[SMM Nickel Ore Analysis] The Philippines May Face Significant Challenges in Emulating Indonesia's Ore Export Ban

On February 3, 2025, the Philippine Senate passed a bill to ban nickel ore exports. The bill is currently under review by a bicameral committee and has not yet been signed into law. The subsequent review of the bill will take place after the Congress reconvenes in June. Meanwhile, Philippine Senate President Francis Escudero expressed hope for a bicameral committee to negotiate and review the bill with members from both the Senate and the House of Representatives. Escudero stated in a briefing, "I hope it can be completed during the recess so that we can approve it when we reconvene." The bill aims to promote downstream development in the mining industry by banning raw ore exports. If signed into law, it will be implemented five years later to allow miners time to build processing plants. "If the bill is passed, we will eventually have ore processing capacity, which will be a transformation for the country," said Escudero, who drafted the third and final versions of the bill.

The Philippines is the world's second-largest supplier of laterite nickel ore. According to SMM statistics, the Philippines shipped 54 million mt in 2024, with approximately 43.5 million mt sent to China and 10.35 million mt to Indonesia. In recent years, the Philippine government has been attempting to learn from Indonesia, the world's largest nickel supplier, to increase mining revenue by encouraging miners to invest in processing facilities rather than merely exporting raw ore. However, the industry generally believes that the Philippines is unlikely to fully replicate Indonesia's ore export ban due to several factors:

1. **Underdeveloped Infrastructure**: Indonesia has relatively well-developed infrastructure capable of attracting foreign investment in supporting smelting and downstream plants, whereas the Philippines' infrastructure is relatively underdeveloped.
2. **Basic Resources**: Indonesia has abundant local resources such as hydropower and coal, while the Philippines lacks sufficient coal resources, faces uncompetitive prices, unstable power supply, and high industrial electricity prices.
3. **Poor Investment Environment**: Philippine nickel ore has a lower grade, making it more suitable for hydrometallurgy to produce MHP. However, hydrometallurgy requires high investment costs, long construction periods, and certain technical thresholds.
4. **Different Political Environment**: The Philippine economy relies heavily on mining exports, and mining interest groups hold significant influence in politics. In contrast, Indonesia's political environment is relatively stable, enabling the government to implement ore export bans.

In February, after the bill was proposed, the Chamber of Mines of the Philippines and the Philippine Nickel Industry Association stated that the proposed export ban "would lead to mine closures" and "reduce government revenue and economic activity in mining communities." Local interest groups may become a significant obstacle to the implementation of the bill. Meanwhile, Indonesia's stable political environment has allowed its government to enforce ore export bans.

5. **Industry Development**: The global nickel market is experiencing a supply surplus, and leading enterprises in nickel resource integration have completed their layouts. SMM predicts that the global nickel resource supply surplus will expand in 2025 and beyond. If the Philippines implements an ore export ban to develop downstream industries, it will face challenges such as limited market space and difficulty ensuring profitability, making it harder to attract corporate investment.

Additionally, in H2 2016, the Philippines attempted to reform the mining industry under the guise of environmental protection but ultimately failed. In summary, SMM expects that the bill will face significant challenges in being signed into law.

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