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For many years, Indonesia has been China's leading supplier of nickel ore. Looking back at 2013, more than 40 million tons of nickel concentrate imported by China came from Indonesia, accounting for 57% of total imports. However, in 2014, the Indonesian government issued an export ban, causing nickel ore exports to plummet to almost zero, a move that plunged China's stainless steel and power battery industries into a supply crisis.
With supplies constrained from Indonesia, China turned to the Philippines to fill the supply gap for nickel ore. The Philippines is gradually replacing Indonesia as China's main supplier of nickel ore. But is this dependence on the Philippines safe?
First, we need to consider the global distribution of nickel reserves. According to 2020 data from the US Geological Survey, global nickel reserves are 94 million tons, of which Indonesia, Australia and Brazil account for up to 60%. Although Indonesia is the most reserve-rich, other countries such as Australia and Brazil have lower reserves and are expensive to extract. Countries such as Indonesia, the Philippines and Russia account for 56% of global nickel production.
Considering the high demand for nickel in the stainless steel and battery industries, China, as the world's leading producer in these two sectors, will continue to increase its demand for nickel. However, China's nickel resources are relatively scarce, accounting for less than 3% of the world's reserves.
In order to meet the growing domestic demand for nickel, China has had to rely heavily on imports, especially laterite nickel ore from countries such as Indonesia and the Philippines. But external imports are not only expensive, but also subject to the policies of other countries. For example, in 2014, the Indonesian government banned the export of raw minerals, allowing only processed minerals. This policy has resulted in Indonesia's nickel ore exports being almost zero, forcing China to turn to the Philippines to fill the supply gap.
However, there are also risks associated with relying on the Philippines. First, there may be changes in Philippine policy, leading to supply disruptions. Second, the Philippines' political relations with China are unstable, with conflicts and diplomatic tensions. Coupled with the stationing of US troops in the Philippines, the United States has influence and say over this military ally.
In order to wean itself off its dependence on foreign nickel ore supplies, China has taken a series of measures. Wenzhou businessman Xiang Guangda's investment in the nickel mining industry solved the nickel supply problem for China. He not only purchased overseas nickel mines, but also developed efficient nickel smelting technologies such as high-pressure acid leaching and high-ice nickel processes, enabling China to become self-sufficient and make an impact in the global nickel market. These technological breakthroughs have changed China's position in the nickel industry, from a passive buyer to a leader.
All in all, China has made significant progress in dealing with nickel ore supply and is no longer at the mercy of external suppliers. Through technological innovation and overseas investment, China has successfully secured its position in the global nickel market, which is a key factor in China's economic development.
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