The Filipino government is contemplating a 10% export tax on nickel ores in an attempt to push miners to invest in local processing.

The Philippines is the world’s second-largest nickel ore producer after Indonesia, accounting for 14% of the global total in 2021. Here, nickel mining is all in the form of laterites and, for the most part, shipped to China for use in its nickel pig iron (NPI) industry. Since Indonesia banned nickel ore exports in 2014, the Philippines now accounts for over 80% of China’s nickel ore imports. Currently, the only value-added products in the Philippines are produced at SMM’s Coral Bay and Taganito high-pressure acid leach (HPAL) plants, which produce mixed hydroxide precipitate (MSP) used in SMM’s nickel sulphate operations in Japan.

The Philippines is now hoping to move on from the adversity that the domestic nickel industry has faced over recent years. In 2016, the head of the Philippines Department of Environment and Natural Resources (DENR), launched an environmental audit of the mining industry which resulted in the permanent closure of a large number of the country’s nickel mines. By December 2021, however, Philippines president Rodrigo Duterte overturned the decision for mining closures, paving the way for the country to grow its nickel mining industry.

Eager to replicate the success of Indonesia, the Philippines is now pushing to incentivise investment in domestic downstream nickel processing capacity and to play a major role in supplying upcoming demand from the EV battery sector. Indonesia, however, took a much larger gamble in 2014 by implementing an outright ban on nickel ore exports. Having successfully navigated the risk, it is now reaping the rewards with an integrated stainless steel industry and the construction of half a dozen HPAL plants to supply the EV battery industry.

Even with the potential benefits of an export tax, not all industry participants in the Philippines see the merits, and the proposal prompted a warning from a member of the Philippine nickel mining industry saying that the move would “…kill the industry”.

It's clear that the Philippines government will have to balance the potential long-term success with near-term unpopularity of local miners. No date has been set for when a decision could be made, but the country is keen to make its move soon