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Exclusive: US and Indonesia to talk over possible EV mineral deal
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Exclusive: US and Indonesia to talk over possible EV mineral deal
November 12, 2018 (Reuters) - Three persons with direct knowledge of the talks say that the US and Indonesia will talk on Monday about how to move forward with a possible minerals collaboration aimed at promoting trade of the nickel metal used in EV batteries.
One of the persons said that when Indonesian President Joko Widodo meets with U.S. President Joe Biden at the White House on Monday, they will talk about the next steps that could lead to formal discussions on the alliance.
According to the sources, the Biden administration is still worried about Indonesia's environmental, social, and governance standards and is looking into the possibility of a deal. As per one of the sources, the administration is scheduled to hold additional talks with labor groups and lawmakers in the United States in the upcoming weeks.
"There's a lot of work to do before we are able to formally announce negotiations on a critical minerals partnership," said the individual.
A request for comment was not answered by the White House.
With the largest reserves of nickel ore in the world, Indonesia requested in September that negotiations for a trade agreement including essential minerals start in the United States. This would allow exports from the Southeast Asian nation to be included by the U.S. Inflation Reduction Act (IRA).
The majority of nickel produced in Indonesia is converted into unrefined metal, but the government is eager to create an electric vehicle supply chain so that the enormous amounts of nickel that can be converted into battery components may be used.
LOCATIONAL IMPACT
One of the sources, who provided direct advice to the administration and was not authorized to speak publicly, said that the Biden administration's discussions with the White House and U.S. Trade Representative Katherine Tai center on ensuring that any potential nickel supply is produced with the least amount of environmental impact possible.
"The overall momentum is promising, but (we) don't want to minimize the fact that there is a fair amount of work to be done here," a participant said.
The world's largest supply of nickel is found in Indonesia, where extensive deforestation and water pollution have been linked to nickel mining.
In accordance with March rules for the U.S. law, Washington has mandated that, in order for EVs sold in the United States to qualify for tax credits, a specific quantity of key minerals in EV batteries must be produced or built in North America or a free trade partner. The United States and Indonesia do not have a free trade agreement.
According to one of the insiders, the Biden administration is also debating how to exclude any nickel that is extracted from Indonesia but processed in China from being eligible for IRA credits.
Despite an oversupply, one estimate places the global market value of the nickel sector at $33.5 billion in 2022.
Biden's ambition for the US to lead the world in EV manufacture is at jeopardy since the nation lacks a nickel smelter and the sole nickel mine in the US is scheduled to close in a few years.
In order to partially finance the construction of a nickel processing plant in North Dakota that would supply Tesla Inc. (TSLA.O), the government awarded Talon Metals (TLO.TO) around $115 million last year.
Native Americans are opposing Talon's request for licenses to build a nickel mine in Minnesota. Numerous American miners have stated that the Biden administration ought to prioritize sanctioning home projects over pursuing supply from elsewhere.
Reporting by Trevor Hunnicutt and Ernest Scheyder; Additional reporting by Fransiska Nangoy in Jakarta; editing by Grant McCool
Our Standards: The Thomson Reuters Trust Principles.
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