Image: Luhut Panjaitan
Indonesia will offer a limited free trade deal with the US on critical minerals. If the agreement is signed, then Tesla and other companies could benefit from it.
Indonesia will offer a free trade agreement for some minerals supplies to the US, according to a Reuters report. This will create conditions for companies operating in the electric vehicle battery supply chain to take advantage of US tax incentives, a senior minister said on Monday.
The US government released new guidance on tax credits for electric vehicles under the Inflation Reduction Act (IRA). It required certain battery components to be manufactured or assembled in North America or from a free trade partner. The rules aim to rid the US of dependence on China to develop the electric vehicle battery supply chain.
At the moment, Indonesia does not have a free trade agreement with the US. However, the fact is that its nickel products are becoming increasingly important in the supply chain. With the growing popularity of electric vehicles, the demand for nickel is also growing. Companies such as Tesla and Ford could benefit from the signing of the agreement. Also, like many other manufacturers in the US, those working in this area will benefit from the agreement.
Asked about the new IRA guidelines, Indonesian Minister Luhut Panjaitan, who is leading efforts to attract US companies, said at a press conference that Jakarta will offer Washington a limited free trade agreement (FTA).
“We do not have an FTA with them. Now we're proposing a limited FTA with them,” Luhut said, adding that he would meet with Ford and Tesla executives to discuss the matter when he travels to the US later this week.
Luhut's deputy, Septian Hario Seto, said the FTA proposal is likely to be similar to what the US has signed with Japan regarding trade in key minerals. The countries agreed on a trade deal on EV battery minerals, including lithium, nickel, cobalt, graphite, and manganese.
“It's the same in essence, that for critical minerals there will be free trade with requirements on processing, such as for nickel, aluminum, cobalt, copper,” he said.
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Eva Fox joined Tesmanian in 2019 to cover breaking news as an automotive journalist. The main topics that she covers are clean energy and electric vehicles. As a journalist, Eva is specialized in Tesla and topics related to the work and development of the company.