Australia and Indonesia Strengthen Ties in Electric Vehicle Supply Chain

Australia and Indonesia Strengthen Ties in Electric Vehicle Supply Chain

Key Mineral Agreement Signed

Australia and Indonesia have inked a significant mineral agreement, marking a strategic move in the global electric vehicle (EV) supply chain competition. The memorandum of understanding, signed in Jakarta by Australia’s Minister of Industry and Science, Mr. Husicki, focuses on “mutually beneficial cooperation” in battery manufacturing and key mineral processing, particularly lithium and nickel.

Strategic Developments in Battery and EV Industry

The agreement aligns with Australia’s upcoming national battery strategy, emphasizing support for the necessary value chain and investments. This collaboration was foreshadowed in July during Indonesian President Joko’s visit to Australia, where he and Australian Prime Minister Albanese discussed strengthening trade and investment.

Indonesia’s Role in Global Nickel Reserves

Indonesia, home to the world’s largest nickel reserves, has attracted significant investment from global energy companies. However, the U.S. has expressed opposition to importing nickel products from Indonesia under the Inflation Reduction Act due to China’s dominant role in Indonesia’s nickel industry. Consequently, Indonesia is seeking to diversify its key mineral partnerships, with the MoU with Australia representing a step towards this diversification.

Negotiations with the U.S. and Focus on EV Supply Chain

Indonesia has reportedly requested talks with the U.S. on a Critical Minerals Trade Agreement to exempt its nickel exports from the U.S. Inflation Reduction Act. The Indonesian government, under President Joko, is keen on evolving beyond exporting roughly processed metal ore. It aims to develop its electric vehicle supply chain, leveraging its rich nickel reserves for processing into EV battery materials.

Growing Trade and Investment Between Australia and Indonesia

Trade between the two nations has been flourishing, with Australian exports to Indonesia totaling US$14.6 billion last year. Mutual investments in mining and processing projects have been on the rise, reflecting the strengthening economic ties and shared interests in the burgeoning EV market.

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