As the world races to secure the minerals that power everything from smartphones to fighter jets, Indonesia and the United States are on the verge of a landmark agreement that could reshape global supply chains. The deal, set for signing by President Prabowo Subianto and US President Donald Trump in late January 2026, centers on reciprocal tariffs and, crucially, the US’s access to Indonesia’s vast reserves of critical minerals. Negotiations have been intense, spanning technical, legal, and political arenas, but both sides now say the substance of the deal is settled and only final language and drafting remain.
Indonesia’s Coordinating Minister for Economic Affairs, Airlangga Hartarto, has been at the heart of these talks. According to ANTARA, Hartarto emphasized that this partnership isn’t new. "In fact, several US companies have already engaged with Indonesian critical minerals firms," he said, pointing to Freeport-McMoRan’s copper extraction operations that date back to 1967. Freeport’s presence is more than symbolic; the company manages one of the world’s largest copper and gold deposits in Papua and has invested $3.7 billion in a cutting-edge copper smelter in East Java’s Gresik, as reported by Jakarta Globe.
But copper is just the beginning. The US, eyeing its own strategic vulnerabilities, is keenly interested in Indonesia’s nickel, bauxite, and rare earth elements—essential components for electric vehicles, aircraft, rockets, and modern defense systems. Hartarto confirmed, "The US needs access to these minerals for automotive, aircraft, rockets, and military defense equipment manufacturing," during a press conference reported by Tempo.
At the heart of Indonesia’s efforts to facilitate this cooperation is Danantara, the nation’s sovereign wealth fund. Danantara operates under a business-to-business scheme, connecting Indonesian companies with US investors eager to tap into the critical minerals sector. The fund manages state-owned mining giants like MIND ID, which counts both Freeport and Vale Indonesia (a major nickel producer) among its subsidiaries. Discussions between Danantara and US export bodies have been ongoing, focusing on the technicalities of access, investment, and long-term supply stability.
Indonesia’s rare earth sector, though still developing, is drawing attention as well. Much of the country’s rare earth output currently comes as a by-product of state-owned tin miner Timah, but government officials see significant potential for growth. As global demand for rare earths skyrockets—driven by their use in everything from wind turbines to missile guidance systems—Indonesia’s reserves are a tempting prize for US manufacturers seeking alternatives to Chinese supply chains.
The urgency for Washington is clear. Under President Trump’s administration, the US has dramatically ramped up its investment in critical minerals. The One Big Beautiful Bill Act allocated $7.5 billion to the Department of Defense for critical minerals, including $2 billion to expand the nation’s metals stockpile and $5 billion for supply chain investments. The goal? To ensure the US has the raw materials it needs, even in times of geopolitical uncertainty or outright crisis. "This stockpile aims to make sure that the US has access to the necessary defense materials in times of emergencies," noted Jakarta Globe.
The upcoming Agreement on Reciprocal Trade (ART) is about more than minerals. It’s also a bid to recalibrate tariffs between the two countries. Negotiations began after President Trump launched a sweeping tariff campaign in April 2025, targeting Indonesia and other nations. Since then, both sides have worked to reduce trade barriers and foster closer economic ties. According to Tempo, the US has already reduced import tariffs on Indonesian products from 32 percent to 19 percent and granted exceptions to leading exports like palm oil, coffee, and tea. Hartarto said, "The US granted exceptions to our leading products such as palm oil, coffee, and tea, and of course, America is very hopeful to gain access to critical minerals."
Indonesia, for its part, is pushing to expand these tariff exemptions beyond tropical commodities. Hartarto told ANTARA that Jakarta hopes to secure favorable terms for a broader range of goods, leveraging its mineral wealth as a bargaining chip. The technical teams from both countries are scheduled to finalize legal drafting and document cleanup between January 12 and 19, 2026, setting the stage for the leaders’ formal signing later that month.
While many details remain confidential, the broad contours of the agreement are public. A July 2025 White House policy framework made clear that Indonesia would "remove restrictions on exports to the US of industrial commodities, including critical minerals." President Trump, never one to mince words, declared, "Indonesia has some great products. They have very valuable earths and various other materials. One of the things that you know they are known for is very high-quality copper, which we will be using."
Industry observers are watching closely—not just because of the minerals themselves, but because of what they could mean for global companies. The deal could pave the way for Michigan-based Ford and Elon Musk’s Tesla to source Indonesian nickel for electric vehicle batteries, a development with huge implications for the booming EV market. Nickel, after all, is a core ingredient in lithium-ion batteries and aerospace alloys, making it vital for both green technology and advanced weaponry.
It’s not just the automotive giants who stand to benefit. The US defense sector, which relies on a steady stream of minerals for everything from jet engines to missile systems, is keen to diversify suppliers and reduce dependence on rival powers. As Jakarta Globe reported, "Nickel is an essential input in aerospace alloys as well as chemicals for lithium-ion batteries." The prospect of a stable, long-term supply from Indonesia is an enticing one for Pentagon planners and private contractors alike.
Yet, for all the optimism, challenges remain. Indonesia’s rare earth sector is still maturing, and environmental concerns about mining and processing linger. Both countries must also navigate domestic politics, with labor, environmental, and industry groups all eager to shape the final outcome. Still, the momentum is undeniable. As Hartarto put it, "So for Indonesia, critical minerals and America are not something new, but something that has been ongoing."
With the world’s supply chains in flux and the stakes higher than ever, the Indonesia-US critical minerals deal is poised to become a defining feature of the new economic order. The coming weeks will reveal whether both sides can turn years of negotiation into a partnership that delivers for industries, workers, and national security on both sides of the Pacific.
