US approaches Indonesia for multinational critical mineral partnership

JAKARTA, July 15 (Reuters) - The U.S. has approached Indonesia about joining a multinational partnership to boost the Southeast Asian nation's environmental standards as the two countries discuss a critical minerals deal, a senior U.S. official said on Monday.

U.S. Under Secretary of State for Economic Growth, Energy, and the Environment Jose Fernandez spoke to the Indonesian government about the Mineral Security Partnership, a collaboration of 14 countries and the European Union, during his visit to Jakarta this week.

The MSP, whose objective is to accelerate development of sustainable critical minerals supply chains and facilitate financial and diplomatic support, would be an opportunity to improve environmental standards and governance in Indonesia's mineral sector, he told a press conference in Jakarta.

Indonesia, which has rich reserves of minerals such as nickel, copper and bauxite, is keen to promote itself as a production hub for batteries and electric vehicles.

The nation has massively expanded its nickel processing industry since it banned exports of unprocessed ore in 2020, but environmentalists have blamed the industry for deforestation, water and air pollution caused by smelters.

"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," Fernandez said.

Indonesia is one of seven countries the U.S. would support to become a semiconductor hub, he added.

Jakarta has asked Washington for a critical mineral trade deal similar to the U.S. deal with Japan.

Fernandez said the discussion is progressing positively, but declined to give a timeline on when a deal may be reached.

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

Indonesia's coordinating minister for economic affairs, Airlangga Hartarto, said in a statement late Monday that he and Fernandez discussed ways to develop critical minerals and the plan to create a mineral forum, which could be developed as a supply chain platform. (Reporting by Fransiska Nangoy; Additional reporting by Stefanno Sulaiman; Editing by Jan Harvey and Michael Perry)