Published
By Madelaine B. Miraflor
A confluence of factors
— such as the expected impact of Tax Reform for Acceleration and Inclusion
(TRAIN) on mining operations, self-imposed closures, and uncertainty in
policies — will continue to drag the value of the country’s metallic production
throughout the year amid improving world prices for metals.
For the first time in a
year, the value of the country’s metals output sank, ending the first quarter
of the year with a 6.5 percent decline. The value ended at P22.51 billion
versus the P23.96 billion recorded during the same period last year.
And given the pressing
issues in the local minerals industry, “outlook for 2018 is quite lackluster,”
Mines and Geosciences Bureau (MGB) said.
This, as the string of
mine suspension due to environmental-related issues and mine imposed
non-operations due to unfavorable weather conditions and maintenance status
that clearly dominated the production scene in 2017 are expected to spill over
this year.
“It is important to
note that mine output in 2017 was generally sluggish, and it was only due to
the improved metal prices that the industry was able to remain upbeat.
This is generally the case in the first quarter of 2018. Mineral analysts
are projecting that metal prices will gain more ground in 2018 given the strong
global demand and production shortfall,” MGB said.
Aside from metal prices,
other market forces that will have an impact on the overall performance of the
local mining industry in 2018 and in the coming years include the price of
fuel, foreign exchange rate, and the implementation of TRAIN.
Mining is a
fuel-intensive industry and the increased tax rates for diesel, gasoline and
other fuel products will increase the operating cost in mining operations.
On the part of
government, there will be an increase in the revenues collected from mining as
a result of the increase in the excise tax rate for minerals and mineral
products from 2 percent to 4 percent.
In total, the country’s
metallic production value during the first quarter of the year suffered a
deficit of P1.45 billion.
“The negative
performance was due to the overall production shortfall of most mining
companies,” MGB said.
Precious metal gold was
the key mineral product in the first quarter with a significant share of 47
percent, or P10.52 billion, while direct-shipping nickel ore and mixed
nickel-cobalt sulfide took the second spot accounting for 29 percent, or P6.46
billion.
Copper followed with 23
percent, or P5.25 billion. The joint output value of silver and chromite
contributed 1.23 percent or P0.27 billion.
As for the production,
Gold’s output was down from 6,167 kilograms with estimated value of P12.16
billion, to 5,279 kilograms with estimated value of P10.52 billion,
year-on-year, lower by 888 kilograms and P1.65 billion in volume and value,
respectively.
Meanwhile, the slow
start of mine production of direct-shipping nickel ore for 2018 was attributed
to the wet weather condition that usually prevail in the areas of Dinagat,
Agusan and Surigao Provinces during the early part of the year.
Nickel mining operation,
being surface mining, is always vulnerable to the weather condition, MGB noted.
To date, 20 nickel
mines operate in the said provinces and 12 reported zero production for the
first quarter of the year.
The red metal — which
accounted for almost 23 percent, or P5.25 billion, of the total metallic
mineral production value — was down by 3 percent, or 2,355 dry metric tons in
mine output from 72,194 dry metric tons to 69,839 dry metric tons,
year-on-year.
Despite the decrease in
production volume, its value went up by 10 percent, or P462 million, from P4.79
billion to P5.25 billion year-on-year.
The growth was
attributed to the upbeat copper price during the period from US$2.60 per pound
to US$3.12 per pound, a US$0.52 per pound uptrend.
In terms of metal
prices, nickel and copper strengthened by 27.06 percent and 20.10 percent,
respectively.
Nickel, in particular,
displayed an upbeat price from US$4.58 per pound to US$5.83 per pound,
year-on-year, or an upswing of US$1.24 per pound.
According to analysts,
the improved price of copper and nickel was attributed to growth in global
demand coupled with production disruptions among major producers due to weather
or policy-related reasons.
Gold also advanced
by 9.14 percent, from US$1,218.54 per troy ounce in 2017 to US$1,329.89
per troy ounce. The increase in investment demand was the primary factor,
according to market experts.
In contrast, silver
price declined from US$17.41 per troy ounce to US$16.74.
The last time the value
of metals output dipped was in end 2016 when metallic mineral production value
incurred an 8 percent shortfall P109.84 billion in 2015 to P100.56 billion.
It eventually recovered
in the first quarter of 2017 when metallic mineral production value grew by
5.10 percent from P22.79 billion in the first quarter of 2016 to P23.96
billion.
The momentum was
sustained throughout 2017.
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