Indonesia Plans to Propose a Limited Free Trade Agreement with US for Critical Minerals

Indonesia plans to propose a limited free trade agreement with the United States for select minerals, including nickel, to help companies in the electric vehicle battery supply chain operating in the country benefit from US tax credits.

This move follows new guidance from Washington that mandates a certain value of battery components to be produced or assembled in North America or a free trade partner to qualify for electric vehicle tax credits under the Inflation Reduction Act.

Indonesia, the world’s biggest nickel producer, has been trying to attract investment from battery and EV makers, including Tesla and Ford, to leverage its nickel reserves.

The FTA proposal, which is still in its early stages, will likely be similar to the one the United States has signed with Japan for critical mineral trade.