How is the US Developing Critical Mineral Resilience?
The US and the Philippines have agreed to establish a 4,000-acre manufacturing zone, a development that could signal a major shift in global mineral processing and rare earth supply chains.
The initiative, part of the Pax Silica programme, aims to reduce reliance on Chinese-dominated mineral processing operations by leveraging the Philippines' significant base metal and strategic mineral reserves.
The announcement comes at a critical time for the mining sector, as US President Donald Trump is set to meet Chinese President Xi Jinping in May 2026 following strained relations between the two powers over rare earths needed for manufacturing.
The US State Department says the hub will secure inputs vital to US and global supply chains, including semiconductor supply chains.
The facility is expected to serve as a purpose-built platform for allied manufacturing, with mineral processing and extraction operations positioned as key components of the zone's industrial activities. The currently conceptual site will function as an "investment acceleration hub" where specific industrial activities will be shaped by market demand, host-country comparative advantages and the "evolving needs of the allied network".
Philippines' mineral resource potential
The Philippines holds significant reserves of nickel, copper, chromite and cobalt. These elements are used in a variety of manufacturing industries including energy storage, batteries, wind turbines and the metallurgical industry. The country's position as a major holder of these strategic minerals could make it a crucial node in reconfiguring global supply chains away from Chinese processing facilities.
Situated within the Luzon Economic Corridor, the State Department said the Zone can leverage the Philippines' geographic centrality in the Indo-Pacific as well as "its young and technically skilled workforce". This site, the first of its kind, is being designated by the Philippines as an Economic Security Zone, a new model for AI-native investment acceleration hubs being developed under the Pax Silica Initiative.
The Wall Street Journal reports the administration will ask companies to put forward proposals to compete for a spot in building out the hub, giving priority to bids that will move critical minerals processing and manufacturing away from Chinese suppliers.
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Addressing China's processing dominance
Pax Silica is the Department of State's effort on AI and supply chain security which spans advanced manufacturing and AI infrastructure with a goal to "reduce coercive dependencies". The initiative reflects growing concern within the mining and processing sectors about concentration of mineral beneficiation capacity in China.
Undersecretary of State for Economic Affairs Jacob Helberg tells the Wall Street Journal: "The current geography of the global supply chain is completely unsustainable.
"If you look at the whole supply chain stack, layer after layer, it is totally dominated by China."
According to the Centre for Strategic and International Studies, China currently accounts for roughly 70% of rare earth mining, 90% of separation and processing and 93% of magnet manufacturing. This concentration of processing capacity has raised concerns about supply security for manufacturers in allied nations.
Mineral processing and export operations
The resources will be used by US companies operating in the new hub in the Philippines and exported back to the US for manufacturing, Jacob tells the Wall Street Journal. This model suggests a hybrid approach where Philippine mineral resources could be processed domestically before being shipped to US manufacturing facilities.
The new announcement builds on strengthening relations between the two countries. In February 2026, senior officials of the Philippines and the US met in Manila for the 12th Philippines United States Bilateral Strategic Dialogue where they agreed to catalyse private sector development with a focus on the areas of transport, logistics, energy and semiconductors.
The inclusion of mineral processing infrastructure within this broader economic partnership could indicate long-term commitment to developing the Philippines' mining and processing capabilities as an alternative to Chinese facilities.