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ASEAN's strategic role in securing critical minerals

ASEAN nations hold significant reserves, production capacities and processing facilities that support the global economy.

Han Phoumin (The Jakarta Post)
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Jakarta
Mon, December 16, 2024

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ASEAN's strategic role in securing critical minerals Nickel smelter chimneys spew a column of emissions on July 7, 2024, into the air above the Indonesia Weda Bay Industrial Park in Lelilef, North Maluku. (AFP/Azzam Risqullah)

T

he demand for critical minerals is projected to increase significantly, from 7.1 million tonnes in 2020 to 42.3 tonnes by 2050. This surge is driven by the global commitment to decarbonize emissions in response to the Intergovernmental Panel on Climate Change's warnings about the severe consequences of climate change.

Achieving the climate goals outlined in the Paris Agreement, an international treaty with a legally binding commitment to keep the global temperature rise well below 2 degrees Celsius and to strive for less than 1.5 degrees above pre-industrial levels, hinges on how effectively countries manage the energy transition. This transition requires political commitment to implement policies that transform energy infrastructures from business-as-usual to clean, sustainable systems, where clean fuels and renewables play a key role.

However, scaling up clean and renewable technologies requires vast amounts of critical minerals, also known as rare earth elements (REE), which are essential for producing technologies such as wind turbines, battery storage, electric vehicles, electrolyzers, smart grids, telecommunications infrastructure and semiconductors. These technologies are central to the global transition to clean energy, prompting Southeast Asian nations to secure a long-term, stable supply chain of critical minerals.

Yet, ensuring a stable and sustainable supply chain faces multiple challenges, including geopolitical risks, environmental concerns and infrastructure limitations. ASEAN countries, including Indonesia, the Philippines, Vietnam and Malaysia, are crucial to the global supply of critical minerals. These nations hold significant reserves, production capacities and processing facilities that support the global economy.

Indonesia, a major producer of nickel, holds about 25 percent of the world's nickel reserves. In 2020, the country produced 760,000 tonnes of nickel and is focusing on expanding downstream industries such as refining and electric vehicle (EV) battery production. The Philippines, the world's second-largest nickel producer, contributed approximately 280,000 tonnes of nickel in 2021, along with significant quantities of copper, gold and other critical metals for electronics and renewable energy technologies.

Vietnam has substantial reserves of tungsten and rare earth elements, though production and refinement are still in the early stages. Malaysia plays a key role in rare earths processing, while Thailand, though smaller in the critical minerals sector, has notable tin reserves and a growing electronics manufacturing base.

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Despite ASEAN’s mineral abundance, the global critical minerals market is heavily influenced by geopolitical factors, especially the tensions between China and the United States. China controls about 80 percent of the global rare earths refining market, making ASEAN nations highly dependent on China for REE supply. Environmental concerns also present significant challenges for Southeast Asian nations, given the impact of mining and processing critical minerals

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