Philex sees ‘banner year’

Philex Mining Corp., the country’s largest mining company, expects 2011 to be another banner year as it sees profits reaching record levels despite dim global economic prospects, which have a direct effect on the company’s revenues.

Philex chairman Manuel V. Pangilinan on Wednesday said the price of gold, which is the company’s top export, has risen to record highs in recent months as fund managers rushed to buy the commodity amid volatile movements in the value of other investment instruments.

“It will be a very good year for Philex,” Pangilinan told reporters.

Philex posted a core net income of P4.15 billion last year, which was more than double the previous year’s level. But Pangilinan said the company would most likely beat its 2010 performance despite recent problems in the world economy that have driven the prices of most metals lower.

Pangilinan said profit could go over P5 billion by the end of the year.

The price of copper, he said, has gone down to below $4 per pound in the last few weeks.

“But at this level, this is still a very good price for copper,” Pangilinan said.

But Pangilinan said the price of gold, which makes up 60 percent of the output from the company’s current Padcal mine in Benguet, has risen to record level of over $1,700, or up by nearly 50 percent year on year.

Pangilinan said the decision to venture into mines that produce two or more kinds of commodities, instead of just one metal, has helped insulate the company from volatile movements in the prices of commodities.

He explained that crises in the US and Europe have led to a drop in copper prices, due to the expectation of lower world economic output.

But gold prices have improved as fund managers channeled investments into safe havens such as commodities following the crash in the values of equity and currency investments.

“The best formula is to invest in dual metal mines. It’s safer,” Pangilinan said. Philex is controlled by Hong Kong-based industrial conglomerate First Pacific Co. Ltd.