Column: Electric dreams turn into a nightmare for battery metals
A sector that was once racing to build new supply has been closing mines and deferring projects as low prices bite into the cost curve.
The US and the Philippines are in discussions over ways to prevent China from dominating nickel processing in the Southeast Asian nation, a key supplier of the metal that’s crucial for electric vehicle batteries.
One measure under consideration is a trilateral arrangement through which the Philippines would supply raw nickel material, the US would provide financing, and a third country such as Japan, South Korea or Australia would offer the technology required for smelting and refining, according to people familiar with the matter.
Talks with the Philippines — the world’s second-biggest mined nickel producer — are still in early stages, with key elements of any potential deal still to be worked out, including whether the US could deliver on financing, said the people, who requested anonymity to discuss private deliberations.
“The Philippines stands ready to partner with all countries who are pursuing energy security for all in a low carbon world,” the nation’s Environment and Natural Resources Secretary Maria Antonia Yulo Loyzaga said in a text message. “They must practice responsible mining and advance our global competitiveness by investing in onshore processing.
Spokespeople for the White House declined to comment.
Discussions come amid growing concern in Washington over China’s dominant position over nickel processing in Indonesia, the top supplier of the critical mineral. Primary demand for the metal, traditionally used to make stainless steel, is forecast to rise about a third to 4.4 million tons a year by 2030, according to BloombergNEF.
US officials say nickel is critical to President Joe Biden’s push for a green energy transition, and the potential partnership is among measures being pursued to reduce dependence on Chinese-produced critical minerals. Lithium-ion batteries will account for about 28% of nickel demand by the end of the decade, BNEF forecasts.
The talks also come as the global nickel market has been thrown into chaos after a flood of new supply from Indonesia — the result of huge Chinese investment and major technological breakthroughs. Mines across the world are at risk of closing, while others are asking for state bailouts or going bust.
The scale of the collapse has left some in the industry questioning if there’s a future for most mines outside of Indonesia, while China’s dominance over the nation’s processing sector has also raised concerns about the reliability of supply.
The Philippines plans to expand nickel mining despite the global surplus, and less than 3% of 9 million hectares (22.2 million acres) of land identified by the government as containing high mineral reserves is currently being mined.
Miners in the Philippines are being pushed to invest in processing facilities that can deliver higher-value products, instead of just shipping out raw metal ore. There are currently only two nickel processing plants, both operated by Nickel Asia Corp. which is partly owned by Japan’s Sumitomo Metal Mining Co.
The country has considered following Indonesia by taxing its nickel ore exports to lure investment in processing plants.
(By Peter Martin and Jennifer Jacobs)
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