After suffering from major regulatory impediments for nearly a decade, it may take some time before the mining sector of the Philippines, one of the most highly mineralized countries in the world, to recover despite the government’s recent policy decisions that favor the industry.
On Thursday, Chamber of Mines of the Philippines (COMP) Chairman Gerard Brimo said that despite the passage of Executive Order (EO) 130 – which amended EO 79 of the Aquino administration and lifted the ban on new mining projects – the ghost of the nine-year-old ban may continue to spook investors alongside other policy roadblocks that are still in place.
“We should realize, though, that while the lifting of the moratorium has undoubtedly been noticed by foreign investors, and we do need them for some very large metallic projects that require a substantial amount of investments, their return to our shores may take some time,” Brimo said.
And then, he mentioned the survey conducted in 2018 by the Canadian think-tank, the Fraser Institute, which ranked the Philippines in the bottom seven out of 91 mining jurisdictions in terms of attractiveness and stability of mining policies.
It also ranked the Philippines last in terms of investment attractiveness in the Australia/Oceania region.
In 2019 and 2020, the Philippines was not ranked at all in the survey as there was no longer interest from international mining investors that participate in the survey every year.
At the time, there was not really much happening in the mining sector, with EO 79 and the ban on open-pit mines still in place.
Right now, the mining industry contributes less than 1 percent to the Philippines' total gross domestic product (GDP).
This is despite the fact the country's mineral resources have an estimated value of around US$1.4 trillion, based on earlier estimates of the Mines and Geosciences Bureau (MGB).
To revitalize the industry and set it on a growth path so that the government’s objective of increasing its contribution to the country’s economy can be achieved, Brimo said foreign and even local investors must be assured that policies that will be put in place after EO 130 are “proper, stable and will not change mid-stream”.
It can be recalled that due to the strong opposition of former Environment Secretary Regina Paz Lopez against the mining sector, Anglo-Swiss mining giant Glencore plc decided to exit the US$5.9-billion Tampakan gold and copper mine project sometime in 2017.
This is considered the biggest foreign divestment ever recorded in the Philippines.
This also happened after Lopez’s issuance of the ban on open-pit mining method for copper, gold, silver and/or complex ores under the Department of Environment and Natural Resources (DENR) Administrative Order (DAO) No. 2017-10.
DAO 2017-10, which claimed that open-pit mines cause adverse impacts to the environment, is still effective to date.
Brimo, however, said open-pit mining is a standard mining method practiced all over the mining world and that the ban against it “needs to be lifted”.
“As without this, the lifting of the moratorium on new mining projects alone will not allow the industry to achieve its full potential,” he further said.
In 2019, Brimo also said that even if EO 79 and the ban on open-pit mines are lifted, the industry will still "absolutely" find it hard to develop if a certain tax regime is implemented in the mining sector.
He was referring to an earlier proposal of the Department of Finance (DOF) to implement a uniform royalty rate of 5 percent for all mining operations, whether located inside or outside a mineral reservation.
Brimo said if this is passed, the government's plan to gain more revenues from the mining sector will no longer become reality.
There are now several bills pending in House of Representatives and Senate pushing for a new fiscal regime in mining.
Meanwhile, on Thursday, Business Bulletin reported that the government is now considering lifting the ban on open-pit mines, based on a text exchange with MGB Director Wilfredo Moncano.
Moncano said the DENR is also in touch with Congress regarding the government's proposal for a new fiscal regime in mining.