The United States and Indonesia will discuss on Monday how to advance a potential mineral partnership aimed at increasing trade in nickel for electric vehicle (EV) batteries, according to three people with direct knowledge of the talks.
When Indonesian President Joko Widodo visits the White House on Monday to meet with US President Joe Biden, the countries’ next steps towards formal talks on the partnership will be discussed, a person said.
Sources said the Biden administration is concerned about environmental, social and governance standards in Indonesia and is exploring how a deal could work. The administration also plans to hold additional consultations with U.S. lawmakers and labor groups in the coming weeks, one of the sources said.
“There is still a lot of work to be done before we can formally announce negotiations on a key mineral partnership,” the person said.
The White House did not respond to a request for comment.
Indonesia, home to the world’s largest nickel ore reserves, asked the United States in September to begin negotiations on a trade deal for the critical mineral so that the Southeast Asian country’s exports would be offset by the U.S. Inflation Reduction Act (IRA).
Much of Indonesia’s nickel is processed as base metal, but the government is keen to develop an EV supply chain to tap its vast nickel reserves, which can be processed into battery materials.
Discussions by the Biden administration, involving U.S. Trade Representative Catherine Doyle and the White House, are aimed at ensuring that any potential nickel exports are produced with minimal environmental impact, a source told the government directly, and was not allowed. To speak publicly.
“The overall momentum is promising, but (we) don’t want to underestimate the fact that there’s still a lot of work to be done here,” one said.
Indonesia’s nickel reserves are the largest in the world and nickel mining there has been blamed for high levels of deforestation and water pollution.
According to US legal guidelines released in March, Washington must produce or incorporate critical minerals in EV batteries in North America or qualify as an FTA partner for EVs sold in the US. Indonesia does not have a free trade agreement with the United States.
The Biden administration is also discussing ways to exclude nickel processed in China from IRA credits for nickel mined in Indonesia.
According to one estimate, the global market value of the nickel industry will reach $33.5 billion by 2022, although the market remains overcrowded.
The only nickel mine in the U.S. will close in a few years, and the country has no nickel smelter, jeopardizing Biden’s goal of having the U.S. lead the way in EV production.
The government gave Talon Metals nearly $115 million last year to partially finance Tesla Inc’s nickel processing plant in North Dakota. will provide
Talon is seeking permits for its proposed nickel mine in Minnesota, but faces opposition from indigenous peoples. Several U.S. mining companies have said the Biden administration should focus more on approving domestic projects than seeking international supplies. (Reporting by Trevor Hunnicutt and Ernest Scheyder; Additional reporting by Fransiska Nangoy in Jakarta; Editing by Grant McCool)