The Asian Development Bank (ADB) has launched a financing facility to strengthen critical mineral supply chains across the Asia-Pacific, backed by early pledges from Japan and the United Kingdom, as governments accelerate efforts to reduce dependence on Chinese processing dominance.
The facility is designed to help countries move up the value chain from mining into higher-value activities such as processing and recycling, the Manila-based development lender said.
Japan has pledged $20 million to related projects and the United Kingdom has committed $1.6 million.
Masato Kanda, the ADB's president, said the region should be more than a source of raw materials, framing the initiative as both an economic development priority and a strategic imperative.
The timing reflects mounting concern across western-aligned governments about concentration risk in critical mineral supply chains.
China controls the processing of the vast majority of the world's rare earths, cobalt, lithium and graphite, minerals essential to batteries, semiconductors, defence systems and renewable energy infrastructure.
Beijing has demonstrated a willingness to use that dominance as a geopolitical tool, restricting exports of gallium and germanium in 2023 and tightening controls on rare earth processing technology last year.
The minerals underpin industries from electric vehicle manufacturing to advanced weapons systems, making secure supply a national security question for importing nations.
Separately, Japan and Australia announced a deepening of their bilateral cooperation on critical minerals, describing the partnership as a core pillar of their economic security relationship.
The two governments identified six projects spanning rare earth production, gallium recovery and high-purity magnesium production, areas where China currently holds an overwhelming processing advantage.
Australian Prime Minister Anthony Albanese said the partnership aims to attract investment and build domestic capability, creating jobs in a sector that has historically exported unprocessed ore.
Australia holds significant reserves of lithium, rare earths and cobalt but has struggled to develop the downstream processing capacity needed to capture more value from those resources.
Japan, which imports virtually all of its critical minerals, has made supply chain diversification a central plank of its economic security strategy, committing billions of dollars through state-backed agencies to secure offtake agreements and invest in processing facilities across Australia, Canada and Africa.
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The ADB facility adds a multilateral dimension to what has largely been a series of bilateral deals, potentially giving smaller Asia-Pacific nations access to financing that would otherwise be difficult to secure for capital-intensive processing infrastructure.
Whether the pledged funding proves sufficient to shift entrenched supply chain patterns remains an open question, given the scale of Chinese investment in processing capacity built over more than two decades.
The recap
- ADB launches facility to bolster Asia-Pacific mineral processing
- Japan pledges US$20 million and the UK US$1.6 million
- Japan and Australia identify six projects including rare earths
