Key risks hamper Phl mining sector, says UK firm

Manila, Philippines - The Philippines offers several investment opportunities for mining firms but key risks which can curtail projects from taking-off remain such as an ongoing moratorium on issuance of permits, provincial bans on mining and new rules in getting the indigenous people’s consent for a project, according to a British firm which specializes in risk analysis.

“Significant opportunities are available to investors in the Philippine mining sector, but large-scale mining has been curtailed by both unpredictable national mining policy and hostile local policy,” Maplecroft said in a statement for its country risk report on the Philippines on Thursday.

It noted that among the main issues faced by investors is the moratorium on the issuance of new mining permits.

Mines and Geosciences Bureau (MGB) director Leo Jasareno said earlier that the moratorium on the approval of mining permits, issuance of tree-cutting permits, and environmental compliance certificates (ECC) would be lifted once the mining policy is released.

Provincial ordinances which prohibit mining, Maplecroft said, is likewise a challenge for investors in carrying out their projects.

The $5.9 billion Tampakan copper-gold project being pursued by Sagittarius Mines, Inc. in Mindanao is threatened by a ban on open-pit mining in the province of South Cotabato.

Maplecroft said that while an ongoing review of the national mining policy is expected to be resolved in the near-term, the potential for an increase in the mining fiscal burden is also a key risk for investors.

The government is set to release a policy for the regulation of the mining industry which among others, seeks to push for responsible mining operations, collect more from mining, and resolve conflicting national and local laws.

Maplecroft also said the new guidelines on free and prior informed consent (FPIC) from indigenous groups to be affected by the mining project “potentially complicate the establishment and maintenance of a secure and long-term social license to operate.”

In May, the National Commission on Indigenous Peoples (NCFP) issued new guidelines which requires obtaining certification from indigenous peoples at every stage of the mining project.

Previously, the FPIC only had to be secured at the outset of the project.

Obtaining the FPIC is a requirement for the issuance of a Financial or Technical Assistance Agreement (FTAA), which is a license allowing a foreign corporation to own a majority stake in a mining project in the Philippines.

The MGB estimates mining investments to the country to reach $2.27 billion this year.

Last year, investments in the country’s mining sector reached only $618.50 million, lower than the government’s $1.4 billion estimate for that year.