Indonesia Seeks Trade Talks with the U.S. on Critical Minerals

Indonesia Seeks Trade Talks with the U.S. on Critical Minerals

Indonesia has formally requested trade negotiations with the United States to include critical minerals in a trade deal, enabling exports from the Southeast Asian nation to be eligible for coverage under the U.S. Inflation Reduction Act, according to a statement from the Indonesian Ministry.

The request was presented during a meeting between Indonesian President Joko Widodo and U.S. Vice President Kamala Harris, held on the sidelines of the Association of Southeast Asian Nations (ASEAN) meetings in Jakarta.

Under the U.S. law’s guidelines issued in March, a specific quantity of critical minerals used in electric vehicle (EV) batteries must be sourced or assembled in North America or through a free trade partner for EVs sold in the United States to qualify for tax credits.

While Indonesia lacks a free trade agreement with the United States, it aspires to establish a prominent role in EV and battery manufacturing, leveraging its extensive nickel reserves.
President Jokowi highlighted Indonesia’s significant nickel reserves of 21 million metric tons, positioning the country as a potential supplier for batteries and EVs in the U.S. He extended an invitation for the U.S. to engage in discussions to establish a Critical Mineral Agreement.

Additionally, President Jokowi expressed hope that Indonesia’s participation in the U.S.-led Indo-Pacific Economic Framework (IPEF) could lead to the recognition of its mineral exports for “green subsidies” under the Inflation Reduction Act.

The proposal for a limited trade agreement with the United States, similar to the March deal between Japan and the Western nation for EV battery minerals, was initially introduced in April by senior Indonesian minister Luhut Pandjaitan.

Vice President Harris, in her opening remarks during the bilateral meeting, expressed her commitment to collaborate with Indonesia in developing supply chains inclusive of “critical minerals necessary for expanding our clean energy economies” and enhancing trade between the two countries through the IPEF.

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