The global transition to clean energy has put the spotlight on battery metals, which are essential components of lithium-ion batteries used in electric vehicles (EVs) and renewable energy storage systems. China currently dominates the global battery supply chain, controlling approximately 80% of the world’s lithium-ion battery production. However, Southeast Asia has the potential to become a significant competitor to China’s battery supply chain.
Southeast Asia is home to significant reserves of battery metals, including nickel, cobalt, and manganese. Indonesia in particular is a major producer of nickel, which is used in the production of nickel-cobalt-aluminum (NCA) and nickel-manganese-cobalt (NMC) batteries. The Philippines is also a significant producer of nickel, accounting for approximately 25% of the global supply of the metal. In addition, the region has significant reserves of cobalt, which is primarily mined in the Democratic Republic of Congo, and manganese, which is used in the production of lithium-manganese-oxide (LMO) batteries.
The battery metals industry in Southeast Asia has attracted significant investment in recent years. According to a report by Mergermarket, battery metal companies in Southeast Asia raised $200 million in capital in 2020, up from $54 million in 2019. The report notes that the majority of the capital raises were related to nickel and cobalt production. Several Southeast Asian companies have successfully raised significant capital to fund their battery metal production efforts. For example, Indonesia’s Harita Nickel (NCKL:IJ) raised $672 million in its 2023 IPO this year to fund its nickel production and processing operations. Similarly, Singapore-based Green Li-ion raised $20.5 million in 2023 to fund its battery recycling operations. Overall, the battery metals sector in Southeast Asia has contributed to significant deal volume in the region, where according to Mergermarket, the Energy and Mining sector was the second most active sector for M&A at 2.7 billion in deal volume in Q3 2022, just behind TMT.
One of the main advantages that Southeast Asia has over China is access to raw materials. The region is home to significant reserves of battery metals, which are essential components of lithium-ion batteries. In contrast, China is heavily reliant on imports of these metals, particularly cobalt and lithium. According to a report by the International Energy Agency (IEA), Southeast Asia’s reserves of nickel, cobalt, and manganese are estimated to be 7%, 6%, and 22% of the global total, respectively. In addition to access to raw materials, Southeast Asia also has a growing pool of skilled workers and a favorable business environment, which are attracting investment from battery metal companies.
The battery metals industry in Southeast Asia is a growing industry with significant potential for growth in the coming years. The region’s access to raw materials, skilled workers, and favorable business environment are attracting investment from battery metal companies. Southeast Asia also has the potential to become a significant competitor to China’s battery supply chain, as the region continues to develop its battery metals industry. As demand for EVs and renewable energy storage systems continues to grow, Southeast Asia’s battery metals sector is expected to play an increasingly important role in the global battery supply chain.