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By Likha Cuevas-Miel, Reporter
The Philippines is veritably sitting on vast
reserves of minerals but the mining industry has yet to reach its
full moneymaking potential. It has only been four years since the
country began campaigning for investments in exploration and
production after the Supreme Court upheld the constitutionality of
the Mining Act of 1995 that opens the doors to foreign investors.
The world’s top mining companies like BHP
Billiton, CVRD, Anglo American, and Xstrata have come and seized the
opportunity to lock in mineral resources.
No mining without foreign investments
The president of a Lopez-led company said it is
difficult to enter the mining industry without the funds that
foreigners bring here. Mining is a capital-intensive endeavor with a
long gestation period. A company has to have a wide distribution
network to be able to make money since the buyers of minerals are
scattered worldwide.
In 2002, gross production value in mining was
P35.2 billion, data from the Mines and Geosciences Bureau (MGB)
show. That year, the industry accounted for $519 million or 1.5
percent of total Philippine exports but in terms of its contribution
to overall gross domestic product mining generated only 1.1 percent
of total.
In 2004, the High Court nullified all provisions
concerning the Financial or Technical Assistance Agreement (FTAA)
and other permits that can be granted to foreign-owned corporations.
Then in 2006 or two years after the SC decision,
production value of the industry slowly went up by P40.7 billion but
contribution to exports jumped to 4.5 percent from the 1.5 percent
four years before. Last year it further rose to 4.8 percent. Still,
contribution to GDP in 2006 barely moved up to 1.2 percent from the
2002 level.
In 2002, jobs generated by the industry was only
0.3 percent of total employment because only 101,000 people were
employed. Four years after, it barely climbed up to 134,000 workers
or only 0.4 percent of the country’s total employment.
Then, only recently, metal prices skyrocketed
around the world—thanks mainly to the growing industries of China
and India that were swallowing up high volumes of these minerals.
This spurred mining companies to look into other mineral-rich
countries like the Philippines where they can pour huge amounts of
exploration money into their local counterparts and hope for large
returns.
“I think it [the foreign investor interest]
has more than tripled even quadrupled. In fact it’s like opening a
door and before the door was closed. With the Supreme Court ruling,
the doors were opened. We’re just barely scratching the surface
[with regards to] the potential. Of the $7 billion spent on
exploration last year, the Philippines did not even get a 1-percent
share,” the president of a local mining firm, who refused to be
named, told The Manila Times.
Last year, the local mining industry posted a
gross production value of P95 billion, 22 percent higher year on
year due to the higher demand from Korea, India and China. Based on
the past two years’ export contribution, the MGB projects that the
country would be able to reach “mining country” status (as
defined by the World Bank) in the next few years when mining exports
have already reached 6 percent of total exports.
As metal prices began to soar, so did the
announcements of investments in the industry. However, some industry
insiders warned that these funds have yet to come in and these are
merely for exploration that may or may not bear fruit.
63 projects go into production in 2009
Two months ago, the MGB announced that the
country may hit $1.8 billion in projected investments as seven of
the 63 priority projects would proceed into production by 2009.
These mining projects include Carmen-Toledo copper, Dipidio
copper-gold, Palawan HPAL nickel (line 2) and Filminera Masbate
gold. Also included in the list are Iligan Ferronickel smelter
plant, Manticao Ferronickel smelter plant and Philippine Saga gold.
The total investments poured into these projects
are estimated to reach $670 million or P26.8 billion, on top of the
$892 million projected for this year. The MGB said additional funds
that would be injected into the industry could easily reach $10.4
billion after four years as the demand for precious and base metals
would continue to grow.
However, not all of these investments may
directly be translated into the potential export contribution since
exploration is a hit-and-miss affair. Exploration could take from
one year up to 15 years before a company can declare that the
tenement is ready to produce minerals. People should rather be
counting on the export potential of the companies that are ready to
produce and ship out minerals.
Only about 10 of those priority projects listed
by the MGB may reach production stage by 2011 at the earliest while
8 would be in the construction and development phase, another 8 in
the feasibility and financing stage and 9 would advance to
exploration stage.
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