The Philippines has taken a significant step into the future with its inclusion in the Pax Silica project, a US-led coalition of 13 countries focused on harnessing natural resources for artificial intelligence (AI) and semiconductor industries. While no definite investment commitments have been disclosed, the partnership is seen as a major win for the country, leveraging its rich deposits of minerals and rare earth elements (REEs) critical for high-tech manufacturing.
What is Pax Silica?
Pax Silica is a coalition aimed at establishing economic security zones through cooperation in AI and semiconductor supply chains. The Philippines signed the agreement on April 17 in Washington DC, represented by Trade Undersecretary Ceferino Rodolfo, alongside Philippine Ambassador to the US Babes Romualdez and Finance Secretary Frederick Go. The country now joins Australia, Finland, India, Israel, Japan, Qatar, South Korea, Singapore, Sweden, the United Arab Emirates, the United Kingdom, and the United States. More nations are expected to join.
Proposed Site: New Clark City
The proposed location for the processing plant is New Clark City (NCC) in Tarlac province, a 10,000-hectare mixed-use urban development. The Bases Conversion and Development Authority (BCDA) is allocating 1,600 hectares for a representative office. BCDA President Jake Bingcang stated that the plan aims to elevate the Philippines' position in the semiconductor production value chain, moving beyond mineral processing to include design, front-end fabrication, back-end assembly, testing, and packaging. This multi-trillion dollar industry promises more investment, jobs, and improved livelihoods.
Philippine Laws and Negotiations
Discussions on Pax Silica details will begin this month, with BCDA ensuring the application of Philippine laws such as the Investment Lease Act and Bases Conversion law. Bingcang noted these were accepted during negotiations. Investment commitment figures will emerge as detailed talks proceed. BCDA can offer modalities like lease, joint venture, and concessions for former base lands, aiming for the most advantageous terms for the Philippines.
Rare Earth Elements in the Philippines
The Philippines holds significant potential for REEs, essential for AI technology. Geological surveys from the 1970s-1980s identified potential areas, mostly in Palawan. Dr. Rene Claveria of Ateneo de Manila University noted that REE values in Philippine mining sites are comparable to those in China and the US, except for some copper-gold deposits like Lepanto in Benguet.
Semiconductor Backbone
Semiconductors are the backbone of AI, driving computational power and efficiency. As US State Department Undersecretary Jacob Helberg said, "If the 20th century ran on oil and steel, our century runs on compute and the minerals that feed it." The Philippines, with its natural resources and skilled English-speaking workforce, is poised to capitalize on this.
Historical Example: Texas Instruments
The Pax Silica initiative echoes the mid-2000s when Texas Instruments (TI) chose Clark Freeport over China for its facility, thanks to a redundant power supply offer by then-Philippine officials. TI has since invested billions, employing 3,000 workers. The potential from Pax Silica could far exceed that, positioning the Philippines as a key player in the global AI and semiconductor industries.
