MAC: Mines and Communities

Philippines mining industry continues to 'under-perform'

Published by MAC on 2019-04-14
Source: Reuters,, Manila Bulletin, Sun Star

A recent report by Fitch (see notes that the Philippines continues to "underperform in Asia as a result of weakening reserves, a poor regulatory framework, corruption, and increasing resource nationalism". It is arguable that resource nationalism is increasing (if anything after the removal of the previous Environment Secretary, Gina Lopez, it could be argued the industry is more in control again). However, it is gratifying to see mention of weakening reserves (given that many lazy articles claim, on ancient and unreliable data, that the Philippines is in top four to six in world reserves for key minerals).

As if to emphasise the argument there are two bills gaining approval in the House of Representatives creating mining-free provinces (one on Marinduque, and one in a district of Palawan). Also Philex have also had to delay opening its Silangan open-pit mine thanks to the continue ban on such mines.


Mining industry worst in Asia for risk-reward balance despite DENR changes, Fitch says

11 April 2019

THE Philippine mining industry is expected to continue to underperform in Asia as a result of weakening reserves, a poor regulatory framework, corruption, and increasing resource nationalism, a Fitch research unit said.

The Philippines was rated 13th in Fitch Solutions Macro Research’s Outlook for Asia’s Mining Sector report released Thursday. The report covers 13 countries and measures a country’s mining risk and reward.

The Philippine score was 42.6, graded at 46.5 for rewards and 36.7 for risks.

It said one of the factors that affected the results were the uncertainty surrounding environmental policy, as well as corruption.

The uncertainty persists despite the replacement of former Department of Environment and Natural Resources (DENR) Secretary Regina Paz L. Lopez with Roy A. Cimatu in 2017.

“In the case of the Philippines, despite the replacement of anti-mining Environmental Minister Gina Lopez with the more accommodating Roy Cimatu in 2017, government regulations on the basis of environmental protection and general policy uncertainty will continue to plague the mining industry in the coming years. The country scores 42.6 in our Asia Mining Risk/Reward Index and is placed last out of 13 Asian countries, (unchanged) from last quarter,” the report explained.

President Rodrigo R. Duterte appointed Ms. Lopez in June 2016. She implemented an uncompromising environment-focused policy on the mining industry and ordered the suspension of many major miners in early 2017.

In May 2018 the Commission on Appointments rejected her appointment, bringing on Mr. Cimatu. A number of metal miners were able to resume operations, but the ban on open-pit mining remains.

In 2012, President Benigno S.C. Aquino III signed Executive Order 79, which suspended the permit process for miners pending a new fiscal regime for the industry with a revenue split that was more favorable to the government.

President Duterte also ordered a move to increase domestic processing of nickel in 2016 to allow the Philippines to capture more value from its ores rather than ship them to China and Japan for processing.

Asked to comment, Mines and Geosciences Bureau (MGB) Director Wilfredo G. Moncano told BusinessWorld that he contests Fitch’s findings.

Weakening reserves “may be true for one or at the most two mines but, overall mineral reserves ready to be developed are in fact increasing. Three of the priority mines for development once the new fiscal regime is put in place via the approval of TRABAHO Bill will increase the reserves of gold and copper.”

He add that the DENR and the MGB have been seeking ways to streamline the approval process for mining companies and which could start showing results by the second half of the year.

“The DENR and MGB are undertaking the review of the regulatory framework with the end of streamlining and reducing the steps, period of approval, documentary requirements and signatories in line with the Ease of Doing Business Act. The streamlining should be in place by 2nd half of the year,” he said in a text message.

On corruption, Mr. Moncano said: “There may be a few bad eggs left in the bureau, but their irregular acts have been largely controlled. Employees have been investigated. Also, Regional Directors are rotated to other regions to prevent or reduce corruption.” — Vincent Mariel P. Galang

Asia’s mining sector offsets risk with reward — report Editor -

11 April 2019

Asia's mining sector continues to hold the greatest rewards globally, with positive business environments, rich mineral deposits, supportive infrastructure and political stability in countries holding the top positions in Fitch Solutions' Asia Mining Risk/Reward Index.

