Pax Silica Could Help Philippines Break China Dependence in Nickel Processing

 

The Philippines could use its participation in the US-led Pax Silica initiative to transform its nickel industry from a raw-material exporter into a domestic processing hub, potentially giving the country greater control over the value of one of its most important mineral resources.

Philippine Ambassador to the United States Jose Manuel Romualdez said the initiative could encourage companies to establish processing facilities in the country instead of sending nickel ore overseas, particularly to China.

Romualdez estimated that Pax Silica could generate between $200 billion and $300 billion in investments and create millions of jobs over the next two to three decades if the Philippines successfully develops the necessary industrial capacity.

The opportunity is significant because the country remains heavily dependent on China as a destination for its nickel ore. Research by Climate Rights International and Empower found that at least 92% of Philippine nickel ore shipments between 2020 and 2024 were bound for China.

That concentration gives Chinese buyers considerable influence over the market. Romualdez argued that establishing domestic processing would allow the Philippines to capture more value from its mineral resources while strengthening its bargaining position over prices.

The issue goes beyond mining revenues. Processing nickel domestically could support a broader industrial ecosystem involving refining, manufacturing, logistics, energy and technology, allowing more economic activity to remain within the Philippines.

From exporter to processor

The Philippines ranks among the world's leading exporters of nickel ore, yet much of the country’s mineral wealth leaves its shores in largely unprocessed form.

This arrangement means the country effectively exports the starting material while other nations capture a larger share of the value created through processing and downstream manufacturing.

Romualdez said Pax Silica could help change that model by encouraging investments in local processing facilities. Instead of simply extracting ore and shipping it abroad, the Philippines could develop the capacity to refine and process the resource domestically.

The concept resembles moving from selling raw agricultural produce to developing the factories that turn those commodities into higher-value products. The latter requires greater investment, infrastructure and technical expertise, but it also allows the producing country to retain a larger portion of the economic benefits.

The Philippines has previously considered stronger measures to achieve this goal. A Senate proposal that sought to prohibit raw ore exports by 2030 was significantly weakened in 2025 following opposition from mining industry groups.

Indonesia took a more aggressive route when it prohibited raw nickel ore exports in 2020 to encourage domestic processing. However, the Indonesian experience has also raised concerns that restricting exports alone does not guarantee economic independence, particularly when foreign companies provide much of the capital and technology.

Vietnam likewise moved to restrict raw rare-earth exports in late 2025 as part of efforts to build a more developed domestic supply chain.

Pax Silica carries geopolitical consequences

The economic potential of Pax Silica is closely tied to its strategic purpose.

The initiative is designed to strengthen supply chains for semiconductors and critical minerals while reducing vulnerabilities associated with China's dominant position in several areas of the technology and resource sectors.

That makes the Philippines' participation inherently geopolitical, even as government officials emphasize its potential economic benefits.

Romualdez rejected the characterization that joining Pax Silica automatically forces the Philippines into a zero-sum confrontation between Washington and Beijing. However, he acknowledged that the geopolitical dimension cannot be ignored.

He also pointed to China's activities in the West Philippine Sea as a major consideration in Manila's foreign-policy calculations, arguing that the Philippines has limited room to ignore its security relationship with the United States.

For Manila, therefore, the challenge is not simply choosing between two economic partners. It is determining how to use strategic partnerships without surrendering control over national resources or industrial policy.

Critics warn about who will actually benefit

The proposed economic gains have not eliminated concerns surrounding Pax Silica.

Agricultural organizations have raised objections over the potential impact of the proposed 4,000-acre technology hub in New Clark City, Tarlac, particularly on farming and fishing communities that could be affected by development.

Economist Cielo Magno has also cautioned that domestic mineral processing will not automatically produce a better economic outcome if the Philippines continues to impose comparatively low mining taxes and royalties.

The concern is straightforward: possessing valuable minerals does not necessarily translate into substantial public revenue. If the government lacks the fiscal and regulatory leverage to negotiate favorable terms with investors, a larger processing industry could still leave the state receiving a relatively small share of the wealth generated.

Scientists' group AGHAM has raised another issue, questioning whether Pax Silica provides sufficient guarantees for technology transfer and the development of Filipino technical capabilities.

Without meaningful knowledge transfer, the country could simply replace one form of dependence with another, relying on foreign companies for capital, equipment, expertise and advanced processing technologies.

Manila faces pressure to move quickly

Romualdez said the Philippines cannot afford to approach the opportunity too slowly.

He pointed to Vietnam, Malaysia and Indonesia as potential competitors for projects associated with the initiative, suggesting that other Southeast Asian countries are prepared to offer Washington more attractive conditions.

That competition puts pressure on the Philippine government to determine what it actually wants from Pax Silica before making concessions.

The ambassador said the agreement would likely require legislation, giving Congress an opportunity to scrutinize its provisions before implementation. He added that he has so far seen only a broad framework, with significant details still subject to negotiation.

That legislative process could prove decisive. Congress will have to weigh the prospective investment and employment gains against questions involving resource taxation, environmental safeguards, community displacement, technology transfer and national control over strategic minerals.

Ultimately, Pax Silica presents the Philippines with an opportunity that extends well beyond nickel exports. The central question is whether the country can convert its mineral abundance into a durable domestic industrial advantage.

If Manila succeeds in attracting processing and advanced manufacturing while securing better fiscal terms and meaningful technology transfer, the initiative could help reshape the country's position in the global critical-minerals economy.

If those safeguards are overlooked, however, the Philippines risks remaining primarily a supplier of raw materials while foreign companies capture much of the value created further along the supply chain.