The United States and Indonesia are set to discuss potential collaboration on a minerals partnership that aims to boost the trade of nickel, a crucial component in electric vehicle (EV) batteries.
Indonesian President Joko Widodo is expected to address the matter during his meeting with U.S. President Joe Biden on Monday.
The Biden administration, however, remains cautious about environmental and governance standards in Indonesia, conducting further consultations with lawmakers and labor groups.
The discussions revolve around ensuring environmentally responsible nickel production, addressing concerns about heavy deforestation and water pollution associated with Indonesia’s nickel mining. Indonesia, with the world’s largest nickel ore reserves, seeks a trade deal for critical minerals, aiming to cover exports under the U.S. Inflation Reduction Act.
The Biden administration is also exploring ways to exclude nickel processed in China from IRA credits, given the absence of a free trade agreement between the U.S. and Indonesia.
Despite the promising momentum, challenges lie ahead, including the need for significant work before formal negotiations on the minerals partnership can be announced.
The global market value for nickel is estimated at $33.5 billion in 2022, making it a crucial industry, especially as the U.S. aims to lead in EV manufacturing.