The analyst’s latest report, released Thursday, revealed that Australia continues to reign at the top, while Myanmar and the Philippines, in an emerging Asian market, remain the regional laggards.

Factors enabling Australia's outperformance include positive business environment, robust mineral deposits and solid infrastructure. "Contrary to the high scores for rewards, the Asia region ranks second lowest for industry risks"

Mongolia emerged as an investment hot spot for untapped reserves, and the availability of rich reserves will continue to attract investors.

Contrary to the high scores for rewards, the Asia region ranks second lowest for industry risks, just above Sub Saharan Africa, Fitch reports.

This partly is due to Asia having the second greatest vulnerability to commodity price volatility globally, after the Middle East and North Africa (MENA), which measures the relative vulnerability to price volatility by country according to the three largest mining commodities produced locally.

Globally, Asia has the second highest score, after Europe, on the Mining Risk/Reward Index, with a score of 55.1, maintaining its position from last quarter. Asia stands out with the highest average industry rewards due to having the largest mining sector size globally.

Emerging markets including Myanmar and the Philippines will continue to underperform, Fitch predicts. The two countries are characterised by weak mining reserves, poor regulatory framework, corruption and increasing resource nationalism.

Read the full report here -

Bill declaring Marinduque mining-free gains in House

By Charissa Luci-Atienza

14 April 2019

The House of Representatives has approved on second reading a bill seeking to declare the province of Marinduque as a mining-free zone.

House Bill 9019, principally authored by Marinduque Rep. Lord Allan Jay Velasco, bans all forms of mining, whether large-scale or small-scale, within the province.

“As citizens of the Philippines, we have the inter-generational responsibility to preserve and protect the environment that is capable of sustaining life. The right carries with it the correlative duty to refrain from impairing the environment,” Velasco said.

He rued that the Marcopper mining disaster 1996 left irreparable damage to the people and province of Marinduque.

“The effects of the incident were so devastating that a United Nations (UN) assessment mission declared it to be a major environmental disaster,” the chairman of the House Committee on Energy said.

Co-authors of the bill include Velasco’s sister, MATA partylist Rep. Tricia Nicole Velasco-Catera and Cebu City Rep. Rodrigo Abellanosa.

HB 9019 covers all mining activities, including quarrying.

Under the measure, all valid existing contracts, exploration permits, licenses, technical agreements, and mineral production sharing agreements in accordance with the Mining Act of 1995 will remain valid until their expiration or termination.

Thereafter, no further extension or renewal will be granted.

Upon the effectivity of the proposed act, no exploration permits or application for extension will be granted even during the lifetime of existing mining contracts, technical and financial assistance agreements and mineral production sharing agreements.

In case of failure to undertake any exploration activity or mining operation within two years from the effectivity of the act, the exploration permit or mineral agreement will be declared dormant by the Department of Environment and Natural Resources (DENR).

Dormant permits or agreement shall ipso facto be cancelled upon declaration of dormancy.

HB 9019 also mandates that all small-scale mining contracts as enunciated in RA 7076 in the province are cancelled upon the effectivity of the Act.

Affected small-scale mining contractors have one year from the time the law takes effect to undertake the rehabilitation, regeneration, and reforestation of mineralized areas, slope stabilization of mined-out and tailing-covered areas, watershed development and water preservation.

Moreover, the existing quarry permit issued by the provincial government at the time of the effectivity of the Act shall be recognized. Thereafter, quarry permits issued by the provincial governor shall be regularly reviewed and monitored by the DENR.

Violators face imprisonment of 6 to 12 years and a fine of from P1 million to P10 million.

Any public officer who violates the proposed act will be dismissed from the service and perpetually disqualified from holding public office.

If the violator is a juridical entity, the highest ranking official and the members of its board of directors or trustees who authorized the violations shall suffer the penalty imposed in the Act.

