Photo credit: TVI-Agata's nickel DSO process To paraphrase a popular mining saying, “They are making a ton of money and the Philippines is not getting a nickel.” The Philippines needs to maximize revenue from its nickel mining operations. Further up, the mining value chain presents more opportunities for the country to realize the contribution of mining. The US Geological Survey (USGS) lists nickel, cobalt, lithium, and rare earth metals as critical minerals. Stainless steel production, super alloys, and rechargeable batteries all use nickel. It is one of the world’s most important metal markets at $20 billion in size. The World Economic Forum reports that the world’s battery capacity must grow 40 times larger than it is today, and electric vehicles will require 80% of that future capacity. A Tesla car battery would require up to 50 kilograms of nickel. In addition, many major countries vowing to stop gas and diesel vehicles are driving further the global boom in electric vehicles (EVs). As the world’s second top nickel ore producer, it is time for the Philippines to advance further up the nickel mining value chain. But is the country ready or is it too late? Photo credit: Tesla  The Mining Value Chain The mining value chain starts with the first stage of the mine life cycle, exploration and analysis. Value steadily rises with new information that is favorable to the project. Each bit of knowledge brings it closer to the project construction and commissioning stage, known as the development stage. The value of a mine rises sharply in this stage as it closes to the production stage. Value remains steady in the production stage and declines as it approaches closure and rehabilitation. If we magnify into the production stage and look further into the sale and marketing of metals, we will realize that the most significant value added is in the final product. While this might be as simple as it looks in precious metals such as gold, the process is complex in critical minerals like nickel. Current Position in the Value Chain According to the Observatory of Economic Complexity (OEC), nickel is the 9th most exported product in the Philippines. The product comes from 32 operating nickel mines and 2 processing facilities. It is classified as direct-shipping ore (DSO), as most nickel operations in the Philippines directly ship nickel laterites to China without further processing to increase its value. However, this is suitable for high-pressure acid leach (HPAL) ores. The Philippines, Indonesia, Cuba, and New Caledonia contribute nickel laterites to the world market. In 2022, the Philippines was the world’s largest nickel producer, producing 370,000 metric tonnes or 10% of the global mined nickel output. S&P reports that the Philippines' nickel ore exports to China amounted to $2.67 billion in 2022, according to data from China's General Administration of Customs. That is 96.5% of the Philippines' nickel ore exports according to the Philippine Statistics Authority.[1] Nickel laterites or nickel oxides are low-grade, high-tonnage ore that accounts for 62.4% of the global supply. Chinese steel uses the typical products of nickel laterites such as nickel pig iron and ferronickel. The remaining 37.5% nickel supply is nickel sulfide, which is high-grade but rare nickel found in countries like Canada, Australia, China, Russia, and Greenland. Their products are typically nickel metal and sulfate, primarily used in electroplating and lithium-ion cathode material. Less than 10% of that supply is in sulfate form; not all are battery grade. [2] Of the nickel mines operating in the country, only Nickel Asia Corporation (NAC), the country’s top producer of nickel, processes its nickel laterite ores. Coral Bay Nickel Corporation and Taganito HPAL operate a hydrometallurgical processing plant that uses the High-Pressure Acid Leach (HPAL) process. HPAL can effectively and efficiently convert low-grade nickel lateritic ores from 1.14%-1.44% nickel to 55 to 60% nickel, also known as mixed sulfides (MS). Mixed sulfides, a mixture of cobalt and nickel sulfides and an intermediate product, are refined further in Japan at the Niihama Nickel Refinery and Harima Refinery. They produce electrolytic nickel and cobalt, nickel chloride, and nickel sulfate. These are further processed at the Isoura Plant to produce either battery-grade nickel or ferronickel. Battery grade nickel or Class 1 nickel is typically >99.8% Ni. Nickel pig iron (NPI) or ferronickel used for stainless steel and alloy is class 2 nickel or <99.7% Ni.  