Manila spooks foreign investors with mining reviewPublished by MAC on 2006-03-13
Manila spooks foreign investors with mining review
13th March 2006
by Carmel Crimmins, Reuters
MANILA - The Philippines is trying to reassure foreign investors they have nothing to fear from a review of its mining law but analysts say the surprise move has spooked foreign firms vital to the industry's revival.The government said on Monday that re-examination of the law, which allows for full foreign ownership of local mines, was simply to address environmental concerns raised by the country's powerful Catholic bishops and not a re-write of ownership rules.
"If it needs to be amended to strengthen the implementation of the environmental issues then it will have to be amended," Romulo Neri, socioeconomic planning secretary, told Reuters.
He said the bishops asked for a review of the law "to ensure that it has more teeth."
After pressure from the Catholic Church, the government announced on Friday it would conduct a 30-day review but any amendment would take longer because it would have to be debated by Congress.Manila is dependent on foreign investors to tap an estimated $1 trillion in mineral wealth but analysts say the government's apparent willingness to re-write laws could jeopardise efforts to attract $6.5 billion in funding for the once mighty mining sector.
"That's not good news for the Philippines, there was a perception policy was going the other way," Ted Leschke, mining analyst for Shaw Stockbroking in Sydney, said.
"From a geological standpoint, the Philippines is A-1, but if they keep changing things, miners will go to Mongolia or somewhere else."
The Philippines ranks in the world's top five for its deposits of copper, nickel and iron ore and is geographically closer to resource-hungry China than the region's other major mining centre, Indonesia.
During the 1970s and 1980s, the country hosted one of the biggest mining industries in the world but two decades of neglect, environmental mishaps and clashes over land rights have seen its potential stunted.
Political instability has also deterred prospectors from pouring money into the Philippines, where there have been more than a dozen coup attempts since the ousting of former dictator Ferdinand Marcos in 1986.
Last month, President Gloria Macapagal Arroyo uncovered a coup plot and declared a week-long state of emergency, which she said gave her the power, if necessary, to take over privately-owned utilities.
"The Philippines will need to demonstrate significant changes in the way the country is run to attract a meaningful level of foreign mining investment. That clearly is not happening," Keith Goode, director of Eagle Mining Research of Australia, said.
Local communities, particularly those reliant on fishing, are concerned about the dangers to their lives and livelihoods from mining.
Australia's Lafayette Mining became the first foreign firm in nearly four decades to develop a Philippine mine but cyanide leaks last year triggered a wave of anti-mining protest, particularly among the mainly Catholic country's bishops.
The government has said it will await the recommendations of a fact-finding commission headed by bishop Arturo Bastes into the impact of the Lafayette leaks before completing its review. The review is expected to take 30 days.
Arroyo also wants mining companies to devote at least 10 percent of capital expenditures to fund environmental expenses and to spend 3-5 percent of direct mining and milling costs for annual environmental programmes. Companies must also take out environmental insurance coverage.