Mining sector suffers decline in production, value in 3 quarters

The Philippines mining sector has suffered a decline in output and value from January to September of this year, a negative development that the government attributes to the COVID-19 pandemic.

In its latest data, Mines and Geosciences Bureau (MGB) said the country’s metallic mineral production was “still lackluster during the first three quarters of 2020”, with its value falling by 4.75 percent from P99.72 billion during the same period last year to P94.99 billion.

This, as almost all of the country’s minerals – gold, silver, copper, nickel, and chromite – booked lower production.

“The COVID pandemic continued to adversely affect mining operations in the country,” MGB said.

Nickel ore, together with the nickel by-products namely mixed nickel-cobalt sulfide and scandium, continued to have the lion's share of the production value, contributing P48.22 billion or 50.77 percent.

Next to it was gold, with a share of P34.85 billion or 36.69 percent, while copper was valued at P10.95 billion or a share of 11.53 percent.

The collective value of silver, chromite, and iron amounted to P970 million, which is about 1.02 percent of the total value of the country’s minerals output during the period.

On the overall performance of nickel and its nickel by-products, MGB saw production value slightly going up by 1.54 percent from P47.49 billion in the same period in 2019 to P48.22 billion.

However, nickel ore’s production volume actually dipped by 12 percent from 264,351 metric tons (MT) to 233,521 MT year-on-year.

As for gold, both volume and value went down from 16,328 kilograms, with an estimated value of P36.90 billion, to 12,833 kilograms, with an estimated value of P34.85 billion. This was a decrease of 21 percent and 6 percent, respectively.

MGB said the entry of Tribal Mining Corporation in Region 12 was not able to fill the void left by OceanaGold Philippines Inc., which has not been operational since its Financial or Technical Assistance Agreement (FTAA) with the government has expired last year.

The recent entry in the commercial phase of Tribal Mining’s Kematu Gold-Silver Project in T’boli South Cotabato was considered by MGB as “one of the positive developments” in the country’s entire mining sector.

Tribal first reported production in May this year and had so far produced gold and silver worth P86.99 million.

Meanwhile, the country’s silver production volume and value were also down from 24,849 kilograms in 2019, valued at P650 million, to 17,853 kilograms, valued at P540 million. This was a decline of 28 percent and 16 percent, respectively. 

The production and value of copper, on the other hand, declined from 56,678 MT, with an estimated value of P14.40 billion in 2019, to 46,520 MT, with an estimated value of P10.95 billion.

During this review period, the production loop was composed of 18 nickel mines, eight gold mines with silver as a by-product, three copper with gold and silver as byproducts, one chromite mine, one iron mine, two nickel processing plant, two gold processing plants, and small- scale chromite mining operations.

MGB said not included in the total number were mining operations with reported zero production during the period.

During the period, the MGB note of the “silver lining”, which was was the prices of precious metals, gold, and silver that continued to advance.

The yellow metal, for instance, reported an average price of US$1,735.16 per troy ounce from US$1,362.99 per troy ounce year-on-year, an increase of US$372.17 or 27 percent.

“The gold price has achieved extreme heights not seen in the history of the commodity. During the 9 months, price levels were all beyond the US$1,500 mark and have been ranging from US$1,558.25 per troy ounce recorded in January 2020 up to as high as US$1,971.08 per troy ounce recorded in August 2020,” MGB said.  

Analysts remain confident that demand for gold, as a store of value or the safe haven of investment, will continue during the rest of the year due to the global economic slowdown.

“During times of uncertainty, gold buying is considered to be the best investment option,” MGB further said.

Just last week, Chamber of the Philippines (COMP) Chairman Gerard Brimo said that with higher exports and few layoffs, the mining sector has actually been relatively unaffected during the COVID-19 pandemic, which already caused severe damages in a lot of industries such as tourism and airlines.

This, he said, makes the industry very much capable of helping the Philippine economy, which slipped by 11.5 percent from July to September, recover from the pandemic-triggered recession.