AT its annual meeting held last week in Samarkand, Uzbekistan, the Asian Development Bank (ADB) announced the launch of a new financing facility designed “to help countries in Asia and the Pacific develop critical minerals supply chains needed for clean energy, batteries, electric vehicles and digital technology,” according to its press release. Given its tremendous potential for economic development through cultivating its mineral sector, the Philippines should immediately take advantage of the new ADB program.
The new funding facility is called the Critical Minerals-to-Manufacturing Financing Partnership Facility, and ”is intended to move the region beyond mining and into higher-value industries such as processing, manufacturing and recycling. The facility will help prepare projects, reform policies, and support public investment and private financing across critical minerals value chains,” ADB has explained. It consists of two main parts, a grant window, and what ADB calls a “catalytic finance window.”
The grant window has been initially funded by the government of Japan, which has committed $20 million, and the government of the United Kingdom, which has contributed an additional $1.6 million. The intent of the grant window is to fund early project work on mining and processing, including feasibility studies, environmental and social assessments, technical assistance and knowledge-sharing.
The catalytic finance window, which will provide loans for actual project development, is designed to leverage co-financing and risk-sharing from other financing partners. The first two partners, also announced during the Samarkand meeting, are the Korea Export-Import Bank and the Korean Trade Insurance Corp., known as K-SURE, which each signed a $500 million memorandum to support the initiative. This brings the total initial funding for the partnership facility, not counting ADB’s own committed resources, which have yet to be disclosed, to more than $1.2 billion.
ADB is currently supporting a number of related projects and technical assistance initiatives, which will continue alongside new initiatives under the partnership. These include a program to help the Philippines develop a critical minerals road map and regulatory reforms; battery manufacturing and recycling in India; geological data mapping in Mongolia; a critical minerals strategy in Kazakhstan; and artificial intelligence-driven critical minerals production in Uzbekistan. Along with these, ADB has also been developing a Critical Minerals Database to improve information on critical minerals supply chains and support better policy coordination.
This matters to the Philippines, because even though mining and minerals processing is a controversial subject due to its environmental and social risks, the country undeniably has opportunities for high-value and badly needed industrial expansion if these risks can be responsibly managed. The Philippines has substantial reserves of copper and nickel, as well as cobalt and smaller amounts of other minerals. Demand for all of these is growing rapidly due to their use in green technology, including batteries, electric motors and components for wind, solar and other renewable energy technologies. The Philippines is benefiting from the expanding demand, but only in a modest way, because at this point, we only export raw ore to be processed elsewhere. With the support of ADB through the Critical Minerals-to-Manufacturing Financing Partnership Facility, it becomes possible to develop other parts of the supply chain and capture the value from minerals processing, and ideally, component manufacturing.
There are three other highly positive aspects to the opportunity presented by the new ADB facility. First, because it is being managed by a relatively agnostic multilateral institution, the Philippines has the chance for independent development of the critical minerals sector, free from geopolitical linkages that may prove problematic. Recently, it was announced that the Philippines had joined the so-called Pax Silica initiative of the United States government, which would, at least hypothetically, accomplish many of the same things under the new ADB facility. However, Pax Silica is designed to support American industrial and supply chain needs, which, while still offering some substantial opportunities for the Philippines, automatically cuts off the Philippines from other potentially lucrative markets. Using ADB support to chart our own destiny with our nation’s mineral wealth is a far better option.
Second, because the funding is being managed by ADB, it will be subject to ADB’s strict standards regarding environmental management, care for local communities and Indigenous people, and transparency in contracting. The Pax Silica initiative, at least at this point, guarantees none of those things.
Finally, there is the not-insignificant reality that the ADB partnership facility is available now, whereas the US alternative still only exists as a noncommittal memorandum of agreement. If the Philippines so desired, it could get started on its critical minerals strategy tomorrow with an email to ADB; with the Pax Silica, progress must wait for the attention of a capricious and distracted government, which may take months or years.
