U.S. and Philippines Discuss Partnership to Counter China’s Nickel Processing Dominance

U.S. and Philippines Discuss Partnership to Counter China’s Nickel Processing Dominance

The United States is in preliminary discussions with the Philippines to formulate a strategy aimed at countering China’s stronghold on nickel processing. This initiative is particularly significant as nickel is essential for manufacturing electric vehicle batteries. The plan includes a potential trilateral agreement where the Philippines would provide raw nickel, the U.S. would contribute financing, and a third country—possibly Japan, South Korea, or Australia—would supply the necessary technology for smelting and refining.

These talks are in the nascent stages, with critical components of the deal, including the U.S.’s ability to provide financing, yet to be finalized. According to sources who preferred to remain anonymous, the Philippines is open to collaborating with nations committed to energy security and low-carbon initiatives, provided these partners support responsible mining practices and invest in local processing capabilities.

The backdrop to these discussions is the increasing concern in Washington over China’s control over nickel processing in Indonesia, the world’s leading supplier of this vital metal. The demand for nickel, which is traditionally used in stainless steel production, is expected to surge by about a third to 4.4 million tons per year by 2030. This metal is crucial to President Joe Biden’s agenda for a green energy transition, with lithium-ion batteries projected to consume about 28% of nickel demand by the decade’s end.

The global nickel market has experienced significant upheaval due to an influx of supply from Indonesia, fueled by substantial Chinese investments and technological advancements. This situation has led to potential closures of mines worldwide and calls for governmental financial support to keep operations running.

In the Philippines, despite the global oversupply, the government is encouraging the expansion of nickel mining. Currently, less than 3% of the designated 9 million hectares of high mineral reserve lands are being mined. The nation is urging local miners to develop processing plants that can produce higher-value products rather than exporting raw ore. Currently, Nickel Asia Corp, which is partially owned by Japan’s Sumitomo Metal Mining Co., operates the only two nickel processing facilities in the country. icon

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