US and Indonesia Discuss Potential Minerals Partnership
On Monday, the United States and Indonesia will hold discussions about advancing a potential minerals partnership aimed at boosting trade of nickel, a crucial metal for electric vehicle (EV) batteries. The talks will occur when Indonesian President Joko Widodo meets U.S. President Joe Biden in Washington.
The Biden administration is concerned about environmental, social, and governance standards in Indonesia and is exploring how a deal might work. It also plans to consult with U.S. lawmakers and labor groups in the coming weeks.
Indonesia has asked the United States to begin discussions for a trade deal for critical minerals so that its exports can be covered under the U.S. Inflation Reduction Act (IRA).
Environmental Impact
The Biden administration aims to ensure that any potential nickel supply from Indonesia is produced with minimal environmental impact. Discussions include focusing on making sure that any potential nickel supply has as little environmental impact as possible.
Indonesia’s nickel supplies are the world’s largest, but mining there has been blamed for heavy deforestation and water pollution.
International Trade Relations
Under guidelines issued in March, Washington requires that a certain amount of critical minerals in EV batteries be produced or assembled in North America or a free trade partner. Indonesia does not have a free trade agreement with the United States.
The Biden administration is discussing ways to exclude any nickel extracted from Indonesia but processed in China from receiving the IRA credits.
Hot Take: US Nickel Industry Outlook
The global market value for the nickel industry is estimated at $33.5 billion in 2022, although it is currently over-supplied. The only U.S. nickel mine is set to close soon, posing a risk to Biden’s goal for the United States to lead in EV manufacturing.
Last year, the government gave nearly $115 million to Talon Metals to partially fund a nickel processing plant in North Dakota that will supply Tesla. However, Talon is facing opposition from Indigenous people while seeking permits for its proposed Minnesota nickel mine.
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