Critical minerals in Southeast Asia and India

3. National and sectoral policies for critical mineral development

3.1. Regional policy landscape in ASEAN

ASEAN has continually expanded its policy focus on mineral development, moving from cooperation on extractive industries to the broader governance of critical-mineral value chains.

ASEAN formalised regional collaboration on mineral development in August 2005, when Ministers endorsed a Ministerial Understanding on ASEAN Cooperation in Minerals. This initiative followed a directive from the ASEAN Summit to strengthen cooperation in the sector. The agreement laid the foundation for future joint action, with objectives to:

• strengthen the role of the mineral sector as a driver of economic growth and social progress across ASEAN;

• facilitate trade and investment flows within the regional minerals industry; and

• advance mineral development that is environmentally sustainable and socially responsible (ASEAN, n.d.[26]).

Since 2005, the ASEAN Ministerial Meeting on Minerals (AMMin) and the ASEAN Senior Officials Meeting on Minerals (ASOMM) serve as the main institutional pillars for policy coordination. ASEAN’s strategic approach to critical minerals is outlined in their ASEAN Minerals Development Vision (AMDV), which is then realised through successive five-year ASEAN Minerals Cooperation Action Plans (AMCAP), led by the Working Group on Sustainable Minerals Development (WGSMD).

The previous AMCAP III (2021-2025) delivered substantial progress across ASEAN minerals cooperation. A major key achievement of AMCAP III was the launch of ASEAN Principles for Sustainable Minerals Development in 2023 which provides a foundation for advancing effective mineral governance and ensuring sustainable and inclusive economic outcomes. At the October 2025 ASEAN Summit, the ASEAN Minerals Development Vision was adopted, which builds on principles established in 2023, laying out a vision to position ASEAN as a leading destination for sustainable and technologically advanced minerals investment through construction of production facilities and promotion of sound governance. AMCAP III also led to other notable policy achievements such as the 2023 Declaration on Promoting ASEAN as an Investment Destination for Sustainable Minerals Development, the endorsement the first ASEAN Minerals Exploration Strategy, and the launch of the first annual ASEAN Minerals Forum in 2024 (ASEAN, 2025[27]).

The current AMCAP IV (2026-2030) seeks to use the Principles for Sustainable Minerals Development and the ASEAN Minerals Development Vision established under AMCAP III, to offer a more coherent unified set of strategies and activities to guide ASEAN initiatives and align with objectives within ASEAN’s broader ASEAN Economic Community Strategic Plan 2026-2030. AMCAP IV has four key programmes areas, namely:

• Trade and Investment in Minerals – which aims to strengthen trade and investment related frameworks and strategies.

• Sustainable Minerals Development – which seeks to improve governance and advance sustainable minerals development principles.

• Capacity Building in Minerals – which has the goal of strengthening human, institutional, and technical capacities across minerals governance, technologies, R&D and innovation.

• Minerals Information and Database – which aims to improve the quality and availability of minerals data in ASEAN through knowledge management and data collection protocols.

AMCAP IV also continues to build off existing ASEAN initiatives, including the Programme on Improving ASEAN Capacities in Mineral Governance; the ASEAN Minerals Exploration Strategy; and the enhancement of the ASEAN Minerals Information System.

ASEAN’s critical mineral approach remains varied, with member states pursuing diverse national strategies: some, like Indonesia, prioritising value addition through export bans, domestic processing and downstream industrialisation; others, like Malaysia, focusing on attracting FDI into downstream sectors.

3.2. National policies frameworks

3.2.1. Indonesia

Indonesia’s regulatory framework for extracting and processing minerals is highly centralised, with the government owning all mineral rights and setting production quotas to manage mining output. The state grants mining business permits or special mining business permits to Indonesian companies through a bidding process, with foreign companies being required to enter into joint ventures with Indonesian companies in order to receive a permit (Mining Transparency, 2025[28]). The impact of this regulatory framework has been a business environment with a significant number of joint ventures.

