The United States and the Philippines are strengthening cooperation to prevent Chinese dominance in the nickel processing industry in Southeast Asia. Nickel is a crucial metal needed for electric car batteries, and the Philippines is the world’s second-largest nickel mining producer.
According to sources familiar with the matter, the US and the Philippines are planning a trilateral cooperation agreement where the Philippines will provide nickel raw materials, the US will provide funding, and a third country like Japan, South Korea, or Australia will provide the necessary technology for smelting and refining.
The negotiations between the US and the Philippines are still in the early stages, and key elements of the deal, including whether the US can provide funding, have not been finalized, according to sources.
Both the Philippine government and the White House have not immediately responded to the news. However, the US is indeed increasingly concerned that Beijing has taken control of the nickel processing industry in Indonesia, the world’s largest nickel ore supplier.
According to BloombergNEF, nickel metal demand is expected to grow by one-third to 4.4 million tons annually by 2030.
US officials state that nickel is crucial for President Biden’s push for green energy transition. The aim of US-Philippines cooperation is to reduce excessive reliance on China for critical minerals. BloombergNEF predicts that by 2030, 28% of nickel will be used in lithium-ion battery production.
With substantial investments and technological breakthroughs in China, coupled with a surge of new supplies from Indonesia, the global nickel market is in turmoil. Mines worldwide face the risk of closure, with some requiring government assistance to avoid bankruptcy.
The dominance of China in Indonesia’s nickel processing industry has raised concerns about supply reliability.
Despite global nickel ore surplus, the Philippines plans to expand nickel mining. Currently, less than 3% of the government-designated 9 million hectares (22.2 million acres) of land for mining is being exploited.
The Philippines is promoting investments in processing facilities by mining companies to provide higher-value products instead of exporting raw metal ores.
Currently, the Philippines has only two nickel processing plants operated by Asian Nickel Corporation, partly owned by Japan’s Sumitomo Metal Mining.
The Philippines has also considered following Indonesia’s lead in imposing export taxes on nickel ores to attract foreign investments in processing plants.