Global nickel markets are facing severe headwinds, with prices having halved since 2022 amid persistent oversupply of both Class 1 and Class 2 refined nickel. Stainless steel prices are also falling, compounding pressure on a sector where steel production remains the primary driver of nickel demand. Yet the long-term outlook presents a contrasting picture: absolute demand for nickel-based cathodes is growing rapidly alongside the electric vehicle market, with industry forecasts projecting that batteries will account for 40% of total nickel demand by 2040, up from 24% today.
Against this volatile backdrop, a new report published by the Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development (IGF), titled Developing Sustainable Nickel-Based Battery Value Chains in Indonesia and the Philippines, argues that both nations must urgently recalibrate their policy frameworks to attract investment and secure their position in the battery supply chain of the future. Indonesia and the Philippines together account for approximately 70% of global nickel mining output, making their policy choices consequential not only domestically but for the entire global critical minerals landscape. According to the IGF report, achieving the right balance between investor protection and policy flexibility will be central to navigating this inflection point.
One of the report's most striking findings concerns the severe mismatch between production and exploration investment. As of 2024, Indonesia accounted for 59% of global nickel output but attracted only 3% of global nickel-focused exploration spending. The Philippines produced 9% of global output while capturing just 2% of exploration spending.
Both countries are currently receiving far less exploration investment than at their respective peaks, recorded in 2010 for Indonesia and 2011 for the Philippines. The IGF warns that declining ore grades, rising production costs, and an oversupplied market are discouraging the very exploration investment that would secure the resource base both countries will require over the next decade. The report recommends expanding geological surveys, improving public access to geoscience data, streamlining licensing procedures, and introducing targeted fiscal incentives such as accelerated depreciation or exploration tax credits.
Canada is cited as a proven model, where flow-through share financing now accounts for close to 70% of all funds raised on Canadian stock exchanges for mineral exploration. On the investment climate more broadly, the IGF stresses that nickel mining, refining, and battery-related industries require large, long-term capital commitments that are highly sensitive to regulatory uncertainty. Frequent shifts in export restrictions, royalties, taxes, and local content rules raise investor risk, delay projects, and can reduce competitiveness relative to other emerging critical mineral producers.
The report points to international guidance from the Organisation for Economic Co-operation and Development's Guiding Principles on Durable Extractive Contracts and the IGF's own report on Evolving Standards on Stabilization as useful reference frameworks for governments seeking to strike the right regulatory balance. Strengthening investor confidence, however, does not mean weakening environmental, social, and governance standards. The IGF report identifies tailings and mine waste management, water management, industrial decarbonization, biodiversity protection, and land-use planning as key areas for improvement in both countries.
Alignment with international ESG standards is described as increasingly important for export competitiveness, as global automakers and battery manufacturers intensify scrutiny of supply chain traceability and carbon footprint. The report concludes with a strong call for regional coordination through the Association of Southeast Asian Nations (ASEAN). It identifies concrete opportunities to move beyond cooperation on mineral trade toward genuinely integrated value chains, including shared geological data systems, harmonized ESG and reporting standards, pooled technical training and research and development centres, coordinated infrastructure and energy planning, and joint recycling systems for end-of-life batteries.
The IGF argues that building out the ASEAN Minerals Information System and accelerating implementation of the ASEAN Minerals Exploration Strategy remain underused priorities with significant potential. According to the IGF, national reforms give Indonesia and the Philippines the tools to develop domestic industrial capabilities, while regional coordination could transform those tools into a stronger competitive hub, positioning ASEAN as a key integrated player in the next generation of sustainable battery and clean energy supply chains. Source: Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development (IGF), report Developing Sustainable Nickel-Based Battery Value Chains in Indonesia and the Philippines, published August 2026.
Source: igfmining.org