The bill tasks the DENR to formulate the necessary rules and regulations for the effective implementation of the proposed Act.

House okays bill declaring Palawan 3rd district a 'mining-free' zone

10 April 2019

THE House of Representatives has approved on third and final reading a measure that seeks to declare the third district of Palawan as a mining-free zone.

If House Bill 8816 is approved into law, all forms of mining operations and activities within the third district's jurisdiction will be prohibited.

The Third District of Palawan is composed of Puerto Princesa City and the municipality of Aborlan.

Representatives Gil Acosta (Palawan, Third District) and Rodrigo Abellanosa (Cebu City, Second District) principally authored the bill.

In their measure, Acosta and Abellanosa said it is the government's policy to protect and advance the right of the people to a balanced and healthful ecology in accord with the rhythm and harmony of nature.

In the bill, the term "mining" refers to the extraction of valuable minerals or other geological materials, excluding quarrying of gravel, sand and marble. This shall include large-scale and small-scale mining activities involving exploration, feasibility, development, utilization and processing.

The measure proposed an imprisonment of six to 12 years and P1 million to P10 million fine as penalty for anyone who violates the law.

Any public officer who violates the Act shall also be dismissed from the service and perpetually disqualified from holding public office, the bill stated.

It added that if the violator is a juridical entity, the highest ranking official and the members of its board of directors or trustees who authorized the violations therein shall suffer the penalty imposed in the Act.

The bill mandates the Department of Environment and Natural Resources to formulate the necessary rules and regulations for the effective implementation of the Act.

Acosta said the third district of Palawan vaunts of a mantel of rainforest, magnificent mountains, prehistoric caves, pristine dive sites and beaches. Its virgin forests are also rich in minerals such as mercury, copper and nickel, all of which are sought after by miners, he added.

“Mining in the third district of Palawan is said to have destroyed forests and caused siltation of water sources. While mining provides job opportunities for some, the degree of damage to the earth, on the livelihood of farmers, and the Palawenos' general well-being, has become exceptionally alarming. Thus, in order to protect and preserve the natural environment of the third district of Palawan, immediate passage of the bill is earnestly sought,” said Acosta. (PR/SunStar Philippines)

Philippines' Philex delays copper-gold mine start by four years

22 March 2019

MANILA - Philippine copper and gold producer Philex Mining Corp on Friday said the start of output at its Silangan mine in the south of the country would be delayed by four years until 2022, hit by a national ban on new open-pit mining.

The Silangan copper and gold mine could be Philex’s biggest source of revenue after its 61-year-old Padcal mine in the north is expected to close in 2022.

Silangan was originally slated to begin production by 2018, but that has been set back by a ban on new open-pit mining introduced in 2017 as the government in one of the world’s top copper, gold and nickel producers tries to step up environmental protection.

Open-pit extraction has been used by many miners in the Philippines, but is blamed for massive environmental destruction in some areas.

Philex said in a statement on Friday that it was now looking at an infrastructure design that would allow it to use underground mining to extract ores.

“We are currently working on securing all requisite permits and approvals to operate Silangan,” said Chief Executive Officer Eulalio Austin.

“We look forward to realizing the massive potential of a project of this magnitude.”

Philippine President Rodrigo Duterte has warned he might declare a total ban on open-pit mining as he ordered mining companies to reforest denuded sites. The existing ban also covers the $5.9 billion Tampakan copper-gold project in southern Mindanao island.

Silangan consists of three deposit areas - Boyongan, Bayugo and Kalayaan - with the latter a joint venture with Manila Mining Corp. Boyongan is expected to be the first to operate, by 2022.

Silangan’s development was previously estimated to cost $1.2 billion, based on open-pit extraction. Philex did not give any new estimate for the cost of the project.

Padcal accounted for 9 percent of gold output in the Philippines last year at 29,782 kilograms, and 20 percent of its copper concentrate production at 282,391 tonnes.

