By Louise Maureen Simeon (The
Philippine Star) | Updated July 28, 2017 - 12:00am
MANILA, Philippines - The major
regulatory changes implemented by the Duterte administration has created uncertainty
for the mining industry.
The sector has come under pressure
to shape up or close down as President Duterte vowed to put a stop to
irresponsible mining.
While former environment chief Gina
Lopez, whom stakeholders considered as their worst nightmare, is now out of the
picture, the industry remains in disarray.
The local mining industry
faced a rough patch during President Duterte’s first year in office, starting
with the appointment of environment advocate Gina Lopez as head of the
Department of Environment and Natural Resources. She issued administrative
orders that hurt the industry.
“We had a really tumultuous year
because of the appointment of Lopez. Tumultuous in the sense that she ordered
the closure and suspension of 28 operating mines and a ban on open pit mines,”
Chamber of Mines of the Philippines Legal and Policy vice president Ronald
Recidoro told The STAR.
“It was a rocky start because of
Sec. Gina’s arrival. But somehow the industry also needed that shake-up because
we can only allow responsible operations in the country,” said JB Baylon, Nickel
Asia vice president for corporate communications.
The industry is getting jittery anew
because of Duterte’s recent announcements he would tax mining fims to death if
they continue to neglect their duty to protect the environment.
“As we see it, President Duterte
relies heavily on his secretaries and he just let Gina do her thing. He wanted
to shake up the mining industry and we were really shaken. He saw that there
were mines that were violating (environmental laws) but he might be confusing
the legitimate miners from the illegal ones,” Recidoro said.
“He might just be seeing mines that
are actively doing mining and might be disregarding our rehabilitation efforts.
Mining does not stop at extraction, mining stops when the area is rehabilitated
and turned over either to the government or the community,” he added.
No
clear path yet for mining
While Lopez’s orders have not
actually been implemented, the industry believes her ditectives created a lot
of uncertainties not just on the operating mines, but also on prospective
investors looking at the Philippines.
“Other people particularly investors
are asking what’s going to happen in the Philippines and frankly, we don’t
know. There’s still a lot of uncertainty until now and even without Lopez
there, there is still no clear path that’s laid out for the mining
industry,” Recidoro said.
“In this administration, we haven’t
seen any indication where it wants to take mining not even on revenue sharing.
The effort should be more of enhancing collection of tax from the illegal
miners,” he said.
Data showed that around $22 billion
worth of projects are already in the pipeline and are hanging including big
ticket items like the $5.9 billion Tampakan project and the over $2 billion
Silangan mine of Philex Mining Corp.
“Globally, the appetite for
exploration has really gone down, then add the uncertainties in the
Philippines. We might be losing out on opportunities,” Recidoro said.
“Global demand for our exports must
go up meaning prices for gold, copper and nickel should increase. If that goes
up, that would also increase interest in the Philippines since we are a major
source of minerals,” he added.
But despite this, investors would
have to consider the country’s policy regime and how viable is it to put up a
mine in the Philippines.
“If there’s nothing happening in the
last six years, the ripple effect of that is 15 years down the line. There will
be a gap because mines are closing and yet no new ones are opening,” Recidoro
said.
Trusting
Cimatu
While the industry lauds Environment
Secretary Roy Cimatu’s stand on responsible mining, stakeholders are still
guardedly optimistic because of their experience with Lopez.
“A lot will depend on Cimatu’s direction
and vision for the industry. He seems to be a more level headed secretary. He
has preliminarily said some positive things about responsible mining so we are
just waiting for his action now on key issues,” Recidoro said.
Cimatu has been quite aloof in
answering media queries, saying he is still trying to learn the ins and outs of
the sector.
“We have to give him more time
because he does not really have an exposure on environmental laws, mining is
not just the portfolio of the DENR. We would rather have him study it well than
rush it and have more adverse decisions,” Recidoro said.
“It’s a very complicated issue that
will require a lot of study. It’s already a complicated issue and Gina made it
more complicated. It will require Cimatu to overturn the decision of a previous
secretary which is politically very difficult. We’re just giving him all the
time he needs,” he added.
Recidoro thinks that Cimatu’s not so
quick action in dealing with Lopez’s orders means he is just being
careful.
“Now that Secretary Cimatu is in and
given the ongoing reorganization inside the department, these have calmed the
noise and I believe the industry would be able to recover,” said listed Global
Ferronickel Holdings president Dante Bravo.
The industry is also happy with the
appointment of engineer and lawyer Wilfredo Moncano as head of the Mines and
Geosciences Bureau.
“We all want consistent regulations,
that’s what we’re asking ever since. The inconsistent implementation of the
mining act has given rise to all our problems,” Recidoro said.
What
government needs to do
The administration has barely
scratched the surface and it has five more years to prove its economic targets
but for stakeholders, the government should stabilize the policy environment
and send the right signal to investors and the current players to encourage
them to expand.
“We need stability because the
global market is also unstable, when I say stability I mean internally in terms
of policy. We need stable policies that allow responsible operations in clearly
delineated areas under terms that are mutually beneficial,” Baylon said.
“We expect the government to
encourage more investments in the industry because it can be one of the
important growth drivers of our economy, particularly in terms of foreign direct
investments and employment. It can provide a significant amount of revenue to
the government, as well as help develop communities, without sacrificing
environmental protection,” Bravo said.
While the share of the industry to
the total economy is a minimal 0.7 percent, this can be increased if the
government will encourage more investments particularly in gold and copper
which are more permanent.
According to geologist and professor
Carlo Arcilla, about 80 percent of gold production is produced by small scale
mining which is plagued by non-payment of taxes and is considered as the real
problem of the industry.
“The share of mining revenues must
shift in favor of the majority going to the local governments because they host
the minerals, and their remote access means they were not cared for properly by
government until mining operations began. Mining companies must also be allowed
to pay taxes directly to LGUs to establish cadence between the impact and
rehabilitation and its earnings,” said Arcilla, professor of earth sciences at
the University of the Philippines.
Mining occurs in less than 0.3
percent of the total land area in the Philippines. While exploration
applications cover 40 percent of the country, many no-go zones and uneconomic
mining conditions prevent mining activities.
“While mining contributes less than
one percent to national GDP and employment, its occurrence in equally less than
one percent of the land area means simply that where mining occurs, it is very
significant,” Arcilla said.
Mining comprises the most important
economic activity in MIMAROPA & CARAGA where its contribution exceeds 20
percent of the region’s GDP.
“All the minerals in the Philippines
are owned by the state. The current sharing of revenues needs review in view of
different metals requiring different mining methods, different levels of
integration, and different marketing methods,” Arcilla said.
Mining stakeholders are also calling
for the development of the minerals industry roadmap.
But COMP is not quite optimistic
about the progress of the downstreaming industry in this administration.
“The move now is to strengthen the
steel industry but in terms of linking mining to the steel industry, it’s one
of the things that we would like to see. We need to find partners who can do
the processing with us. Mineral processors are saying it’s very hard to turn a
profit in the Philippines given the high electricity, red tape, and other
external factors,” Recidoro said.
“These things have to be fixed if we
want to have a viable downstream processing industry. It has to be a
multi-agency thing and a multi-departmental approach,” he added.
Recidoro, meanwhile, believes that
mining can contribute a bigger chunk to the economy if it will be in full
steam.
“It can add another one to two
percent in GDP. It’s a big thing already and we can do that consistently for
the next 20 years. Once we start, we will be there for the next 20 years and
more,” he said.
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