The Indonesian government is reportedly in the process of reducing the portion of shares of Chinese companies in Indonesian nickel smelter projects, a maneuver believed to ensure the domestic downstream nickel ore industry to access the United States (US) government’s electric vehicle subsidies.

“The government had discussed with several investors to build a new smelter, with Chinese companies having less than 25 percent of shares,” Bloomberg said in its report on July 26, 2024.

However, Septian Hario Seto, Deputy for Investment and Mining at the Coordinating Ministry for Maritime Affairs and Investment, said that the government does not intervene in the business decision of each company to reduce the share of Chinese companies in the nickel projects in the country.

“All projects are agreed through business-to-business between shareholders, including the decision on Chinese shareholder composition as a minority,” Seto said on July 26, 2024.

Additionally, the government still continues negotiations to gain access to consumer tax credits that are included in the US Inflation Reduction Act (IRA) on electric vehicle incentives until now.

It is known that IRA tightens metallic mineral criteria that can receive US government-allocated EV incentives after 2023. The regulation also allocates subsidies up to USS$370 billion (Rp6.025 trillion) to develop clean technology.

Several of those criteria including mandatory metallic minerals to be processed in the US along with raw materials received originating from several countries must be included in the free trade agreement (FTA) with the US government.

Meanwhile, China becomes a foreign entity of concern to not receive IRA facilities in mineral downstream projects.

Previously, Jose W. Fernandez, US Deputy Secretary of State for Economic Growth, Energy, and the Environment said, there are big potentials in critical mineral cooperation with Indonesia, and its government continues to discuss the agreements.

“But this is a positive discussion and we want to work towards a critical mineral agreement that will allow more companies from the US and elsewhere to invest in the critical mineral industry here, in Indonesia,” he said on July, 15, 2024.

He also stated that his colleagues had spoken with the government about the mineral security partnership, that comprises 14 countries including the European Union (EU), which cover more that 55 percent of the world’s Gross Domestic Product (GDP). These countries include India, Australia, Japan, the US, and others.