Villar: Mining should shift from export to processing

By Louise Maureen Simeon (philstar.com) | Updated August 23, 2016 - 8:00pm

http://www.philstar.com/business/2016/08/23/1616563/villar-mining-should-shift-export-processing

MANILA, Philippines -- The development of domestic mineral processing plants should be the government's long-term goal since these will generate more employment and significantly improve the mining industry’s contribution to the economy,  Sen. Cynthia Villar said.

"That should be the vision in the future because, right now, we are just exporting raw materials but as the country develops, we should export the processed already. [We can't do that] now because the industry is not that developed but it is something that we can look forward to in the future,” Villar said on the sidelines of the opening day of the Mining Philippines Conference 2016.

The plan is similar to that of the Indonesian government's which requires companies to build domestic processing facilities and has revised regulations on mineral ore export to lean towards banning it altogether.

"If we are able to build stronger mining companies then their next sphere of action would be to build processing plants. They have to be stronger first, then that would follow,” Villar said.

The Chamber of Mines of the Philippines (COMP) said the establishment of processing plants cannot be done in a short period of time as these need economic feasibility studies that would benefit both investors and the government.

"The industry would need a huge capital for that, billions of dollars, and we have to look at the best available technology. It’s a longer-term plan," COMP executive vice president Nelia Halcon said.

Although Villar doubts that the plan would materialize in the current administration, the chamber is upbeat that the plan would at least be included in Duterte's six-year development program as he shift gears towards industrialization.

"The president has been saying that we have to industrialize. In his term of six years, I think that would all be allotted for planning and the next administration would be on the execution," Halcon said.

Despite the costly plan of putting up processing plants, Halcon noted that investors would continue to flock to the Philippines as long as the government would provide incentive packages such as tax exemptions on environmentally-safe equipment.

Unlike in Indonesia, the chamber emphasized that it should not be mandatory, but merely an encouragement for companies to increase their investments and income.

"I don’t think you should impose just like what Indonesia did because not everyone was able to follow. It’s hard for Filipinos to be imposed on, it’s better if we just encourage and direct them that this is what the country needs and this is where we are heading. And that way, I think Filipinos, taipans and industrialists will invest in the country," Halcon said. 

Striking a balance

Amid the administration’s ongoing clampdown on allegedly irresponsible mining operations, Villar -- chair of the Senate Committee on Environment and Natural Resources -- emphasized that the mining industry generates employment and helps the government's poverty reduction measures.

"The government should do a balancing act—encourage investors by putting in place the right business environment and at the same time be vigilant against abuses and excesses, especially negative impact, if any, on the environment," Villar said.

President Rodrigo Duterte earlier said he will support responsible mining that will uphold environmental and safety standards, strictly implement the mining law and considers limiting the issuance of government permits to mining companies.

Last month, Environment Secretary Gina Lopez ordered the audit of all mining companies to ensure their compliance with environmental standards. This has resulted in the suspension of around 10 firms in the last 50 days.

Furthermore, Villar said mining projects that prioritize local suppliers and contractors should be given priority since this can spell the difference in inducing growth both upstream and downstream industries such as agriculture and agro-forestry, which can thrive under responsible mining operations.

Although accounting for less than one percent of the country’s total employment, Villar said mining's contribution should not be overlooked as it enhances local services such as retail trade, financial services, agriculture, manufacturing and others that are indirect beneficiaries of mineral resource development.

The value of mineral resources in the Philippines is over $1 trillion and the country is utilizing less than one percent of its mineral wealth.

Based on the Philippine Development Plan, of the country’s nine million hectares endowed with high mineral potential, only 2.7 percent is covered by mining permits while only 0.32 percent is in the development or operating stage.

"I was surprised that with so little, you are being blamed for environmental degradation. You [big companies] and the illegal miners should be differentiated so that you would not be blamed," she added.

Villar reiterated that any talk of mining will bring about concern for the environment as mining begins and ends with nature and should not be done to the detriment of the country’s natural resources.

"While the industry’s growth and development may foster equitable distribution of the country’s natural wealth to the Filipinos, it can never justify environmental destruction, especially when unrestrainedly done. We should continue to draw the line as it has been clearly demarcated even before by existing policies, rules and regulations," she said.

Despite being mineral-rich, the senator said the country should still strive to be competitive in terms of taxes to be attractive to investors and that mining taxation should be studied thoroughly.

"There have also been calls to revisit some issues relating to provisions of the Philippine Mining Act of 1995. What is important is that all sectors and stakeholders are consulted and that the decision will ultimately be beneficial to the country," she added.

The senator also urged mining stakeholders to come to Congress and educate them on matters regarding the industry.

"Legislators do not pretend that they know everything, you have to reach us in order to be able to pass meaningful legislation that will both benefit the industry and our country," Villar said.