On Monday, a senior official said Indonesia would pursue a free trade arrangement for minerals supplied to the U.S. to benefit electric car battery supply chain firms from U.S. tax advantages.
Washington’s Inflation Reduction Act (IRA) for E.V. tax credits requires a particular value of battery components to be produced or assembled in North America or a free trade partner.
Indonesia has no free trade agreement with the U.S., yet battery supply chains use its nickel.
The world’s largest nickel deposits have drawn Tesla and Ford to Southeast Asia.
When asked about the new IRA requirements, Indonesian minister Luhut Pandjaitan said he would pursue a limited free trade agreement (FTA) with Washington.
“No FTA. Limited FTA.” Later this week, Luhut will discuss it with Ford and Tesla executives in the U.S.
Septian Hario Seto, Luhut’s deputy, said the early FTA proposal would mirror the U.S.-Japan crucial mineral trade pact.
“Unfettered commerce with processing requirements for important minerals like nickel, aluminium, cobalt, and copper,” he stated.
Ford, Vale Indonesia, and Zhejiang Huayou Cobalt unveiled a $4.5 billion nickel processing complex in Sulawesi last month.
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