Source: Sumitomo Metal Mining. HPAL Technology for Nickel Recovery. [3] Value increases as the products are refined up to their final form in the supply chain. More value is added to battery production, and eventually electric vehicle production. Thus, the Philippines needs to get added value and opportunities along the production line, at least for the primary products. Countries like China, Indonesia, and Japan get this added value in the processed product stream. The Philippines, from its current standing, needs to move further up the value stream at least to the primary products. Additionally, it might be best if it can go to battery cathode or stainless-steel production, as most nickel ore is suitable for this. Source: International Energy Agency (IEA). The Role of Critical Minerals in Clean Energy Transitions. [4] Recharging the Philippine Nickel Mining Industry The Philippines, through the Department of Trade and Industry (DTI) participated in the Indo-Pacific Economic Framework for Prosperity (IPEF) Ministerial Meeting in Los Angeles, U.S.A last September 2022. The meeting highlighted that the U.S. Government will extend a grant for the Philippines’ nickel ore processing for the manufacture of batteries through a partnership with an American firm. [5] In December 2022, a study grant was awarded to Eramen Minerals Inc. (EMI) to evaluate the technical and economic viability of developing a nickel processing facility at the site of EMI’s mine in Zambales province. The plant is expected to use EMI’s nickel ore to produce refined nickel and cobalt products for sale as battery precursor materials. The study will help define the technical specifications for the facility and promote alignment with high environmental, social, and governance standards. [6] Last January, Chinese investors pledged to invest US$7.32 billion in the electric vehicle and mineral processing sectors in the Philippines during President Ferdinand Marcos Jr.'s first state visit to China on January 05, 2023. [7] Last February, Global Ferronickel Holdings Inc. coordinated with a potential technology partner for its plan to build a $100-million steel plant in Bataan. The plant aims to capture around 10% of the market for imported steel. [8] These are exciting opportunities for the nickel mining space, but policy changes especially on taxes must be balanced as the country needs to maintain a healthy business environment favorable to foreign investors, the government, and its citizens. Balancing Interests The government is planning to impose up to 10% tax on nickel ore exports in what the Department of Environment and Natural Resources (DENR) Secretary Antonia Yulo Loyzaga describes as moving out of the supply chain to the value chain. Inspired by the success of nickel’s high-value production in Indonesia, DTI is initiating the government’s industrial policy study to determine whether it will impose an export tax or nickel ban. Another statement from Trade Secretary Alfredo E. Pascual encourages investment in local processing to produce higher-value export products and not resource-based exports. However, following the footsteps of Indonesia is not as easy as it seems for several reasons. Depleting Reserves. The Philippines' class A nickel reserves dropped by 4.8% to 474.49 million tonnes in 2021, according to The Philippine Statistics Authority. [9] While the Philippines remains among the top countries with nickel ore reserves, there is a huge difference compared to the ore reserves of Australia, Brazil, and Indonesia. Favorable circumstances could quickly shift investors into moving into these countries in the long term. By the time nickel peaks, the Philippines might no longer have that impact on global production. In addition, a future tax on nickel would be meaningless and only discourage smaller mining projects. Dante Bravo, president of the Philippine Nickel Industry Association (PNIA), said the comparison to Indonesia is flawed because it has more reserves to support investments in local mineral processing. Capital Requirement. A processing facility is a capital-intensive infrastructure, and many small nickel mining operations need to satisfy processing capacities to operate. A more attractive investment solution would be a centralized nickel processing facility for mining operations near each other. Energy Requirement and Environmental Concerns. Lateritic nickel ores of the Philippines are amendable to high-pressure acid leach (HPAL) requiring substantial energy input. Processing low-grade nickel ores require high volumes of water, resulting in expensive water treatment and disposal. Lateritic ore mining also warrants high tonnage, thus, a larger environmental footprint. Policy Shifts. The Philippines has an unstable political climate where policies, especially in mining, change every time a new administration takes over. The industry is always at risk. The deposit is not the only focus of mining investment. It also means investment in the national and local government, the community, and the environment. Thus, changing policies is a significant concern for foreign investors. Overall, the environmental and social costs are the most significant reason for the Philippines to maximize value from mining. Processing facilities abroad do not assume that cost because they just buy into the product after mining, while we struggle to defend the industry and what is left after mining. The Philippines’ nickel mines will not be here forever and not for a very long time. Decisions need to be guided by facts and science for the interest of the common good.   