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The Philippines is seeking Western investment to further develop its nickel reserves. In doing so, they profile themselves as an alternative to the Chinese-dominated supply chain for the important battery metal.
The world’s second-largest nickel producer is seeking a major deal with the U.S. on minerals and investment from foreign companies to build more refineries, amid growing concerns about China’s control over the electric vehicle ecosystem.
“There is now room for the Philippines to become a major player in the battery space,” Ceferino S. Rodolfo, undersecretary of the Department of Trade and Industry, told the Financial Times in an interview.
Nickel production in the Philippines is just a fraction of that of top player Indonesia, where 90 percent of the industry is owned by Chinese companies, according to government officials.
But unease over the concentration of nickel supply in the hands of Indonesia and China – as well as low prices that have curbed output from other producers – have prompted buyers to seek other sources of the raw material, which is also a crucial ingredient in steelmaking.
The US, UK, Australia, Japan and South Korea are among the countries that have shown interest in investing in the Philippine nickel industry, Rodolfo said. But so have Chinese companies.
“It’s a race between China and the US,” he said, noting that the Philippines “had a very strong argument to go with a non-Chinese investor so we can be the supplier of non-Indonesian, non-Chinese nickel.”
The Philippines is also taking a step toward closer economic ties with the US and its allies as tensions with Beijing rise in the South China Sea.
Last week, Chinese coast guard vessels rammed and closed in on Philippine army supply ships, seriously injuring a Filipino soldier.
The Philippines wants to sign a crucial minerals deal with the US, which would make the country eligible for tax breaks. It has also asked to join an existing agreement between the US and Japan, Rodolfo said.
But no deal is on the table for now because of the US’s reluctance to sign an agreement in the middle of an election year, officials in Manila said.
The Philippines is also seeking to produce “greener” nickel with the help of investors by using renewable energy to power smelters, Rodolfo said, setting it apart from Indonesia, which relies heavily on coal-fired power plants, giving it a reputation as a producer of “dirty” nickel.
But Washington is concerned about high energy costs, Manila’s envoy to the US, Jose Manuel Romualdez, told the FT. “One of the main obstacles right now is energy. . . We need to be able to build a better, more coherent type of energy that is cheaper,” he said.
Manila is willing to invest in cheaper and cleaner energy options and is considering a combination of hydropower, solar and wind energy and natural gas, he added.
The Philippines currently has two nickel processing plants, both operated by Nickel Asia Corp, of which Japan’s Sumitomo Metal Mining is the majority shareholder.
Indonesia accounts for 57 percent of global refined nickel production – 4.5 times more than the Philippines in 2023 – and its share is expected to rise to 69 percent by the end of the decade, according to Benchmark Mineral Intelligence. Its reserves are also much larger than those of the Philippines: with 55 million tons, Jakarta has eleven times as much nickel, according to the US Geological Survey.
Meanwhile, nickel mines in Australia have been closed due to lower prices – which have fallen 23 percent in the past year. Production in New Caledonia, a French overseas territory, has also been disrupted by political unrest.
Adam Webb, cathode product director at Benchmark Mineral Intelligence, said raising financing in the current low-price environment would be a challenge for the Philippines.
He said tax breaks and policies that favor non-Chinese companies could attract investment to the Philippines, which could be a viable alternative for Washington to reduce its nickel supply chain.
“For the West, the Philippines offers an opportunity to diversify away from the Chinese-dominated Indonesian nickel industry and to mitigate the risks associated with the growing concentration of nickel supply in a single country,” he said.
Additional reporting by Demetri Sevastopulo in Washington