Jakarta. Australia is hoping that the upcoming review on its trade agreement with Indonesia will make room for critical mineral cooperation, particularly on lithium, according to its diplomat. 

Indonesia already has a comprehensive economic partnership agreement (CEPA) with Australia, a deal that not only grants zero tariffs for virtually all products, but also provides greater certainty for investors. The Indonesia-Australia CEPA came into effect in 2020. When Australian Prime Minister Anthony Albanese visited Jakarta in mid-May, the two economies agreed to review the CEPA trade pact next year for improvements. 

Australian Ambassador to Indonesia Rod Brazier told reporters Thursday that Canberra would look into enabling greater critical mineral cooperation. This includes the possibility of Australia -- the world’s largest lithium producer -- supplying the silvery-white metal to Indonesia as the Southeast Asian country works on its battery ecosystem.

“We are hoping that the [CEPA] will look more closely at issues like green energy transition and critical minerals. Indonesia needs many of the critical minerals that Australia has. Lithium is a very good example,” Brazier said, commenting on the review. 

“We want to do more to be a reliable provider of lithium to Indonesia’s booming battery sector,” Brazier said.

Lithium is a critical component for electric vehicle (EV) batteries, particularly the lithium ferro-phosphate (LFP) ones. A 2025 Geological Survey report showed that Australia mined an estimated 88,000 metric tons of lithium in 2024.

Indonesia does not produce its lithium but is home to the world’s biggest reserves of nickel, another mainstay ingredient in EV battery production. Senior minister Airlangga Hartarto a few months ago revealed that Australia had been supplying lithium of up to 80,000 tons to the Morowali Industrial Park. He also admitted that talks were underway to “include critical mineral cooperation in the Indonesia-Australia CEPA”.

In 2023, Western Australia -- which makes up half of the global lithium production -- alongside the Indonesian Chamber of Commerce and Industry (Kadin) inked a plan of action that could power critical minerals investments. 

Indonesia is currently open for foreign investments as the country builds its battery ecosystem to boost its economy. Just a few days ago, Indonesia broke ground on a China-backed EV battery manufacturing project worth $5.9 billion in Karawang. The government aims to make Indonesia Southeast Asia’s EV battery hub.

‘A Fair and Square’ Trade
Indonesia’s Trade Ministry data showed that Jakarta had been running a deficit with Australia over the past years, although the imbalance had narrowed last year.

Indonesia’s deficit declined from nearly $6.1 billion in 2023 to almost $5.5 billion in 2024. Overall trade had reached nearly $15.4 billion last year, the ministry reported. The Central Statistics Agency (BPS) recently revealed that Australia was the third-biggest contributor to Indonesia’s trade deficit, with an imbalance of up to $2.11 billion between January and May. 

Amidst the imbalance, Brazier told the press that the Indonesia-Australia CEPA had been “very fair” by setting the tariffs on goods at 0 percent. He also pointed out how the statistics did not include trade in services such as tourism. The embassy reported that bilateral trade in both goods and services had grown from A$17.7 billion ($11.6 billion) in 2019 to A$35.4 billion ($23.2 billion) last year. Indonesia also enjoyed a surplus of A$3.13 billion (around $2 billion) in 2024 as many Australian travelers flocked to Bali.