Reference: [1] Chen. A. (2023, February 02). Philippines seeks to follow in Indonesia’s footsteps with Nickel Export Ban. S&P Global Market Intelligence. https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/philippines-seeks-to-follow-in-indonesia-s-footsteps-with-nickel-export-ban-74109353 [2] Desjardins, J. (2017, October 30). Nickel: The Secret Driver of the Battery Revolution. Visual Capitalist. https://www.visualcapitalist.com/nickel-secret-driver-battery-revolution/ [3] Sumitomo Metal Mining. (n.d). HPAL Technology for Nickel Recovery. https://www.smm.co.jp/en/sustainability/activity_highlights/article_12/ [4] International Energy Association. (2022, March). The Role of Critical Minerals in Clean Energy Transitions. https://iea.blob.core.windows.net/assets/ffd2a83b-8c30-4e9d-980a-52b6d9a86fdc/TheRoleofCriticalMineralsinCleanEnergyTransitions.pdf [5] Magkilat, B. (2022, September 15). US vows grant for PH nickel ore processing — DTI. Manila Bulletin. https://mb.com.ph/2022/09/15/us-vows-grant-for-ph-nickel-ore-processing-dti/ [6] Eramen Minerals gets US trade grant. (2022, December 14). Philstar Global [7] Magkilat, B. (2023, February 06). Chinese firms to invest $7.32 B in nickel, EV, steel, electronics ventures in PH. Manila Bulletin. https://mb.com.ph/2023/01/06/chinese-firms-to-invest-7-32-b-in-nickel-ev-steel-electronics-ventures-in-ph/ [8] Philippine Nickel Industry Associations (PNIA). (2023, February 09). Global Ferronickel in Talks With Potential Partner For $100m Steel Plant. https://www.philippinenickel.org/news-and-updates/mining-news/philippines-proposed-tax-on-nickel-ore-exports-could-kill-industry-group-head/ [9] Philippine Statistics Authority. (2022, June 02). Philippines’ Class A Nickel, Gold, Copper, and Chromite Resources Valued at Php378.04 Billion in 2021 (Press Release). https://psa.gov.ph/content/philippines%E2%80%99-class-nickel-gold-copper-and-chromite-resources-valued-php-37804-billion-2021

  Kicking off International Women’s Month, the International Women in Mining Alliance (IWIM) Alliance held its first ever-virtual Global WIM Summit on March 1-2.  Through the wonder of technology, I had the pleasure of connecting with other IWIM leaders throughout the world without having to hop on a plane and despite our differences in time zones. The summit also combined live and pre-recorded sessions which made it possible to view sessions at leisure. Diwata-Women in Resource Development, Inc, of which I was Founding President, is IWIM’s member organization in the Philippines.  There are currently at least 37 IWIM organizations throughout the world. The Alliance is a pioneering initiative that brings IWIM organizations together to leverage their collective strength to provide a global, multilateral platform that will facilitate collaboration among them and promote the emergence of a strong, unified IWIM voice.  Prior to its launch, the different IWIM organizations were under a loose umbrella, getting together only occasionally for teleconferences to exchange ideas and experiences.   Last year, IWIM  embarked on a strategic partnership with the World Bank on a research project to gather  information to understand the opportunities and constraints women in mining organizations face.   Results of the research project have been collated in a report to be published online and presented at international mining conferences starting with the Global WIM Summit.  It will also be presented at Mining Indaba, PDAC, the World Bank's 2nd Gender Conference, and other events. In November last year, Diwata’s core group, led by our President, Atty. Joan Adaci-Cattiling, were interviewed by the World Bank’s researcher on  the challenges we have faced, the lessons we have learned and our recommendations for strengthening IWIM organizations.  Hearing excerpts of the final report, it was heartening to know that our sisters in other IWIM organizations face the same challenges, including difficulty in obtaining funding, dependence on the efforts of volunteers and getting members who are busy with their day jobs to engage. One session that I would have wanted to attend, but missed was on “Role Models and Mentors for Women in Mining”.  