will be procured will be used in Tesla's lithium batteries. “We are still in constant negotiation with Tesla . .. but they have started buying two excellent products from Indonesia," he was quoted as in a Reuters report.

Indonesia is rich in nickel reserves and wants to establish electric vehicles and batteries industries on its own land and for this, it has also stopped exports of nickel ore to ensure supply for investors. This step attracted investments from South Korean companies like LG and Hyundai as well as big Chinese steel companies. The Indonesian government is also planning to impose an export tax on nickel and nickel-related metals to increase its revenues and encourage domestic production of higher-value products.

A recent report also stated that multiple environmental groups wrote an open letter to Musk and the EV company's shareholders to stop direct investments in the country for procurement of nickel. The groups wrote about the adverse impact of nickel mining that will impact the nature of the country. They specifically mentioned Wawonii island located in the country's Sulawesi region and how nickel mining in this region will affect the coral reefs.