Killing exports, under(mining) growth
In 2003, Benin self-imposed a ban on shrimp exports to the European Union to boost local processing. The result? The industry collapsed—fishermen and traders were pushed out of business, and even after the ban was lifted, the sector couldn’t recover. Why? A lack of investment, infrastructure, and alternatives.
Today, the Philippines is eyeing a raw mineral export ban under Senate Bill No. 2826, hoping to replicate Indonesia’s strategy. But Benin’s cautionary tale shows just how easily such policies can do more harm than good. Sen. Francis Escudero cites Indonesia’s raw nickel export ban as a success story. The rationale is clear: banning exports would spur local processing plants and generate more value-added exports.
However, this overlooks a crucial difference: Indonesia implemented its ban after laying the groundwork for robust mining infrastructure and securing foreign investments—advantages the Philippines currently lacks. The Philippine Nickel Industry Association highlights that Indonesia has 10 times more nickel reserves and enjoys enhanced permitting, or the process of obtaining necessary authorizations from regulatory bodies before commencing any mining-related activities. It also has advanced infrastructure and attractive tax policies.
Indonesia’s ban followed a decade of preparatory policies alongside Chinese-backed industrial parks in Morowali and Weda Bay. If the ban is imposed, the Philippines may face trade issues. In 2022, the World Trade Organization (WTO) ruled that Indonesia’s ban violated the 1994 General Agreement on Tariffs and Trade. Now on appeal, the case sets a precedent. Recently, the WTO revealed that Japan and the UK raised the Philippines’ proposed ban as a trade concern.
Energy and environmental problems are other factors to consider. Indonesia’s nickel plants rely heavily on coal, leading to pollution. The Philippines, with high electricity rates and limited affordable renewable energy, will have no choice but to also rely on coal. This makes setting up nickel plants economically unviable and environmentally hazardous. Moreover, Indonesia’s success in its nickel ban is now backfiring as rapid expansion in nickel production has led to a significant oversupply, causing global nickel prices to plummet, and prompting it to consider cutting mining quotas by 40 percent in 2025.
While banning raw exports could boost local processing, they are a critical revenue stream. In 2024, the Philippine metallic production hit P252.9 billion, with P56.7 billion from nickel ore alone. The country currently benefits from Indonesia’s increased reliance on imported ore—with 97 percent coming from the Philippines.
The country is just one player in a competitive global market. A premature export ban without alternatives could cost the Philippines its market share and reputation. Nickel ore output is expected to recover this year, fueled by Indonesia’s ore shortages as a result of government licensing issues and by steady demand from China. The Chamber of Mines of the Philippines forecasts demand to rise by about 82 percent by 2030 and 149 percent by 2040. Failure to meet this demand could quickly shift buyers toward more capable suppliers, such as Brazil and New Caledonia.
Rather than emulate Indonesia’s approach uncritically, the Philippines would do well to pursue a more calibrated path. Australia offers a compelling example: it has maintained its position as a leading nickel exporter while fostering domestic processing. Even amid low prices, it has resisted the impulse to impose bans, opting instead to back domestic refineries and streamline development.
The proposed ban is overly ambitious and ill-timed. The Philippines must first invest in infrastructure, technical upskilling, and regulatory reform. Tax incentives and reduced energy costs can attract investment in processing without sacrificing short-term revenue. The Philippines should also capitalize on possible mineral partnerships with other countries and maximize regional collaboration through the Asean Minerals Cooperation Action Plan adopted in 2005.
As we consider the future of the Philippines’ mining sector, the key question is: Can we afford to impose restrictions that undermine the very industries we seek to protect, or should we invest in long-term strategies that secure sustainable growth? The raw materials are here—but our success will depend on smart, strategic choices.
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Carlo A. Matilac is operations head at Global Ferronickel Holdings, Inc. (FNI). A mining engineering licensure exams topnotcher, he also holds a Master’s in Business Administration. Reeno E. Febrero and Leo Ernesto Thomas G. Romero, both CPA-lawyers, lead FNI’s tax group. Reeno is completing his Master of Laws at the University of the Philippines while Leo is pursuing his Master of Science in Financial Technology at the Asian Institute of Management.
