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The US Government has blocked Indonesia’s bid to become a nickel free-trade partner in a move that has been applauded by Australian nickel miners.

While Indonesian President Joko Widodo lobbied for access to the US Government’s $US500 billion Inflation Reduction Act (IRA), The Australian Financial Review (AFR) has reported Widodo and US President Joe Biden have not been able to come to an agreement.

Under the Act, for EV buyers to achieve a tax credit they must purchase a vehicle whereby 40 per cent of the materials used in the vehicle’s battery are sourced from the US or from a free-trade partner such as Australia.

There are 21 countries on the US free-trade agreement list, including Canada, Mexico and Korea, but Indonesia does not feature.

As Indonesia began its petition to join, several Australian players sounded the alarm, including BHP, Chalice Mining and Wyloo Metals.

“If the world wants batteries and EVs to be both affordable and environmentally sustainable, investment in Australian and Canadian production must be encouraged,” Wyloo Metals chief exeucitve Luca Giacovazzi told The AFR in October.

“A free-trade agreement on nickel with Indonesia would significantly reduce the attractiveness of investing in countries with higher ESG standards and leave consumers with no choice but to use dirty nickel.”

Some of the biggest concerns came from Indonesia’s weaker labor and environmental control laws.

“It’s pleasing to see that the US has made it clear in its discussions with Indonesia that any possible free trade agreement must factor in strict ESG requirements,” Giacovazzi said.