US and Indonesia Discuss Potential Partnership for Nickel Trade, Aimed at Boosting Electric Vehicle Industry
The United States and Indonesia are in discussions regarding a potential partnership for the trade of nickel, a crucial metal used in electric vehicle (EV) batteries. The goal of this partnership is to stimulate the growth of the EV industry. Indonesian President Joko Widodo will be visiting the White House for a meeting with US President Joe Biden, where they will discuss the next steps towards formal negotiations on this partnership.
However, the Biden administration has expressed concerns about environmental, social, and governance standards in Indonesia. They are carefully examining how a deal can be structured to address these concerns. The administration is also planning to consult with US lawmakers and labor groups in the coming weeks. Despite the momentum, there is still much work to be done before formal negotiations can take place.
Indonesia, known for having the world’s largest nickel ore reserves, has expressed its interest in establishing a trade deal for critical minerals, including nickel, with the United States. By doing so, Indonesia aims to have its exports covered under the US Inflation Reduction Act (IRA). Although most of Indonesia’s nickel is currently processed into crude metal, the government sees the potential in developing an EV supply chain that utilizes the vast reserves of nickel for battery materials.
The ongoing discussions between the Biden administration and Indonesia focus on ensuring that any potential nickel supply is produced with minimal environmental impact. Guidelines issued by the US government require a certain percentage of critical minerals in EV batteries to be produced or assembled in North America or a free trade partner in order for those EVs to be eligible for tax credits. Since Indonesia does not have a free trade agreement with the US, there are considerations about how nickel extracted from Indonesia but processed in China might be treated.
The global market value for the nickel industry is estimated to be around $33.5 billion in 2022, despite an oversupply in the market. However, the US is facing challenges in this industry. The only nickel mine in the country is set to close in a few years, and there are no nickel smelters, which poses a risk to President Biden’s goal of leading in EV manufacturing. To address this, the US government has provided funding to Talon Metals for a nickel processing plant in North Dakota, which will supply Tesla Inc. However, the project has faced opposition from Indigenous groups.
Some US miners argue that the Biden administration should prioritize approving domestic projects instead of relying on international supply. It remains crucial to strike a balance and consider different perspectives when navigating potential partnerships.
In summary, the United States and Indonesia are exploring a potential partnership for the trade of nickel, aimed at boosting the EV industry. Both countries are discussing the next steps towards formal negotiations. However, concerns about environmental standards and other factors need to be addressed. The US has requirements for EV battery production, and considerations are being made regarding nickel processing in China. The global nickel industry holds significant value, but the US faces challenges due to the impending closure of its only nickel mine. The government is funding a nickel processing plant, although it has faced opposition. The importance of considering domestic projects versus international supply is an ongoing discussion.