Indonesia’s 2009 Mining Law and subsequent amendments underpin its strategy of resource-based industrialisation. The government since the 2010s has progressively banned exports of unprocessed nickel, bauxite and copper (see Section IV and Box 4.1 below). These export restrictions were coupled with investment incentives, compelling investors to establish smelters and processing facilities that produce high-value products like ferronickel, nickel matte and battery precursors. Investment into these downstream projects was largely driven by Chinese state-supported investment, due to the high capital intensity and volatility of these projects deterring other investors (Andrenelli et al., 2025[29]). By 2024, Indonesia operated 44 nickel-processing plants – 34 Rotary Kiln Electric Furnace smelters for the production of nickel pig iron and stainless steel and 10 High-Pressure Acid Leach facilities, which processes lower-grade limonite into mixed hydroxide precipitates used for EV battery manufacturing – cementing its position as the world’s leading nickel refiner (Figure 7) (Subarna, 2024[30]). The surging number of nickel refinery facilities also leads to the import of nickel ore from other countries. In 2023, Indonesia imported 374 468 tonnes of nickel ore, valuing USD 16 million, from the Philippines (World Bank, n.d.[15]).

The government complements this approach with fiscal incentives, state-owned enterprise participation and dedicated industrial parks such as the Indonesia Morowali Industrial Park. The strategy explicitly links upstream mining to the development of EV-battery manufacturing and renewable-energy industries.

Figure 7. Indonesia's nickel production far outpaces other countries

(Nickel production by country, in metric tonnes, thousands)

Source: (Financial Times, 2024[31])

Box 2. Indonesia’s downstream push in the nickel sector

Across many critical mineral-producing countries, export restrictions on upstream products (i.e. ore and minerals) are being used to promote the development of domestic downstream industries (see Section IV). Indonesia provides a prominent example of this approach in the nickel sector, where policy measures have sought to leverage export bans to foster investment in processing capacity.

Recent case studies on the economic effects of export restrictions in Indonesia indicate that potential domestic benefits from such measures often coincide with costs for trading partners (OECD, 2025[23]). In Indonesia, export bans on primary nickel were associated with a re-orientation of exports toward domestic processing and correlated with investments in downstream capacity, which in turn coincided with increases in downstream production and value addition. However, these downstream gains tended to be concentrated in the immediately adjacent processing stages and frequently involved substantial participation by foreign investors, many of whom were already active in these segments prior to the restrictions. Market participants note that the high capital intensity and volatility of these projects made them difficult for some commercial financiers in OECD countries to underwrite, relative to state-backed investors from countries such as China (OECD, 2025[22]). As a result, Chinese firms became the largest investors in Indonesia’s nickel processing sector, responsible for building 90% of the country’s nickel smelters (CSIS, 2024[33]).

3.2.2. Philippines

The Philippines mining framework is less centralised, with the central government making high-level decisions and holding permitting authority while regional/local entities playing supportive administrative roles – such as processing applications and conducting inspections. Ownership rules for production facilities are somewhat flexible, with rules requiring that mining companies either be at least 60% locally-owned or that foreign owned companies enter into Financial or Technical Assistance Agreements with the government, requiring a minimum investment of USD 50 million (Government of the Philippines, 2026[32]).

In early 2023, the Philippine government considered imposing an export ban on unprocessed minerals, following Indonesia’s example. The proposal was ultimately withdrawn after strong opposition from the mining industry, which warned of potential negative impacts on investment and operations. The government has since shifted its focus toward promoting a “China-free” nickel supply chain to attract investment from the United States and other like-minded partners – a strategy that could also introduce new geopolitical complexities as countries compete for similar resources and industrial capacities (Financial Times, 2024[31]).

