A Better Outlook for Mining In 2021
In spite of the economic downturn that the COVID pandemic has brought to the world, the Philippines is hopeful that the mining sector will bring the country that much-needed growth.
“There is a keen and renewed interest to see what it has to offer to the Philippines,” said Chamber of Mines of the Philippines (COMP) executive director Ronald Recidoro. “Only two per cent of the country’s territory is currently covered by mining contracts.”
But for this industry to help in the recovery, there must be changes.
“We have made several representations with the government in light of the pandemic. They are looking into the policies and issues that we have been raising and, hopefully, we get word from policymakers in the future,” COMP spokesperson Rocky Dimaculangan said.
To show that the industry is picking up, the government has lifted the suspension of some mine sites and has also renegotiated the contract of OceanGold, and moved the privatization of various state-owned mining assets.
The government is also considering the moratorium on new mining projects and the lifting of the open pit ban.
According to Larry Heradez, mining tenements management division chief of the Mines and Geosciences Bureau (MGB), this moratorium is important because not only does it create 41,250 new jobs but provides at least P20 billion in annual revenues. This will benefit at least 800,000 people.
Heradez said there should be change to the provision of a new mining tax regime for the government to grant new contracts. He added that the government should still follow its legislative agenda in restructuring the fiscal regime by offering revenue sharing. In addition, of course, is the lifting of the controversial pit ban.
“We have recommended the lifting of the ban and promoting alternative methods for new mining applications, as far as practicable and feasible, or when particularly inapplicable, strict environmental safeguards shall be imposed,” he said. “We are also formulating appropriate measures to enhance environmental protection for the upcoming, current and post open-pit mining projects.”
Another source for the government is the renewal of the technical or financial assistance agreement of OceanGold Philippines Inc. - which can give P2.8 billion yearly and another P1.8 billion in fees, taxes, and other obligations. This will also provide at least 10,000 workers with jobs.
Besides, the Diwalwal Mineral Reservation Area (DMRA) can possibly give 15,000 more jobs and P609 million annual revenues. River restoration can also come up with P25 billion in extra revenues.
As for the 2021 global outlook, Fitch Solutions in its 2021 outlook report said that the pricing should be favourable as these are supported by a global economic recovery with the entrance of COVID vaccines. Demand for minerals and some metals will also have a better 2021.
Fitch added that the mining capital expenditures would improve this year.
To move forward, Surigao del Norte Rep. Ace Barbers said that the mining industry is the way to go. “The mining industry is a sleeping giant waiting to be tapped and harnessed and taken care of so it can grow as big as it could be,” he said. “Only if we have a firm and stable mining policy, this would invite a lot of investors to come and infuse capital and thereby create jobs and revenues for the country.”
Ateneo School of Government Dean Ronald Mendoza added that this industry has more flexibility as compared to other sectors. “The tax revenue potential of the industry is huge. This is not the time to cripple the industry with further uncertainties,” he said. “We can bank on mining if we actually focus on growing the industry in a sustainable way and using those revenues to invest for our nation’s future.”