Supply Chain: Upstream and Midstream

Indonesia Has Emerged as a Key Beneficiary of US Policy Changes New investment and deals in former US-FTA countries have slowed. Until recently, the Biden-era EV tax credit offered Asian companies two main strategic options: 1. Invest in US-free-trade-agreement countries (FTA) to meet IRA compliance and secure OEM contracts eligible for the EV tax credit 2. Set up in non-FTA countries, forgoing the tax credit but benefiting from lower production costs – a more profitable path for upstream and midstream players not claiming the tax credit directly Since the EV tax credit is repealed and since free trade agreement status is no longer applicable, production and new investment is now shifting decisively toward cost control, and Indonesia is emerging as a beneficiary. It has an integrated ore-to-MHP advantage and extending further into the pCAM stage, which offers meaningful cost savings, even compared to China. It has a similar cost profile for LFP CAM and synthetic graphite. This shift is occurring at the expense of Chinese and South Korean production, as Korean producers face significantly tighter margins than their Chinese and Indonesian counterparts while PFE rules set barriers for Chinese materials entering the US market. It has also slowed new investments and agreements in Morocco and Canada.

Source: Content & analysis provided by CRU Group (Distinguished Partner). For more information, visit crugroup.com

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