As the world’s second-largest nickel producer, the Philippines government is positioning itself as an alternative to China’s dominant role in the global battery-materials market. The government recently signed an MoU with the United States to cooperate on diversify global critical mineral supply chains and is actively exploring ways to court foreign investment in refining capacity to support the development of domestic value chains (Embassy of the Philippines, 2026[33]) (Financial Times, 2024[31]). Although the country’s nickel output remains far below Indonesia’s, growing concerns over supply concentration and price volatility are prompting buyers to diversify sourcing. Interest from the United States, United Kingdom, Australia, Japan and Korea reflects a broader shift among advanced economies seeking more secure and diversified access to critical minerals (Financial Times, 2024[31]).

To further cement itself as an alternative to Chinese and Indonesian nickel suppliers, the Philippines government is promoting plans to produce “greener” nickel by powering smelters with renewable energy sources. Current proposals include expanding hydro, solar, wind and natural gas generation to reduce energy costs and distinguish Philippine production from Indonesia’s coal-reliant industry. However, financing new refining capacity remains challenging in a low-price environment, and the country currently operates only two processing plants, both run by Nickel Asia Corp. in partnership with Japan’s Sumitomo Metal Mining (Financial Times, 2024[31]). High environmental and social costs also constrain expansion prospects. Downstream projects are increasingly subject to scrutiny and delays due to local opposition, particularly in sensitive ecosystems such as Palawan, where mining operations have triggered community backlash, health concerns and temporary moratoriums on new licences (France24, 2025[34]).

3.2.3. Viet Nam

Viet Nam is actively developing its rare-earth strategy with a clear emphasis on international partnerships and policy reforms. The government is placing the Dong Pao mine at the centre of its plans, offering new concessions to foreign investors in joint ventures.

Beyond mining, Viet Nam is courting magnet and component manufacturers. Companies from South Korea, China, and Western markets are entering Viet Nam to build magnet factories, anticipating local supply of rare-earth oxides. This helps to connect Viet Nam’s upstream production to downstream technology value chains.

To illustrate, South Korea’s and Viet Nam’s Ministries of Industry recently signed an MoU together, paving the way for a five-year Official Development Assistance programme to establish a Korea–Vietnam Critical Minerals Supply Chain Center that will coordinate mining, refining, and downstream development (Korea Times, 2025[35]). This centre aims to reduce Korea’s dependence on Chinese rare earth imports (which were ~95 % in 2023). As part of this push, Korean industrial players like LS Cable & System are establishing infrastructure in Vietnam to mine and refine rare earths for direct supply to Korean automakers (Rare Earth Exchanges, 2025[36]).

Geopolitically, Viet Nam is navigating a delicate balance, trying to position itself as a reliable partner and supplier across the board. For instance, in January 2026 Viet Nam signed a Comprehensive Strategic Partnership with the EU to strengthen and expand trade and investment opportunities in a variety of areas, including critical minerals (S&P Global, 2026[37]).

3.2.4. India

India’s mineral policy framework has undergone significant reform in recent years. The government replaced the National Mineral Policy (NMP) 2008 with the NMP 2019, aiming to substantially increase the mining sector’s contribution to GDP and in 2024 launched the National Critical Mineral Mission.

The NMP 2019 focuses on strengthening the domestic mining industry and reducing import dependency while ensuring a balanced distribution of mineral resources. It places strong emphasis on environmentally sustainable mining, active stakeholder participation (including communities affected by mining) and the creation of a more predictable and efficient regulatory framework to improve the ease of doing business.

Building on these foundations, the Government of India launched the National Critical Mineral Mission in the Union Budget 2024 to strengthen the country’s strategic capabilities in critical mineral supply chains (see also Section I). The mission prioritises technology development, workforce training, extended producer responsibility, and the creation of financing mechanisms to support domestic production, recycling, and overseas acquisition of critical minerals such as lithium, copper, cobalt, and rare earth elements. To enable this, customs duties on 25 critical minerals will be fully exempted, while duties on graphite and silicon will be reduced to 2.5%, measures aimed at lowering input costs, enhancing value addition, promoting export competitiveness, correcting inverted duty structures, and boosting domestic manufacturing (India Ministry of Finance, 2024[38]).

