Indonesia is the world's biggest nickel producer, a product that is vital in the production of electric vehicles (EV), and has increased domestic processing of the metal.

Earlier this month the US Department of Labor, citing reports by non-governmental groups, has included nickel from Indonesia on its annual "list of goods produced by child labor or forced labor". 

Yuli Adiratna, the ministry's director of labour inspection, told Reuters the US report would be the basis of the ministry improving "supervision of regulations and international standards" in the commodities sector, without providing details. 

Yuli said the ministry has not verified the claims in the US report, which include workers being deceptively recruited in China, being underpaid, suffering physical punishment, and having their passports confiscated.

Indonesia's nickel industry is centred in Sulawesi and is dominated by Chinese companies. 

"There are multiple reports that adults are forced to work in the production of nickel in Indonesia," the US report said.

The report said large industrial parks, majority-owned by Chinese firms, had been built on Sulawesi to process nickel ore and employed an estimated 6,000 Chinese migrant workers. 

The Chinese embassy in Jakarta did not immediately respond to a request for comment on the contents of the US report. 

Indonesia has ambitions to become a major player in the manufacturing of EVs and their batteries. Jakarta has been negotiating a critical mineral deal with Washington so that its nickel can be included in supply chains recognised under President Joe Biden's Inflation Reduction Act (IRA).

To be eligible for a tax cut under the IRA, materials for an EV or batteries must be supplied by firms with not more than 25 percent ownership by a "foreign entity of concern", which applies to companies from China, Russia, North Korea and Iran.