While women are very well represented in all facets of the mining industry (as geologists, mining engineers, metallurgists, environmental scientists, community relations officers,  lawyers, accountants, human resources professionals, adminstrative staff, truck drivers, etc.), we want to see the numbers of women at the very top increase. Recently, the Philippines topped Grant Thornton International’s 2021 Women in Business Report, a global survey among 29 economies on the role of women in senior management.   While I do not have the figures for the mining industry, a quick “scan of the room” will show the male mining CEOs still outnumber the women.  Thankfully, we have strong figures likes Gloria Tan Climaco, Chairman of the Board of Filminera Resources Corporation and Mt. Labo Exploration and Development Corporation, and Diwata’s own Joan Adaci-Cattiling, President of OceanaGold (Philippines), Inc., as exemplars. Before the March 2020 lockdown, Diwata was scheduled to launch its 'Industry Leaders' professional mentorship & networking program (with Gloria Tan Climaco as the first speaker), which is designed to benefit female professionals through interaction with respected resource persons, professional mentorship and networking opportunities.  While it is entirely possible to hold this activity online in the near future, we are still looking forward to in-person connections with our members soon, particularly young women mining professionals who will most benefit from the program. In the eight years of Diwata’s existence, perhaps we have focused on the word “resources” in its name to refer to natural resources, but we have not lost sight of our equally valuable human resources.  To build and sustain the mining industry, we must support the professional development and career progression of the women who “hold up half the sky”.     On February 26, I had the pleasure of emceeing the Philippine Infrastructure & Construction Club’s webinar on the Prime BMD Wawa Weir 2 Project featuring Prime BMD’s CEO J.V. Emmanuel A. “Jocot” De Dios and Director of Operations, Jeff Gallus.  They were joined by their colleague, Gisoue (Jeff) Pani, who focused on the technical aspects of the project.  Once completed, the Wawa Weir 2 Project is expected to deliver 518 million liters per day (MLD) of water to 500,000 households within Manila Water Co. Inc.’s franchise area.  The presentation was very timely as water is a basic necessity that cannot be taken for granted, especially as pointed out by Jocot, our population grows and migration into Metro Manila increases the demand for water. In the webinars that I have hosted and attended, I have noted that the attendees are less shy about asking questions.  Perhaps this is because 99% of webinars start punctually compared to live events, and more time can be devoted to the Q&A. In the Q&A on the Wawa Weir 2 Project, the questions ranged from technical to practical (“who do we contact in your company”), but what I found most interesting were Jocot’s responses to observations that Prime BMD appears to have handled its community relations well.  In the case of Prime BMD, Jocot says that there is no tried and tested formula or template, but what has worked well for them is ensuring respect for the communities, particularly the indigenous communities, in their project area, constantly engaging with them to understand their needs, and upholding their culture and traditions.   This is of course easier said than done, but it seems, at least in this respect, Prime BMD has succeeded where other companies have faced much difficulty.   Patricia A. O. Bunye is a Senior Partner at Cruz Marcelo & Tenefrancia where she heads its Mining & Natural Resources Department and Energy practice group. She is also the Founding President of Diwata-Women in Resource Development, Inc., a non-government organization advocating the responsible development of the Philippines’ wealth in resources, principally through industries such as mining, oil and gas, quarrying, and other mineral resources from the earth for processing.

By Marcelle P. Villegas For the past centuries, the mining industry in the Philippines was greatly affected by the changes of government or colonisers, events around the world and more. It seems that whenever there is war, there is also a rise in the demand in certain mineral resources or a fall in the production rate of some minerals. August is History Month in the Philippines as promoted by Government and Education sectors. The Philippines is rich in natural resources, cultural heritage and more noticeably, we are rich in history which brought progress or hindrance in economic growth through the years. Last August, during the Philippine Mining and Exploration Association (PMEA) Monthly Membership Meeting, one of the keynote speakers is Mr Hernulfo “Nonoy” Ruelo, Geologist Consultant. The title of his presentation is “Copper-Gold Discoveries and Mine in the Philippines - Understanding the Past, in order to make sense of the Current, and the Future”. It was a well-researched report and analysis on how historical events, like wars or change in leaders, affected the mining sector and the socio-economic status of the country. The presentation takes us back in time with some rare vintage photos from the past. During the pre-Spanish Period, the earliest use of metal in the Philippines by our Filipino ancestors was the use of copper for ornamentation, not for tools or currency. Other metals used were gold and tumbaga (copper alloyed with gold). “Gold was the major form of ‘currency’ among the early Filipinos and one of the first things they [ancestors] taught their children was the knowledge of gold and the weights with which they measured.” (From the book by Evelyn J. Caballero, 1996. “Gold from the Gods: Traditional small-scale miners in the Philippines”. Giraffe Books, Quezon City.( p 196 and 263) On note, the pre-colonial mining methods had no environmental impact on land, water, air and people. Pre-Spanish Period Mining in the Philippines started in the 3rd century when gold was traded with China and the Javanese empire where the height of this trade was during 12th to 14th century. The Chinese were the first foreign miners. Gold is both a commodity and a medium of exchange. When the Spaniards arrived in the 1521, gold was already being mined, traded and used as jewelry or ornamentation by the native Filipinos. In fact, 16th century Filipino noblemen were decked in gold. Colonial Period Under Spain 1500s - 1898: Paracale and Cordillera were the oldest goldfields. From 1500s - 1700s, gold was one of the tributes collected by the Spanish government and given to the King of Spain. In 1583 and 1595, an expedition was sent to mine in Cordillera but was a failure due to the resistance of the Igorots. “Gold mining before the coming of the Americans was primarily in the hands of enterprises organized in the Philippines by Spaniards and Chinese mestizos and Filipinos, with a few other companies trying, without success, to produce commercially.” (Ref. - Wirkus 1974) In 1600 to 1700, about 10,000 ounces of gold per annum were shipped to Spain, and the gold shipments to Spain increased from 1800 to 1895. For copper, the Spaniards opened the first copper mine in the country in 1842, called the Carawisan copper mine in Antique province. From 1864 to 1874, the Contrabro-Filipino Company operated Mankayan Copper Mine. Gold mining made its comeback in commerce in 1892 where concessions to foreigners were first granted. The British explorer, Frank Karuth of Philippine Mineral Syndicate, led the commercial-scale hard-rock and alluvial gold operations in Paracale District until 1895. (Ref. - Chaput 1987) Philippine Revolution 1896 – 1902: With the rise of the Philippine revolt against Spain, in 1896, mining operations at Paracale dwindled until 1902 when the Filipino-American War ended. The Organic Act of 1902 was created which organized companies, issued patents, and established the Geological & Mining Science Department. By 1927, gold was the third best export commodity and initiated by the Philippine (Manila) Stock Exchange. In the following years, the Mining Act of 1935 was released (Commonwealth Act 137) which introduced the Regalian Doctrine, the concept of Mining Lease, and the establishment of Bureau of Mines. The Americans invested US$ 34.2M in gold production. Mining for copper was reopened in 1936, the same time when the Japanese savvy for copper was high and led to the ‘discovery’ of the first large porphyry copper deposit in the country. Commonwealth Period 1937 - 1941: This period in Philippine history was considered a golden era when Manila was highly modernised and was one of the most beautiful cities in Southeast Asia. In fact, in 1937, we had the best and well-equipped airport in the Southeast Asia, the Nielson Airport. (This is now Ayala Triangle Park in Makati City, and the original Nielson Tower is now “Blackbird” Restaurant.) Although this elegant airport was primary used as an aviation school, it also paved the way for trade and commerce for foreign investors. Philippine Airline made its first commercial flight in 1941, from Nielson Airport to Baguio. The Philippines was the largest gold producer in Asia and second only to California in world production. During the American period, 9 million oz of gold was produced from 1906 – 1941. Japanese Occupation 1942 – 1945: Being a colony of United States of America, the Philippines got itself involved in war against the Japanese who invaded Manila in 1942. The Japanese took over Lepanto and the Hixbar mines (Rapu-rapu) and was able to mine and extract 11,000 tonnes of copper. No gold production was recorded. With the