Critical minerals security review

Critical minerals are becoming an important part of the energy security and industrial agenda of ASEAN member states. The region holds substantial mineral resources and is gearing up to rapidly expand processing capacity. These resources are increasingly integrated into clean energy, battery, electric vehicle and advanced manufacturing supply chains. This creates opportunities for investment, exports, employment and local value creation, but also introduces vulnerabilities related to concentrated supply chains, infrastructure and technology dependence, environmental and social performance, volatile markets and changing trade policies.

ASEAN member states have a strong resource base and a growing role in global supply. The region accounts for around 51% of global nickel reserves, 20% of bauxite reserves and 17% of tin reserves, alongside important resources of cobalt, copper and rare earth elements. Indonesia is the world’s largest nickel producer and refiner, accounting for 63% of mined nickel supply and more than 40% of refined output in 2024. The Philippines is another major nickel producer, while Myanmar and Lao People’s Democratic Republic are important rare earth suppliers. Malaysia hosts the largest rare earth processing facility outside the People’s Republic of China (hereafter, ‘China’), and several ASEAN member states manufacture electronics, solar PV, batteries and electric vehicles.

Production and processing are expected to expand, but unevenly. Mined output from ASEAN member states of cobalt, copper, nickel and rare earths is projected to increase by a weighted average of around 30% by 2035 under current policies and announced projects, although copper mining is expected to decline, in a stark contrast to highly increasing copper demand globally by 2035. Refined output of critical minerals could rise by a weighted average of around 130%, led by Indonesian nickel and rapid growth in cobalt and rare earth refining. Indonesia’s restrictions on unprocessed mineral exports have encouraged domestic smelter investment, while regional battery-cell manufacturing capacity could rise from 26 GWh in 2024 to more than 80 GWh by 2030.

Resource endowment alone does not ensure supply-chain security. Many ASEAN economies remain dependent on imported processing equipment, refining technologies, precursor materials, magnets, battery components and specialised manufacturing inputs. Global processing is highly concentrated in China, and export controls affecting rare earths, magnets and battery supply chains have shown how quickly disruption can affect automotive, electronics, energy and digital industries. Even locally manufactured products may therefore remain exposed to disruption caused by external suppliers and technology decisions, calling for a more global approach to mid and downstream diversification.

Concentrated investment and trade relationships create additional risks. An estimated 75% of Indonesia’s nickel refining capacity is linked to investment from Chinese companies, while Indonesian companies own only a small share; and as much as 98% of nickel processed in Indonesia is exported to China. Additionally, the Philippines sends most of its nickel ore exports to China. These relationships have supported rapid development, but dependence on a limited group of investors, technology providers and offtakers can increase exposure to external market conditions. ASEAN member states should diversify partnerships while building domestic skills, supplier networks, research capacity, management expertise and mechanisms for technology transfer.

Energy, infrastructure and input constraints can undermine resilience and competitiveness. Mining and processing require reliable power, ports, transport and water systems. Indonesian nickel refining is closely linked to captive coal-fired power, increasing emissions and potential exposure to carbon-related trade measures and financing constraints. High-pressure acid leaching also depends on imported sulphur and sulphuric acid: Indonesia sources around three-quarters of its imported sulphur from the Middle East, making nickel production vulnerable to maritime disruption and price spikes. Diversifying key inputs, improving logistics and expanding access to affordable lower-emissions electricity can strengthen both security and market access.

Responsible development is essential for durable supply. Mining and processing can affect land, water, biodiversity, coastal livelihoods and local communities. Weak environmental and social management can undermine public acceptance, restrict access to finance and cause permitting delays or project disruption. Clear, predictable permitting; effective safeguards; meaningful community engagement; and compliance with national requirements, including free, prior and informed consent where applicable, are therefore central to supply security. The ASEAN Principles for Sustainable Minerals Development provide a common foundation for improving performance.

Regional co-operation can turn diverse strengths into more resilient value chains. Mineral endowments and industrial capabilities differ across ASEAN member states: some specialise in mining or processing, others in manufacturing, finance, trading or logistics. The ASEAN Minerals Development Vision and the 4th ASEAN Minerals Cooperation Action Plan 2026-2030 provide a framework for collaboration. Priorities include better geological and market data, shared standards, responsible mining and processing, workforce development, investment facilitation, recycling and circular economy measures, and stronger links between upstream resources and regional manufacturing. Partnerships with external economies will remain important, but a regional dimension can aggregate projects, increase scale and diversify risks to boost revenues and strengthen resilience.

To ensure adequate critical mineral resources, the priority is to capture greater value while reducing external dependencies. Each member state should develop a critical minerals strategy based on its comparative strengths, vulnerabilities and realistic position in regional and global value chains. Policies should align mining, industrial, trade, energy and infrastructure planning; avoid relying solely on export restrictions; and support commercially viable processing and manufacturing where ASEAN member states can compete. Governments should diversify investors, suppliers and export markets, strengthen environmental and social governance, improve data and transparency, expand recycling and support lower-emissions production. Together, these measures can help ASEAN member states become reliable suppliers of responsibly produced minerals and materials while protecting their own energy and manufacturing industries from disruption.