How vaults of mining resources in ASEAN countries can be better utilised, and NZ’s view

Written by Newsroom

As the ASEAN Ministers on Energy Meeting (AMEM) marches on into its second day of discussion, delegates continue to explore strategies to manage the region’s abundant energy and mineral resources efficiently, and transparently. During the debates, multiple policy frameworks were surfaced, with the most notable ones being “Standardisation In Grid Monetary costs And transparency” (SIGMA), “Environmental Leadership and Liability Accord” (ELLA) and “Yield-Integrated Neutral Uplift Option” (YINUO). Though each proposal focuses on different perspectives of the region’s energy landscape, it was ultimately the SIGMA framework that garnered support from the NZ Minister.

What exactly is the SIGMA framework? 

The SIGMA framework, developed by the Ministers of NZ, Korea, Japan and the GCC, proposes a third-party neutral arbitrator in order to increase transparency between countries, while ultimately standardising wheeling charges. This framework seeks to serve as a regulatory body that promotes equity and fairness between ASEAN countries. 

NZ’s rationale is simple. At its core, SIGMA embodies the values of transparency, anti-corruption and fairness, all of which reflects NZ’s stance on these issues. The Ministers responsible for the creation of the SIGMA framework recognises the importance of these reasonable pricings in energy markets, aligning with NZ’s foreign policy. 

NZ’s views on ASEAN’s resources 

“The ASEAN region is known for being rich in resources.” as the delegate of India has stated. According to the ASEAN Centre of Energy, ASEAN’s nickel and tin production is estimated at 47% and 35% of global total production, with net exports of nickel and tin being worth US$ 551,8 million and 1,5 billion respectively. Other than that, ASEAN is also a major producer of natural rubber, coconut, tin, palm oil, and hardwood products. It would be evidently beneficial to the overall development of the region, and its investors. 

Although not a member of ASEAN, NZ maintains close ties with ASEAN through strategic economic partnerships, making ASEAN’s rich resources deeply significant to NZ’s economic stability and growth. In the month of March 2015, ASEAN remained as NZ’s fourth largest trading partner. Trade in goods is estimated to be at NZ $15.2 billion, accounting for 9.1% of exports and 14% of imports. ASEAN continues to remain as one of NZ’s most significant strategic partners. Due to this, NZ takes a keen interest in ASEAN’s economic affairs, including any proposals that may impact resource usage. With an uplift in the quality of usage of resources in ASEAN member countries, NZ would surely benefit largely. 

In order to utilise the resources in ASEAN to its fullest potential, the ELLA model was proposed to properly regulate deep-sea mining in ASEAN waters. Within the “Quad Partners”, namely Japan, United States, India, and Australia, each would contribute its technological expertise, which would be the icing on the cake. 

In detail, “donor” countries will finance and build critical mineral logistics such as transportation,storage or processing hubs, while host countries retain full ownership and operational control of all infrastructure after the duration of contract. In return for aiding in infrastructure development, donor countries will receive 25% of annual market value until cost recovery and a percentage of annual market value until the end of the contract. 

This proposal marks a step in the right direction, recognising how critical it is to ensure proper regulation of deep-sea mining, to prevent a destruction of the sea-bed environment. Given NZ’s conservation-driven stance on seabed resource extraction, NZ should support this model, as it can serve to promote conservation of the natural environment. 

However, caution must still be exercised. NZ should fight for a stake in this framework, allowing for her to push her conservationist stance. Additionally, as global demand for critical minerals like cobalt and lithium surge due to the push towards clean energy and digital infrastructure, without a stake in the framework, NZ may see itself losing bargaining power over the access and pricing of these essential resources. Despite being outside the quad, New Zealand possesses advanced research capabilities, and can bring great contributions to the framework, providing valuable expertise. 

In the face of willing cooperation efforts being seen, NZ sees the implementation of the YINUO and ELLA model along with its own SIGMA framework, strong ally bonds with aligned objectives can be expected to form and we could see the sizable mining resources in ASEAN being utilised to its potential.

Written by Liu Haoyue, Raynor Leo Kay Hon, Nay Myo Win