The United States and Indonesia will discuss on Monday how to advance a possible mining partnership aimed at boosting trade in nickel metal for electric vehicle (EV) batteries, according to three people with direct knowledge of the conversations.
Next steps that could move the countries toward formal negotiations on the partnership will be discussed when Indonesian President Joko Widodo visits the White House on Monday for a meeting with U.S. President Joe Biden, according to one of the sources.
The Biden administration is still concerned about environmental, social and governance standards in Indonesia and is exploring how a deal could work, the sources said. The administration also plans further consultations with U.S. lawmakers and labor groups in the coming weeks, one of the sources said.
“There is a lot of work to be done before we can formally announce negotiations on a critical minerals partnership,” the person said.
The White House did not respond to a request for comment.
Indonesia, which has the world’s largest reserves of nickel ore, in September called on the United States to begin talks on a trade deal on critical minerals so that the Asian country’s exports of the Southeast may be covered by the American Inflation Reduction Act (IRA).
Most of Indonesia’s nickel is processed into the raw metal, but the government wants to develop a supply chain for electric vehicles to use the vast nickel reserves, which can be turned into battery materials.
The Biden administration’s discussions, which include U.S. Trade Representative Katherine Tai as well as the White House, are aimed at ensuring that any potential nickel supplies are produced with as little environmental impact as possible, one of the sources said. who directly advised the administration. and was not authorized to speak publicly.
“The overall dynamic is promising, but (we) don’t want to downplay the fact that there is a lot of work to be done here,” one of the sources said.
Indonesia’s nickel reserves are the largest in the world and nickel mining there has been blamed for high deforestation and water pollution.
Under guidelines in U.S. law released in March, Washington required that a certain amount of essential minerals in electric vehicle batteries be produced or assembled in North America or a free trade partner, so that the vehicles electric vehicles sold in the United States are eligible for tax credits. Indonesia does not have a free trade agreement with the United States.
The Biden administration is also discussing ways to exclude any nickel mined in Indonesia but processed in China from receiving IRA credits, one of the sources added.
One estimate puts the global market value of the nickel industry at $33.5 billion in 2022, even if the market is in surplus.
The United States’ only nickel mine is expected to close within a few years and the country does not have a nickel smelter, a risk to Biden’s goal of seeing the United States become a leader in electric vehicle manufacturing.
Last year, the government gave Talon Metals nearly $115 million to partially fund a nickel processing plant in North Dakota that will provide You’re here Inc.
Talon seeks permits for his proposed nickel mine in Minnesota, but faces opposition from indigenous peoples. Many U.S. miners said the Biden administration should focus more on approving domestic projects rather than seeking international supply.
(Additional reporting by Fransiska Nangoy in Jakarta; editing by Grant McCool)