The company signed a 142 trillion rupiah ($8.4 billion) deal in 2020 on the so-called Grand Package project, which aimed to establish a local electric vehicle battery value chain in the country.

"Taking into account various factors, including market conditions and investment environment, we have agreed to formally withdraw from the Indonesia GP (Grand Package) project," it told AFP in a statement.

"However, we will continue to explore various avenues of collaboration with the Indonesian government, centering on the Indonesia battery joint venture, HLI Green Power."

HLI Green Power, a joint venture between LG Energy Solution and Hyundai Motor Group, operates Indonesia's first electric vehicle battery plant, which was launched in 2024 with a production capacity of up to 10 Gigawatt hours (GWh) of cells annually.

Indonesia has been seeking to position itself as a key player in the global EV supply chain by leveraging its vast nickel reserve to attract investment.

Tri Winarno, director general of coal and mineral of the energy and mineral resources ministry, did not immediately reply to AFP's request for comment.

But local media quoted him as saying on Monday that the withdrawal would not impact the country's nickel downstreaming agenda, while expressing optimism the government would find other partners to further its electric vehicle ambitions.