The United States and Indonesia are set to discuss the possibility of a trade deal for critical minerals that are essential for electric vehicle (EV) batteries, according to Reuters. The meeting between US President Joe Biden and Indonesian President Joko Widodo will take place on Monday at the White House.
Indonesia is the world’s largest producer and exporter of nickel, a key ingredient for lithium-ion batteries that power EVs. The Southeast Asian country has been keen to develop its own EV supply chain and attract foreign investment in its battery industry. In September, Indonesia asked the US to begin talks for a trade deal for critical minerals, so that its nickel exports can be covered under the US Inflation Reduction Act (IRA). The IRA is a law that provides tax credits for EVs sold in the US, but requires that a certain amount of critical minerals in the batteries be produced or assembled in North America or a free trade partner.
US’s Interest and Concerns on EV Minerals
The US, on the other hand, is looking to diversify its sources of EV minerals and reduce its reliance on China, which dominates the global battery market. The US also wants to boost its domestic production and processing of critical minerals, as part of its efforts to combat climate change and create green jobs. However, the US has some concerns about the environmental, social and governance standards in Indonesia, and how a deal might work, according to Reuters. The US also plans to consult with its lawmakers and labor groups before formally announcing negotiations on a critical minerals partnership.
Potential Benefits and Challenges of the Partnership
A potential partnership between the US and Indonesia on EV minerals could bring mutual benefits for both countries, as well as challenges. For Indonesia, it could increase its market access and competitiveness in the global battery industry, as well as create more jobs and revenue for its economy. For the US, it could secure a stable and reliable supply of nickel and other critical minerals, as well as support its EV adoption and emission reduction goals. However, the partnership could also face some hurdles, such as ensuring the environmental and social sustainability of nickel mining and processing in Indonesia, which has been blamed for deforestation and water pollution. The partnership could also face competition and opposition from other countries, such as China and Australia, which have their own interests and stakes in the EV minerals market.
