But BMI Research sees no impact on production
The Fitch Group’s BMI Research said foreign investment in the Philippine mining sector will be sparse in the coming years due to increasing government regulation, policy uncertainty and increasing environmental restrictions.
This is regardless of the ousting of the controversial secretary of the Department of Environment and Natural Resources (DENR) Regina Lopez from the post in May, the think tank said in a report Tuesday.
“The Philippines will continue to deter potential foreign investors in the country’s mining space with its strict environmental laws, policy uncertainty and a social mindset that is anti-mining,” the report said.
BMI said although the new head of the DENR, Roy Cimatu, is more adaptive and believes mining and protecting the environment can be achieved simultaneously, President Rodrigo Duterte insists on upholding the existing mining law.
Soon after Lopez was appointed in June 2016, she carried out environmental audits of all mines in the Philippines, resulting in her closure order for 28 of the country’s 41 mines during her 10-month tenure.
“The closures of the mines are still pending the President’s approval as the companies have appealed against Lopez’s orders,” BMI noted.
Before being ousted, Lopez banned open-pit mining, to the uproar of the mining community.
BMI pointed out that upon multiple complaints from mining giants and growing resentment among miners and communities that depend on mining, Lopez was replaced by Cimatu.
With this, it said foreign investment in the mining sector in the Philippines will be limited due to policy discontinuity, severe government intervention and strict environmental laws.
“Besides, protests against mining by environmental activists and local communities, supported by the Catholic Church, are also commonplace in the country,” it added.
BMI recalled that in March 2015, 300 protestors marched to Mendiola Bridge in Manila and burned an effigy of then President of the Philippines Benigno Aquino 3rd, demanding a stop to coal mining.
Furthermore, the Catholic Church in the Philippines joined a 1 million-signature petition against coal plants and mines, named the “One Million Against Coal Campaign,” it said.
“The Philippines scores 45.1 out of 100 in our Mining Risk/Reward Index, where the average for Asian countries is 55.6,” it added.
No impact on production
Nevertheless, BMI said there will be no likely effect on production growth in major minerals as the big producers manage to comply with or revolt against regulations.
It said any tightening of environmental regulations in the Philippines will have limited effect on actual production from the country, despite acting as a deterrent to potential new investment.
Nickel ore output growth seen averaging 2.4% in 2017-2021
Thus, BMI maintained its nickel production forecasts for the Philippines, believing that the Philippine nickel industry would not suffer a significant drop in overall output in 2017 compared with 2016, as prices recover and the government’s mine closures largely affect smaller players.
“True to all our expectations, production from the Philippines in 2017 will be stable. Nickel ore production growth in the Philippines will register an annual average of 2.4 percent during 2017-2021,” it said.