aggressive strategies of conquering their neighboring countries, Japan was unstoppable that time in their collection of natural resources that were needed to fuel their warships and planes and the production of weapons. Battleships Musashi and Yamato where the two giants in naval power that made Japan feared by other nations. The two battleships were defeated though in the Philippines during the Battle in Leyte Gulf in October 1945 which paved the way to the Liberation of Manila and eventually the whole country. Post-war Reconstruction 1946 – 1954: Those post-war years were hard times for all war-torn countries. However, with the need for repairs infrastructure after WWII, there was an increase in the global demand for copper. Some gold mines in the Philippines were rehabilitated but the problems were lack of capital and low market demand. Copper production re-started in 1947. Since Manila was the ground zero and battlefield of the war that ended WWII in the Pacific (Battle of Manila in 1945), there were serious damages in the country’s economy and on the mining industry. Korean War 1954 – 1960: For the Filipino soldiers who fought the Japanese during WWII, the Korean War was the first time for them to fight a battle in a foreign land. Although this war affected Southeast Asia directly, the gold prices maintained. However, in mid 1950s, the gold mines collapsed due to a recession period. The copper price rose slight due to high world demand. More Philippine copper mines opened. Vietnam War 1960-1975: In 1972, U.S. President Nixon took dollar off the gold standard. It was fixed at $35 since 1934, but gold prices are allowed to float free which devalued dollar to $38. In 1973, world gold price jumped from $38 to $120. World copper rate hit high at $0.90 in 1974. World copper mine production was at its peak. Martial Law 1972 - 1986: During Martial Law in the Philippines, copper price trended upward where the country’s copper production continued and boomed in 1980 where it reached its peak. It was in 1980 when Philippine copper production was recorded the highest at 306 Kt. However, the World Oil Crisis in 1973 - 1980 brought about a decline in copper demand. World Recession in 1982 – 1984 pulled down the copper prices. Philippine inflation devalued the Philippine peso and there was an increase in production costs, materials and equipment. The Global recession resulted in a decline in copper demand. The Philippine gold production was sustained and gold prices surged from 1978 to 1980. The modern Gold Bloom in 1980s brought about the rise of unregulated Small Scale Mining. In summary, the explanatory variables of growth and decline in PH copper industry in the 1950s-1980s are: - For Copper resources: risk capital or investments, development in the world’s copper market, technology, human capital in mining, domestic social, legal, and political environment . - For the gold industry: gold resources, competition, commodity price, production costs, technology (bulk mining, milling, treatment), damages – natural & man-made disasters (Reference). T.M. Santos 2001 . Growth of Copper Production: Determinants and Empirical Evidence. Social Science Diliman, July-December 2001. 2:2, 1-49.) There were other historical events in the Philippines that followed like: EDSA Revolution: 1986-1992 - gold averaged $381, copper $1.02 – There was investment uncertainty and several mines closed. New mining laws were crafted like the 1991 RA 7076 (Small Scale Mining Act). The 1987 Constitution replaced Leasehold into Agreements system. From 1990s – 2004, there was collapse of the local mining industry. However from 2004 – 2009, there was a revitalization of the mining industry with EO 270 National Policy Agenda – Mineral Action Plan. Gold price surged from $410 to $873. Copper production hit lowest in 2004 at 16 Kt since 1957. The year 2005 brought global gold boom where Philippine gold-copper mines had expansion and reopening. The Aquino Administration from 2010-2016 was within the Global Mining Boom period (2010 - 2013). It was a successful period for Philippine mine exploration, prospect drill-testing, and resource evaluation drilling. In conclusion, Mr Ruelo presented a list of challenges that miners will need to face at the present time, namely: - Fewer outcropping “easy-to-find” deposits are now left except in high-risk and “inaccessible” areas. - Current mining operations will encounter increasing real costs (labor, materials, energy, environmental, community impact) that will affect production. - The next generation of lower-grade copper/gold projects require significantly higher metal prices to justify development. - We need to discover high-quality or better gold/copper resources, even deeper ones that can be economically mined – e.g. in greenfields and brownfields.