Critical minerals deal: U.S. approaches Indonesia for environmental collaboration

The United States has initiated discussions with Indonesia about joining a multinational partnership to improve Southeast Asia's environmental standards. Jose Fernandez, the U.S. Under Secretary of State for Economic Growth, Energy, and the Environment, disclosed the proposal during his recent diplomatic visit to Jakarta.

The Mineral Security Partnership (MSP) is comprised of 14 countries alongside the European Union. Its primary goal is to expedite the establishment of sustainable supply chains for critical minerals, leveraging financial and diplomatic support. Fernandez emphasised that joining the MSP could allow Indonesia to bolster governance and environmental practices within its mineral sector.

Indonesia, renowned for its extensive mineral reserves, including bauxite, nickel, and copper, has expressed a strong interest in positioning itself as a pivotal hub for battery and electric vehicle production. This strategic move, which aligns with global trends towards sustainable energy solutions, not only underscores Indonesia's ambitions in the burgeoning electric vehicle market but also positions it as a forward-thinking player in the global shift towards sustainable energy.

The discussions between the U.S. and Indonesia are of significant importance, as they coincide with ongoing negotiations over a critical minerals agreement. This underscores the broader economic and environmental objectives driving bilateral engagements between the two nations, and the potential impact of these discussions on the global mineral and environmental landscape.

The country has significantly scaled its nickel processing industry since implementing a ban on unprocessed ore exports in 2020. However, environmentalists have criticised the industry for contributing to deforestation and water and air pollution resulting from smelting operations.

Fernandez said, "I believe this will lead to more investment in Indonesia, and not just any investment, but also investment that benefits communities, that upholds labour laws, that upholds environmental laws."

"The U.S. would support Indonesia as one of seven countries to become a semiconductor hub."

Jakarta has requested a critical mineral trade agreement from Washington, similar to the deal the U.S. struck with Japan. Fernandez indicated that discussions are advancing favourably, though no specific timeline for reaching an agreement was provided.

"We are very satisfied with the way that our discussions are ongoing. We will continue to expand on those discussions going forward," Fernandez said.