The NCMM is also closely aligned with India’s climate goals: reducing the emissions intensity of GDP by 45% by 2030 (compared with 2005 levels), generating 50% of electricity capacity from non-fossil sources by 2030, and achieving net-zero emissions by 2070. To achieve these climate goals, the NCMM plays a vital role by building a resilient and self-reliant ecosystem for critical minerals. The mission focuses on boosting domestic production, encouraging private sector participation, strengthening international partnerships, and streamlining regulations to ensure a steady supply of minerals essential for clean energy technologies (Ministry of Mines, 2025[39]).

Recent announcements as part of the Union Budget 2026-2027 are looking to massive expand India’s role in Rare Earth Permanent Magnets. Dedicated rare Earth corridors in regions of Odisha, Kerala, Andhra Pradesh, and Tamil Nadu have been announced to promote mining, processing, research, and manufacturing of REPM, with INR 72.8 billion being allocated to build India’s manufacturing capacity for REPM. Additionally, tariffs were removed from all processing machinery for rare earth elements and tax deductions for critical minerals prospecting was expanded for nine additional types of critical minerals.

3.3. Policies along the critical-mineral supply chains

3.3.1. From mining to processing: Building domestic value addition

A central focus for ASEAN is to capture more value from their mineral endowments by developing mid-stream processing. Indonesia leads this effort through its extensive network of nickel refineries and industrial parks integrating smelting with precursor production for EV batteries. Malaysia and Viet Nam are strengthening aluminium, copper and tin refining capacities, while the Philippines is planning HPAL plants for nickel and cobalt with Japanese and Australian partners.

These policies respond to growing global demand for battery-grade materials and the need to mitigate exposure to commodity-price volatility. However, constraints remain: technology transfer, high capital costs, and compliance with ESG standards all determine how effectively these economies can move beyond raw-material exports.

3.3.2. Downstream industrial development: Clean-technology manufacturing

Developing downstream industries has become a strategic priority for linking mineral resources to the broader economic development. Southeast Asia plays a crucial role in the global solar photovoltaic value chains. Malaysia and Thailand host significant photovoltaic (PV) manufacturing capacity: Malaysia specialises in polysilicon and PV modules, while Thailand focuses on silicon wafer and assembly production.

Figure 8 showcases the supply chain industries capacity in ASEAN, where Malaysia dominates the upstream segment. Viet Nam has emerged as a key player in the downstream PV value chains, particularly in the production of solar cells and modules. Viet Nam's competitive labour market and supportive policies have allowed it to become a manufacturing hub for renewable energy technologies (ClimateWorks, 2024[40]).

Figure 8. Photovoltaics industry supply chain

Source: (SinoVoltaics, 2024[41])

Production capabilities are driven largely by Chinese-headquartered PV manufacturers investing in and establishing subsidiaries or joint ventures in ASEAN, alongside growing regional demand for solar deployment.

3.3.3. EV and battery value chains

Electric vehicles illustrate the convergence of industrial, trade and mineral policies. They represent the most dynamic downstream segment linking critical minerals to end-use manufacturing and the clean-energy transition. Rapidly growing demand across advanced and emerging economies is transforming EVs into a key driver of industrial competitiveness and supply-chain restructuring. While the United States and the European Union remain major markets, Southeast Asia’s EV sales are projected to reach 8.5 million units by 2035, underscoring the scale of future opportunities (ASEAN-UNCTAD, 2023[42]).

Investment trends reflect this momentum. In 2022, ASEAN attracted USD 18.1 billion in EV-related foreign investment, a 570% increase from the previous year, with greenfield FDI in battery production rising by 656%, from USD 1.2 billion in 2021 to USD 8.4 billion (ASEAN-UNCTAD, 2023[42]). This surge has helped position Southeast Asia as a key manufacturing base for both components and finished vehicles and is accelerating the integration of ASEAN economies into global EV value chains.

