JAKARTA, Indonesia: A senior cabinet minister in Indonesia has told CNBC Indonesia that U.S. carmaker Tesla has signed contracts worth some $5 billion to purchase minerals for electric batteries from nickel processing companies in the country.
Indonesia, which is Southeast Asia's largest economy, has major nickel reserves and has, in the past, sought to convince Tesla to establish a production facility in the country. Earlier this year, 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, "We are still in constant negotiation with Tesla, but they have started buying two excellent products from Indonesia."
"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," he added.
As Indonesia aims to develop locally assembled electric vehicles and develop battery industries, it halted exports of nickel ore to ensure supplies for investors, which 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.