Jakarta. Indonesian nickel and batteries might have a better chance of penetrating the American market should president hopeful Kamala Harris win the upcoming US election, according to a senior economist. 

But a Harris government might only grant entry for Indonesian nickel if it met its green standards, Bhima Yudhistira, the executive director at the economic think-tank Celios, said Tuesday. 

In 2022, the incumbent US President Joe Biden inked the so-called Inflation Reduction Act (IRA) into law; a climate policy that reduces the taxes that Americans have to pay when purchasing electric vehicles (EVs). However, an EV is only eligible for tax credits if made from minerals from the US or its free trade agreements partners. Indonesia does not have a trade pact with the US but has been pursuing what it calls a limited critical mineral agreement so batteries made from its nickel can benefit from the tax credits.

In just a few hours from now, Americans will have to choose between Former President Donald Trump and the current veep Harris to be their next leader.

The moments counting down to the election also spark questions on what will happen to Indonesia’s pursuit of having its nickel enter the US market when the White House installs a new president. 

Trump plans to revoke any unspent funds from the IRA, and this could spell bad news for Indonesian nickel, according to Bhima. 

“Trump’s promise of terminating or delaying the IRA can take a toll on Indonesian nickel’s access to the US market. … A Harris election victory means that goods processed from Indonesian nickel can diversify its markets beyond China. Of course, this will lead to [Indonesian nickel] being sold at a better price. But this is only possible if Indonesia produces green-premium nickel,” Bhima told the Jakarta Globe on Tuesday. 

Bhima expects to see the IRA continuing under a Harris administration, saying that the US Democratic Party sees the climate law as a stimulus for both the economy and energy transition. The analyst added: “Harris will continue the IRA policies, especially follow-ups on US deals, including helping Indonesia improve its [nickel] supply chain, traceability, environmental and social governance.”

Indonesia, however, still has a lot of things to fix before the country can produce premium green nickel that the Harris government might accept. Bhima told the Globe that Indonesia had proposed 14.4 gigawatts of captive coal capacity to power its critical mineral smelters. Bhima attributed Indonesia’s sluggish approach to adopting sustainability principles to the attitude of its top nickel buyer China.

“Chinese buyers are not nudging [Indonesia] into implementing more stringent ESG [environmental, social, and governance] standards,” Bhima said.

Both Indonesia and the US are witnessing a transition of power.

Former army general Prabowo Subianto recently rose to power after securing a landslide victory. Biden has congratulated Prabowo on his inauguration, saying that he was looking forward to bolstering ties with the new administration. 

Prabowo is scheduled to fly to the US later this month as part of his first-ever foreign trip as president. According to State-Owned Enterprise Minister Erick Thohir, Prabowo would try to give an extra push for American carmaker Ford to make an investment in Indonesia. 

“Regarding Mr. President [upcoming] overseas tour, I have told Foreign Minister [Sugiono] to include this on [Prabowo’s] agenda … for the president to start the discussions on pushing for Ford Motor Company’s investments in Indonesia. … Indonesia wants to play a role in the global EV battery supply chain,” Erick told the country’s lawmakers in Jakarta on Monday.

Under the preceding Joko “Jokowi” Widodo government, Indonesia-US upgraded its ties to a comprehensive strategic partnership (CSP) when the former Jakarta governor visited Biden at the White House last November. It was also then that the US agreed to develop an action plan that would possibly culminate in the negotiations of a bilateral critical mineral deal. The two leaders also vowed to work together towards a low-emission mineral supply chain. 

Indonesia hosts the world’s largest nickel reserves. The 2024 US Geological Survey report shows Indonesia has 55 million metric tons in nickel reserves, seconded by Australia (24 million metric tons).