Countries across the region are pursuing strategies to capture segments of this rapidly expanding industry. Indonesia is seeking to build a fully integrated EV ecosystem, leveraging its vast nickel reserves and domestic processing capacity to anchor upstream-to-downstream production. Thailand has emerged as a leader in EV assembly, supported by targeted fiscal incentives and robust industrial infrastructure. The National Energy Plan (2023) and Thailand EV 3.5 Scheme offer tax holidays and import-duty exemptions for companies manufacturing EVs, batteries and related components domestically. This strategy aims to position Thailand as a regional hub for EV assembly and component manufacturing, sourcing key battery materials from regional suppliers while strengthening links with Japanese, Korean and Chinese investors.

Malaysia and Viet Nam are expanding their roles in electronics and battery-component manufacturing, while the Philippines is enhancing its assembly capabilities to enter regional supply chains (ERIA, 2024[43]). Chinese and Korean companies, including BYD, SAIC and LG Chem, have established or are establishing major production hubs across the region, complementing investment from Western firms pursuing “China + 1” diversification strategies (Reuters, 2024[44]).

India is also positioning itself as a central player in the regional EV landscape. The automobile sector already accounts for nearly half of its manufacturing GDP, and the EV market is expected to grow at an annual rate exceeding 45% until 2030 (Press Information Bureau, 2025[45]). Key policy instruments such as the FAME II and PLI-ACC schemes provide subsidies for EV manufacturing, support domestic production of battery cells, and expand charging infrastructure. Tax exemptions for EV imports and purchase incentives for consumers have also stimulated domestic demand. At the same time, India’s continued dependence on imported lithium-ion batteries presents an opportunity to develop new supply-chain linkages with Asian partners, particularly within ASEAN, for sourcing critical materials and co-developing production capacity.

3.3.4. Private sector investment landscape

Public policy initiatives across ASEAN have been a major catalyst for private-sector investments in the EV and battery sectors (ADB, 2024). Leading global automakers and battery manufacturers are actively building production capacity, establishing partnerships and securing access to critical minerals across the region. These strategies are strengthening ASEAN’s position in global EV supply chains and are also accelerating technology transfer, local capability building and supply-chain diversification.

Top global EV manufacturers are carving out diverse niches to position themselves in ASEAN markets. Their approaches highlight ASEAN’s unique combination of market potential, manufacturing capabilities and resource availability. Chinese companies such as BYD have begun constructing large-scale EV plants, including a USD 490 million facility in Thailand (Reuters, 2024[44]), and are investing in new component factories and charging networks across Viet Nam and Cambodia. Similarly, Tesla has signed a USD 5 billion nickel mining agreement in Indonesia in 2022 (Reuters, 2022[46]) and started new operations and service infrastructure in Malaysia, while Volkswagen is collaborating with partners to develop an Indonesian EV battery ecosystem (Reuters, 2023[47]).

Other major players are expanding their footprint through joint ventures and strategic partnerships. Hyundai Motor and LG Energy are investing more than USD 4.6 billion in Indonesia, spanning battery production, smelting and vehicle manufacturing, while BMW and Mercedes-Benz are deepening their presence in Thailand through new production facilities, regional headquarters and charging networks (BMW Group, 2024[48]). The Renault–Nissan–Mitsubishi Alliance is scaling up EV and battery manufacturing in Indonesia, Thailand and Viet Nam, alongside substantial investments in charging infrastructure. Meanwhile, Geely’s Volvo is assembling EVs in Malaysia for regional export, demonstrating how ASEAN production bases are increasingly serving wider Asian markets.

This surge of investment reflects the broader structural shift discussed earlier: global manufacturers are seeking to diversify supply chains away from single-country dependencies and leverage ASEAN’s strategic location, competitive labour markets and resource endowments. It also illustrates the deepening integration of upstream and downstream segments, from critical minerals and battery materials to vehicle assembly and charging infrastructure.