CRITICAL MINERALSSoutheast Asia’s Potential in Critical Minerals
Global critical mineral demand is expected to increase dramatically in coming decades, from a 7.1 million tons in 2020 to 42.3 million tons in 2050. All manner of sophisticated industries, including defense manufacturing, will also compete for these materials. Southeast Asia has significant natural reserves of several key critical minerals, including nickel, tin, rare-earth elements (REEs) and bauxite, and the region is still not fully explored for more of them.
Global critical mineral demand is expected to increase dramatically in coming decades, from a 7.1 million tons in 2020 to 42.3 million tons in 2050. Global commitments to decarbonization are the main drivers of this growth, because clean-energy technologies depend on large quantities of critical minerals. But all manner of sophisticated industries, including defense manufacturing, will also compete for these materials.
Secure and reliable critical mineral supply chains will be vital for energy transition. The supply chains are the secret to scaling up installation of wind turbines, advanced batteries, electrolysers and clean-energy grids.
Southeast Asia has significant natural reserves of several key critical minerals, including nickel, tin, rare-earth elements (REEs) and bauxite, and the region is still not fully explored for more of them. But establishing downstream processing of the materials in Southeast Asia is a great challenge, especially if high environmental standards are to be met.
To turn itself into a hub of critical minerals supply, the region will need help from countries that are experienced in the field, such as Australia, India, Japan, the United States, China and European nations.
Nickel, lithium, cobalt, copper, and neodymium are among the most commonly used critical minerals in clean-energy products, which include solar PV, wind turbines, grid battery storage, electric vehicles, electricity networks, and hydrogen technologies. Significant increases in demand are expected.
Southeast Asia holds large reserves of several key critical minerals. Measured against global reserves:
—Indonesia has 22% of nickel; 16% of tin and 4% of bauxite;
—Vietnam has roughly 18% of both rare earth elements and bauxite;
—Myanmar has about 18% of rare earth elements; and
—The Philippines has about 5% of nickel.
Cobalt reserves have also been identified in Indonesia and the Philippines.
Due to challenges in extending the value chain downstream and a lack of engagement by experienced, outside countries, Southeast Asia has begun developing domestically focused approaches. Indonesia’s approach to nickel is a strong example.
Indonesia began establishing itself as a critical mineral hub by banning exportation of raw nickel ore in 2014, allowing exceptions only for mining companies that were investing in processing. By 2020, the ban on nickel ore exports was absolute.
