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Indonesia intends to reduce the participation of Chinese enterprises in nickel mining projects
Postdate:2024-07-27 Views:247
Before obtaining tax cuts from the US, Indonesia must first negotiate a trade agreement with the US. Both parties are discussing to include key minerals in the agreement, but no agreement has been reached so far.
Nickel is an important raw material for producing electric vehicle batteries, and Indonesia is the worlds largest producer of nickel. According to Benchmark Mineral Intelligence, Indonesias refined nickel production accounts for 57% of the worlds total, and is expected to increase to 69% by 2030.
The development of nickel mining in Indonesia has benefited from the influx of large amounts of Chinese enterprise funds in recent years. It is expected that 80% to 82% of the local battery grade nickel production this year will come from manufacturers in which Chinese enterprises hold a majority stake.
Septian Hario Seto, Deputy Minister of Marine Affairs and Investment Coordination in Indonesia responsible for investment and mining affairs, confirmed the news, saying that it is not only based on considerations of meeting the US tax reduction conditions, but also to promote diversification of investment sources.
Indonesia is also seeking investment from American electric vehicle manufacturer Tesla in Indonesias nickel mining industry. According to local media reports, Indonesias Minister of Ocean Affairs and Investment Coordination, Luhut, said that he will invite Tesla founder Elon Musk to invest in Indonesia when he meets with him in the United States next month. However, Luhut did not provide further details on the proposed project.
Septian said that Chinese enterprises are in talks with Indonesian and South Korean companies to explore the establishment of factories. The intention of the authorities is to reduce the shareholding of Chinese enterprises in order to comply with the tax reduction conditions in the United States. He also said that Indonesian companies hope to hold a majority stake in such projects.
Indonesia is seeking to reduce the participation of Chinese companies in new nickel mining projects to meet the conditions for obtaining tax exemptions from the US government.
According to the US Inflation Reduction Act, starting from 2025, electric vehicles can receive tax reductions, provided that the manufacturers of electric vehicle components and batteries cannot be owned by "foreign entities of concern" holding more than 25% of the shares.
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Septian said, "This is a very important policy because we dont want to be trapped in geopolitical tensions. We must take care of our national interests
According to reports from the Financial Times, Bloomberg, and Reuters, Indonesian officials are in talks with investors to limit the stake of Chinese companies in the newly built nickel smelter project to less than 25%.
The definition of "foreign entities of concern" by the United States includes China, Russia, North Korea, and Iran.
Although there is an intention for Chinese companies to hold minority stakes in new investment projects, Sepetien said that these are purely arrangements between companies, and the Indonesian government will not intervene or implement mandatory measures to restrict Chinese companies stakes.
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