The U.S. relies heavily on nickel imports to meet its long-term domestic needs, historically sourcing much of its supply from allies like Canada and Australia. While expanding domestic production and strengthening partnerships with these countries should remain priorities, rising demand necessitates diversifying import sources.

To mitigate risks like trade controls, the U.S. should consider secure suppliers such as the Philippines, where Japanese companies are actively involved in nickel extraction and processing.\

The Eagle Mine in Michigan is the only nickel mine in the U.S., yet it exports its nickel sulfide concentrate because the U.S. lacks a single nickel metal refinery. The country has nickel exploration projects, but mines face permit delays and even mining bans — meaning the average time from first discovery to first production is nearly 29 years. Hence the Philippines — the world’s second-largest nickel miner and a U.S. security ally — is a potential supply source.

The Philippines last year had 29 producing nickel mines. Most of this production, however, is exported as ore, with over 96% of it going to China in 2021. The Philippines also has two high-pressure acid leach (HPAL) plants owned by Japan’s Sumitomo Metal Mining. In 2023, these two plants produced mixed nickel-cobalt sulfide, which was all exported to two Sumitomo Metal Mining refineries in Japan. Critically, the Philippines seeks new investors — specifically deals with the U.S. — to build additional HPAL plants.

The U.S. government should invest in and finance a U.S.-owned, Japanese- and Filipino-operated HPAL plant in the Caraga region, where there were 16 producing nickel mines in 2023. The estimated cost for an HPAL plant with 30,000 to 40,000 tonnes of nickel-contained capacity is at least $1 billion. To keep the project on budget and on time, Washington should require that the Japanese and Filipino awardees — with a Philippine government guarantee — meet or exceed the projected capital expenditures, ramp-up the timeline and build nameplate capacity. The Chinese nickel giant Tsingshan similarly guaranteed it would meet these benchmarks when building and commissioning an HPAL plant in Indonesia for Nickel Industries.

The U.S. International Development Finance Corporation could be the main participating government agency as it can both make equity investments and finance eligible projects. For example, the DFC has invested $105 million in the Dublin-based minerals company TechMet to fund a nickel-cobalt mine in Brazil and a rare-earth processing project in South Africa. The DFC has additionally proposed a $553 million loan for a railway project and port in Angola to facilitate copper and cobalt exports from the Democratic Republic of Congo and Zambia. The corporation has already committed a $250 million loan to the Africa Finance Corporation for extending the railway into Zambia.

The proposed deal structure for a U.S.-funded and owned HPAL plant has historical precedent. In the 1940s, Washington financed the construction of a processing plant in Cuba. The facility was owned by the U.S. government and operated by a private company. The U.S. government also previously financed the expansion of copper plants in Chile and the construction of vanadium facilities in Peru.

As part of the HPAL plant deal, Washington should require that the Japanese partner build a downstream nickel refinery in the U.S. Similar to the HPAL plant deal, the U.S. government would finance the construction and own the refinery, but the Japanese partner would build and operate the refinery. This U.S. facility would further refine mixed-nickel cobalt sulfide from the HPAL plant into electrolytic nickel, electrolytic cobalt and nickel sulfate, similar to Sumitomo Metal Mining’s Niihama Nickel Refinery.

Importantly, the U.S. refinery should also have the capability to refine nickel sulfide concentrates, which are currently produced at the Eagle Mine in Michigan and several mines in Canada. Prospective nickel mines like the Tamarack Project in Minnesota and additional projects in Canada also seek to develop nickel sulfide deposits. Thus, the proposed U.S. refinery will not only help meet growing U.S. demand and reduce reliance on imports, but also provide a demand source for North American nickel mines and projects.

The proposed refinery deal has precedent, too. In the 1940s, the U.S. government financed the construction of a tin smelter in Texas that would refine Bolivian tin concentrates. The plant was owned by the U.S. government but built and operated by a subsidiary of a Dutch East Indies company experienced in refining tin. Just as the U.S. currently lacks American companies with expertise in building and operating HPAL plants, it also lacks local companies with expertise in refining nickel — necessitating a partnership with appropriate Japanese companies.

The Philippines is a rational destination for a U.S.-backed processing facility, even with nickel mining in the U.S. and partner countries like Australia and Canada having higher standards and more secure shipping lanes to America. Prospective processing plants need access to sustained feedstock, and amid an oversupplied nickel market, mines in developed countries generally face higher costs that make them unprofitable and, thus, nonoperational at current nickel prices. For instance, this year, Wyloo Metals, First Quantum Minerals and BHP halted nickel mining operations in Australia. Meanwhile, 14 nickel mines in the Philippines continued to operate and produce as of March.

To summarize, the U.S. should work with the Philippines and Japan to help secure its nickel supply. The Philippines has nickel mining, Japanese companies have processing and refining expertise, and the U.S. government has capital. Washington has executed such deals in the past, and it should do so again now.