MANILA, Philippines — The local mining industry remains at a standstill, fighting for its existence and approval from both the administration and the public.
But the extractive sector’s optimism is not waning as it continues to believe in its important contribution to the growth of the economy.
While President Duterte has shown signs of mellowing in his hostility toward the industry, he has also not issued any orders that could propel the growth of the sector.
In fact, lawmakers are pushing ahead with plans to further tax the mining industry on top of the doubling of the excise tax, which formed part of the new tax measure.
Yet the industry is still willing to carry the additional burden of being slapped with more levies even as it awaits government’s decision on its request to reverse the orders issued by former environment chief Gina Lopez.
“The country is well mineralized and the industry, if allowed to grow, can contribute significantly to the country’s economic development,” said Gerard Brimo, chairman of the Chamber of Mines of the Philippines (COMP).
“Three pending mining projects can bring the industry’s exports to over nine percent of total exports and increase the industry’s contribution to about 1.4 percent of the country’s GDP (gross domestic product),” he added.
Metal exports are about $4.05 billion or nearly seven percent of the country’s exports while their contribution to GDP is P134.5 billion or 0.85 percent.
The industry also contributes 1.4 percent or P25.6 billion of the total taxes and employs 0.5 percent of the total workforce.
Nearly three years since the Duterte administration started, the industry continued to be haunted by the same old issues.
Among these include Executive Order 79 which called for the moratorium on new mining permits until a new mining tax regime is legislated.
In the first tranche of the tax reform program, the excise tax on mining doubled from two percent to four percent of gross output and yet the moratorium remains in place.
“With higher taxes, the moratorium on new mining projects should be lifted to allow the industry to flourish,” Brimo said.
There also remains a perception that the industry is not paying enough taxes.
Mining companies, no doubt, are still having a hard time changing the public’s perception largely because Lopez was successful enough in painting the industry as the bad guy.
“We build roads, provide electricity and water. If there’s someone doing rural development other than the government in a big way, it’s the mining companies,” Filminera Resources Corp. chairman Gloria Climaco said.
“There is no better example of development in remote areas that see very little of it than large-scale mining,” Brimo said.
The bigger issue remains the ban on open pit mining.
“Banning open pit mining, which is practiced all over the world, even in the most developed countries, is tantamount to turning one’s back on the industry. No other country has turned its back on the development of its mineral wealth,” Brimo said.
“Open pit bas been demonized by Gina that even the mention of the word is bad, but it is not,” Climaco said.
COMP said the Philippines is losing P300 billion in potential revenues with the government’s inaction on its request for the lifting of the open pit ban.
Three pending open pit mining projects stand to earn P303 billion in national revenue and some P40.4 billion in local government revenue. These gold and copper projects include the Tampakan mine in South Cotabato, King-King in Compostela Valley and Silangan mine in Surigao del Norte.
COMP said allowing the three projects to move forward would allow the country to be a major copper producer.
“These companies are not asking for subsidies, they are not asking for government investments. They are just asking to lift the open pit ban and that’s it,” said Joaquin Lagonera, president of Sagittarius Mines Inc-Tampakan copper gold project.
“We are not rushing this project but Tampakan has been trying to do this for the past 23 years. It is not as if we got the permit last week and we want government to push for it immediately,” he added.
The Tampakan project is expected to yield P142 billion in combined national and local government revenues. Capital investment was set at $2.5 billion.
Silangan, on the other hand, will generate P140.4 billion in revenues. It has an investment of $1 billion.
KingKing is also expected to turn in P61 billion in revenues with a capital investment of over $2 billion.
Open-pit mining remains an internationally accepted method for mining. The Constitution even gives the state the duty to explore, develop, and utilize the country’s mineral resources.
While the last two years were never good for the industry, mining firms are seeing a flicker of hope that things may start to change next year following the mid-term elections.
“2019 is an election year. Things can change, local government units may change leadership in key areas,” COMP said.
The industry also expects the global market to go full throttle again. This year, the metal sector, particularly nickel, is on a downward trend in terms of prices amid oversupply, trade wars and Indonesia’s return in the ore export scene.
Given these reserved bullets, it may not entirely be a continuous negative streak for the industry.
And while the uncertainties hounding the sector are far from over, the industry still believes that DENR chief Roy Cimatu is the industry’s ally.
Left with no choice, the mining industry continues to crawl its way up, with or without support.