Miners welcome local ore processing but incentives seen as key

Posted on July 27, 2016
http://www.bworldonline.com/content.php?section=Economy&title=miners-welcome-local-ore-processing-but-incentives-seen-as-key&id=131026

On Monday, the Speaker of the 17th Congress, Davao del Norte Representative Pantaleon D. Alvarez, said he will pursue legislation that will require mining firms to process or semi-process their ores before they can be exported, which he expects to boost employment in the industry.

Dante R. Bravo, president of Global Ferronickel Holdings, Inc., said the company is in favor of the proposal if the terms support the establishment of processing facilities.

“One is the time when it should be implemented. This should be optional to existing operating mines. Or at the very least, allow them sufficient time to put up a plant if it is viable,” Mr. Bravo said in a text message.

Mr. Bravo also said incentives for mine owners that put up their own plants must be globally competitive, saying the “ideal scenario” was a single tax on gross income.

“[Say] 5% tax based on gross income earned, in lieu of all national and local taxes, including exemption from payment of royalties to indigenous people),” he said.

Mr. Bravo also pointed out that a mine should have at least 20-year mine life in order to qualify for value-added processing and proper infrastructure to ensure continuous supply of raw material.

In addition, if such bill is imposed, the government should consider simplifying the permit process and relaxing foreign ownership restrictions.

Francis G. Ballesteros, Jr., division head for Public and Regulatory Affairs at Philex Mining Corp., said the Indonesian ore export ban could serve as a model and a cautionary tale for regulators.

“The proposed ban on raw ore exports, which is not novel... must be studied carefully if it be legislated because though the intentions may be noble the impact or consequences may be severe, as drawn from the experience in Indonesia,” said Mr. Ballesteros.

In 2014, Indonesia, one of the world’s top nickel ore producers, required the domestic processing of ore before any exports are permitted, but announced a review of the export ban earlier this year after the nickel and bauxite industries had to forego billions of dollars in revenue.

Meanwhile, the political left weighed in on the mining industry’s poverty-statistics dispute, saying that any benefits derived by communities from mining are outweighed by environmental and health costs.

Bagong Alyansang Makabayan, in a statement, said mining contributes “virtually nothing” to the alleviation of poverty, leaving the people “net losers” because of the accompanying environmental damage.

It said poverty incidence remains “very high” in most provinces hosting large-scale mining, with Benguet deemed an outlier with a 3.7% poverty rate as of 2012. The poorest province on their list was Eastern Samar at 63.79%, followed by Agusan del Sur at 48.2% and Surigao del Norte at 41.8%.

Regulators and miners are putting out competing claims on poverty in mining areas, with Environment Secretary Regina Paz L. Lopez asserting that miners operate in places with the high poverty levels, while the Chamber of Mines says its members are not present in the top 10 provinces where poverty is highest.