GMA appeals to mining firms to help Du30 achieve PH goals

Maricel Cruz

20 March 2019

House Speaker Gloria Macapagal Arroyo has called on the mining industry to help President Rodrigo Duterte achieve his economic and environmental agenda by working closely with the Department of Environment and Natural Resources to make sure that laws on sustainable and responsible mining are carried out.

“We should help the sector and help the DENR. Because when the industry players and the DENR work together, your sector can contribute greatly to government revenues, exports, economic growth, job creation and the progress and development to the local communities that host mining,” Arroyo told mining industry leaders at the Philippine Nickel Industry Association Nickel Initiatives Forum at Shangri-La Towers in Bonifacio Global Center Tuesday.

Arroyo said the mining industry should endeavor to work closely with the DENR in order for it to grow even with the strict stance of President Duterte on mining.

“I have said earlier that even under my successor who was very strict about mining, the sector even grew compared to my time, and thus what we want to do now. Even in today’s policy and regulatory environment, we want to have the sector grow and contribute to sustainable national development,” she said.

Arroyo said the nickel mining industry can contribute largely to President Duterte’s economic policies particularly on his on his Build, Build, Build program and tax reform.

“It is so important for the Philippines because the Philippines is the 2nd largest supplier of nickel in the whole world. So hopefully, if we end up on the same page with government in mining and we were able to revitalize the manufacturing industry, because President Duterte’s economic policies on “Build, Build, Build” and tax reform, are truly revitalizing our economy, then nickel ore production will increase in the coming years,” she said.

Arroyo also said that the DENR should view itself not just a regulator but also as a promoter of responsible, world-class, efficient and mining businesses.

Traditionally, Speaker Arroyo said mining was always a major sector of the Philippine economy. However, after EDSA I, in the mid-1980s, mining was virtually banned.

“Then during my presidency, I revived the mining industry. In January 2004, I issued EO 270, declaring the policy to promote responsible mineral resources operation, development and utilization in a manner that is conducive to sustainable development and with due regard to justice and equity, and sensitivity to the culture of the Filipino people, and respect for Philippine sovereignty. That is what my EO 270 did as it provided for the guideline for reviving the mining industry,” said Arroyo.

In December 2004, the Speaker said they were able to reverse a Supreme Court ruling that was adverse earlier. The high court ruled favorably on the issue of foreign participation in mining. “I think those two acts in 2004 were what led to the present modern day mining boom in the Philippines,” said Arroyo.

“My successor was against mining and apparently wanted to ban it but his Executive Secretary, I was told, has pointed out that there was no legal basis for a ban on mining. So what he did was to only ban new permits,” Arroyo added.

Despite his stance against mining, the industry grew under the time of her successor because bigger operations were carried out, she said. “But note, he did not ban any old existing operations through EO 79. Thus, 20 new operations were initiated in my successor’s time. Even under EO 79 using only existing permits and expansions. So, despite the fact that there was a ban on new permits, actually mining output during my successor’s tenure was bigger than during my tenure,” said Arroyo.

Last April 2017, the DENR issued Order No. 10, banning the open pit mining for copper, gold, silver and complex ores in the country. But even then, according to Speaker Arroyo, the Secretary of mining was very quick to point out that the ban on open pit mining did not include nickel mines.

“There were report at the time, urban legend the Secretary of the Environment closed 20 mining companies. But I think you know the facts. Actually none of them were closed. However, in that negative mindset regarding mining, the industry’s output went back to the levels of my time. And this worried you, the business community and inspired your industry to become more militant. The Chamber of Mines became meore unified and the sector even began considering legal action. But when I became Speaker I discouraged legal action,” she said.

Arroyo said Congress should not have an adversarial stance towards mining. Instead, Congress should help the mining sector and the DENR because when the industry players and the DENR work together, mining sector can contribute greatly to government revenues, exports, economic growth, job creation and the progress and development to the local communities that host mining.

“I have said earlier that even under my successor who was very strict about mining, the sector even grew compared to my time, and thus what we want to do now. In the remaining years of his administration we should help the DENR focus on harvesting the fruits of those good seeds within President Duterte’s term,” Arroyo said.





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