Investment in the mining industry is expected to grow further slightly this year after jumping more than 60 percent in 2013 due to sustained capital expenditure by companies and the government lifting of a moratorium on the issuance of new mining permits.
But growth may taper off in 2015, and by 2016 the amount of new investment may be down by half the 2014 level, according to projections made by the Mines and Geosciences Bureau (MGB).
In 2013, investment in mining totaled $1.311 billion, surpassing that year’s target of $817.58 million by more than 60 percent, MGB Director Leo Jasareno said over the weekend.
“It is also significantly higher than the $812.5 million recorded in 2012,” Jasareno said in a telephone interview.
The bureau forecasts that investment in the sector will rise further to $1.324 billion in 2014, then start easing to $1.2382 billion in 2015 before plunging to half the 2014 level to $659.7 million in 2016.
Explaining the expected increase in investment in 2013 to 2014, Jasareno highlighted the continuing capital expenditures by major mining groups in their local existing projects – including Japan’s Sumitomo Metal Mining Co. Ltd. (SMM) HPAL project, the Sagittarius Mines Inc.’s $5.9-billion Tampakan copper-gold project, Philex Mining Corp’s Silangan project, Lepanto Consolidated Mining Co.’s Far Southeast Project in Benguet, and Toronto-listed St. Augustine Gold and Copper Ltd.’s $2-billion King-king copper-gold project in Mindanao.
Also contributing to the robust mining sector growth were new mining ventures such as the TVI Resource Development (Phils.) Inc.’s Agata nickel project in Agusan del Norte, Jasareno said.
The Philippines in January 2011 stopped approving new mining permits until Congress passed a bill increasing the government’s share from mineral extraction and the “no-go” zones map was set in place. The map is supposed to guide potential investors in identifying areas that are not accessible to mining.
The policy is contained in a new executive order signed by President Benigno Aquino 3rd aimed at overhauling policies governing the industry to boost state revenues while putting in place measures to protect the environment, tourism and agriculture.
In March 2013, however, the government lifted the moratorium on the acceptance of new mining applications – such as exploration permits and financial or technical assistance agreement —following the completion of the “no-go” map.
The MGB chief said that “no-go” areas, which include island ecosystems and tourism destinations, are a crucial aspect of the Aquino administration’s mining policy to address environmental and social issues that hound the industry.
“It is subject to clarification on the boundaries of prime agricultural land,” he said, adding that the government had difficulty delineating boundaries of prime agricultural land, as well as tourism development areas that are considered closed to mining.
Under Administrative Order No.2013-10, or the “Procedural Guidelines in the Filing and Processing of Applications for Exploration Permit,” the MGB increased the exploration permit (EP) and mining application (MA) fee to P300 per hectare, or not less than P200,000 per application, from P60 per hectare or not more than P50,000 per application.
The fee for a financial or technical assistance agreement (FTAA) was increased to P300 per hectare, or not less than P500,000 per application, from P60 per hectare or no more than P100,000 per application previously.
Memorandum Order No. 20130-01, on the other hand, increased the minimum authorized and paid-up capital requirement for mining applicants pursuant to Republic Act No. 7942 or the Philippine Mining Act of 1995.
Jasareno said the minimum authorized capital requirement for applicants of EPs, MAs, and FTAAs has increased from P10 million to P100 million, while the minimum paid-up capital has risen to P6.25 million from P2.50 million previously.
In the case of an applicant for FTAA, it shall be required to have a minimum paid-up capital of P500 million upon the grant of the said FTAA by the President of the Republic of the Philippines and prior to its registration with the MGB.
For new mining applications, the MGB also set a limit for each exploration permit to about 16,000 hectare per province and a total of 36,000 nationwide.