By Madelaine B. Miraflor
The Philippines, one of the world’s top nickel producers, will see gold contributing more to its total metals output for the year as impact of mines suspension and closure continue to linger.
In its outlook, Mines and Geosciences Bureau (MGB), the government agency tasked to regulate and monitor the mining sector, said it sees gold output dominating the production scene moving forward, still outpacing nickel.
If ever, this will be a two-year streak for gold, which used to be dominated by nickel.
From 2012 to 2015, the country’s joint production value of nickel direct shipping ore and mixed nickel-cobalt sulfide (MNCS) consistently took the top spot in total metals output, with a four-year average of almost 49 percent of the total metallic production value. The highest recorded contribution made by nickel was in 2014 at 58 percent, or P80 billion.
But due to a string of suspension of operation in nickel mines in Zambales and Palawan, gold bested nickel in 2016 and 2017, a trend that continued until 2018.
During the first three months of this year, gold also validated its dominance over the other metals with a contribution of 45 percent, or P12.22 billion, while the combined output of direct shipping nickel ore and MNCS took the second spot with 36 percent share, or P9.81 billion.
For the rest of the year, MGB’s positive outlook for gold will be supported by the passage of Republic Act (RA) No. 11256 or An Act to Strengthen the Country’s Gross International Reserves (GIR).
The new law exempts from excise and income tax the sale of gold sourced from small-scale mining activities to the Bangko Sentral ng Pilipinas (BSP).
The measure also covers the sale of gold by small-scale miners to accredited traders for the eventual disposal to the central bank.
This tax incentive will encourage small-scale miners and traders to once again sell their gold to BSP based on international market price instead of selling their gold elsewhere, MGB said.
In 2012, the government witnessed the disturbing drop of BSP gold purchases from small-scale miners and traders, by 94 percent or 16,548 kilograms from 17,638 kilograms in 2011 to only 951 kilograms in 2012.
This was after the Bureau of Internal Revenue (BIR) on the same year strictly imposed the collection of the 2 percent excise tax and 5 percent creditable withholding tax (CWT) from small-scale gold producers/traders.
Right now, the BSP buys gold through its five buying stations located in Baguio City, Davao, Zamboanga, Naga and Quezon City.
“At the end of the day, RA No. 11256 will not only boost the GIR of the country but also increase the country’s annual total metallic production value. Likewise, industries involved in jewelry making, medical, electronics stood to benefit from the passage of said law,” MGB said.
During the period, the Masbate Gold Project of Filminera Mining Corporation and Philippine Gold Processing and Refining Corporation in Masbate were at the forefront of gold production, producing 1,788 kilograms with estimated value of P3.92 billion.
Next to it was Didipio Gold Project of OceanaGold Philippines, Inc. (OGPI) in Nueva Vizcaya, with 1,047 kilograms valued at P2.30 billion.
Out of the country’s 28 nickel mines, 18 reported zero production and only 10 reported production in the first quarter of the year. This was due to unfavorable weather conditions as well as to the closure of several mines.