Provision of technical assistance to developing countries trough bilateral partnership with similar but more mature organization in other parts of the world has proved to be an effective way to transfer expertise, train staff, build up management capabilities, and enhance institutional capabilities. This paper examis an innovative arrangement in which Indonesia Ministry of Mines and Energy is participating in science and technology cooperation with the US Department of the Interior to develop institutional capacity for reformulation and implementation of mining environmental policy. Prospects and progress in implementation of the project which began in April 1995 is reported.