In February 2026 Indonesia and the United States (“US”) signed an Agreement on Reciprocal Trade (“ART”) focusing on trade and investment relations. Although framed as a broader trade agreement, several of its provisions directly affect mineral extraction, processing, export policy, and foreign investment in mining.

For Indonesia, a major global supplier of nickel, coal, copper and other critical minerals, the agreement intersects with longstanding domestic policies emphasizing resource nationalism, downstream processing, and domestic market prioritization.

This article focuses specifically on how the ART reshapes the regulatory and investment landscape for mining.

Indonesia’s Mining Regulatory Framework

Indonesia’s mining regime is primarily governed by Law No. 4 of 2009 on Mineral and Coal Mining as amended from time to time and Government Regulation No. 96 of 2021 on Implementation of Mineral and Coal Mining Business Activities as amended from time to time (“Mining Laws”), which emphasize the following:

• mandatory domestic processing and refining;
• restrictions on raw ore exports;
• state control over strategic minerals; and
• gradual foreign divestment requirements.

Over the past decade, Indonesia’s policy direction has been consistently domestic-oriented, prioritizing value-added processing before export, particularly for critical minerals such as nickel. The ART, however, introduces commitments that may influence how these policies are implemented going forward.

Export Liberalization and Critical Minerals

One of the most consequential mining-related provisions in the ART concerns export restrictions on industrial commodities, including critical minerals.

Article 6.1.1 of Annex III of the ART provides:

"To strengthen supply chain connectivity between the Parties, Indonesia shall remove restrictions on exports to the United States of industrial commodities, including critical minerals". 

For several years, Indonesia has implemented a strict “hilirisasi” policy, including bans on the export of unprocessed mineral ores in order to promote domestic refining and smelter development. The wording of the ART has therefore drawn attention, as it may affect how export restrictions are applied in relation to the US market.

Some observers have interpreted this clause as signaling a potential relaxation of the raw mineral export ban[1]. However, the Coordinating Ministry for Economic Affairs has clarified that the “removal of restrictions” refers to streamlining the export of processed and refined minerals, rather than permitting the export of raw ore[2].

The practical impact of this provision will depend on how Indonesia harmonizes its downstreaming policy with its treaty commitments, including through implementing regulations and administrative guidance.

Foreign Ownership and Investment

The Mining Laws restrict foreign ownership in companies engaged in the mining of certain commodities. Where foreign investment is permitted, foreign shareholders are required to divest their shares so that foreign ownership is reduced to a maximum of 49% by the fifteenth year of production. In fulfilling this divestment obligation, their shares must first be offered to the central government, regional governments, state-owned enterprise (Badan Usaha Milik Negara), regional state-owned enterprise, domestic private entities, or alternatively through a public offering on the Indonesian Stock Exchange.

Under the ART, Indonesia agrees to allow US investment in mining on terms no less favourable than domestic investors and to remove ownership caps for US entities. Meaning, US companies could potentially hold 100% ownership in Indonesian mining projects and mandatory divestment requirements may no longer apply to US investors.

This represents a change in the context of Indonesia’s historical approach to foreign participation in strategic natural resource sectors and could materially change how large-scale mining projects are financed and structured.

TKDN under the ART Framework

In mining sector, Local Content Requirements (Tingkat Komponen Dalam Negeri or “TKDN”) obligations typically arise in procurement of heavy equipment, supporting infrastructure, technology and machinery sourcing, etc. In practice, mining companies are often expected to prioritize domestic suppliers where available.

The ART materially alters the landscape for mining investors by requiring Indonesia to exempt US companies and US goods from TKDN requirements. In the context of mining, this provision potentially grants US backed projects significantly greater procurement flexibility.

Conclusion

The ART introduces significant commitments affecting Indonesia’s mining sector, particularly in relation to export treatment, foreign ownership limitations, and local content requirements. Provisions on the removal of export restrictions for critical minerals, the elimination of foreign ownership caps for US investors, and exemptions from TKDN obligations collectively signal a recalibration of Indonesia’s regulatory approach in the context of its trade relationship with the US.

At the same time, Indonesia’s core mining framework remains in place. The extent to which the ART reshapes the mining landscape will therefore depend on how its provisions are implemented within Indonesia’s existing legal structure.

[1] https://celios.co.id/wp-content/uploads/2026/02/CELIOS_ART_Indonesia-AS-Feb-2026.pdf

[2] https://en.tempo.co/read/2088692/indonesia-will-not-export-critical-minerals-to-the-us-in-raw-form