PH seen missing $16B mining investment target

The Philippines will likely miss its mining investment target of $16 billion by 2016 (cumulative from 2004) given its changing regulatory environment and push for higher taxes, Chamber of Mines of the Philippines (COMP) president Benjamin Philip Romualdez said.

At the Mining Philippines 2013 Conference and Exhibit in Pasay City, Romualdez said at a briefing that some $12 billion in additional mining investments might be put on hold and that companies would likely continue disbursements only for committed projects.

Such challenges, combined with softening metal prices in the international market, were seen to drive mining investments down “dramatically” over the next three years, Romualdez said.

Industry group COMP had said that the targets would not be met due to various challenges, including changing mining policies, the recent moratorium on new contracts pending proposed changes in mining tax laws, local government ordinances that ban mining or methods like open-pit mining and high investment requirement amid high political risks.

These were hampering investments at a time when the government was seeking more revenue from the industry, according to COMP.

Meantime, Senate President Franklin Drilon, in a speech at the same conference, said the government has noted the risks taken by companies investing in mineral exploration and development, as well as the economic benefits of projects that actually reached the production stage. The global average was that out of 25,000 exploration programs, only one would develop into a productive mining project. As to the question of what was a fair revenue sharing scheme, Drilon said the Senate “will listen to all quarters.”

Drilon said mining areas must be “clearly defined” so that mining firms would not be “misled” into investing in areas that were not designated for mining. The senator said he supported proposals for mining rights to be made available only to tax-paying firms, for a review of tax holidays for mining and for a mineral reservation where small scale miners could work so that they would not encroach on medium- and large-scale projects. He also proposed that a task force be created to run after illegal miners and companies that did not pay proper taxes.

The Mines and Geosciences Bureau is proposing a revenue-sharing scheme where all tax incentives are to be removed, existing taxes to be retained and the 5-percent royalty for mineral reservations to be applied to all. Previously the inter-agency Mining Industry Coordinating Council (MICC) proposed a government share of 10 percent of gross mining revenue or 50 percent of net revenue.

Industry players have argued that both proposals would make the Philippine mining industry uncompetitive and that tax-paying mining firms were already giving a “fair share” to government.

The Philippine government aims to attract $2.27 billion in mining investments for 2012 but has not released the official figure for actual investments for the year.

In 2011, the Philippines missed its mining investment target of $1.44 billion due to deferred development of major projects, although mineral sales grew as existing mines continued to be productive and metal prices remained high. Actual mining investments in 2011 reached $618.5 million from ongoing developments like the Surigao Sumitomo project, Didipio copper-gold mine, Siana gold project and the Runruno gold venture.