Uncertainties over how the mining industry will be regulated are scaring off potential foreign investors, according to an executive.
Eulalio Austin Jr., president of the country’s biggest gold producer Philex Mining Corp., said in an ambush interview with reporters the unstable fiscal and regulatory regime had been affecting the company’s plans to expand.
Other industry players have expressed the same sentiment since last year, when the government proposed a new fiscal tax regime for the sector.
Philex is currently in the middle of plans to open its Silangan mine in Surigao del Norte, which is considered one of three big-ticket projects seen to make the country a major copper producer.
The project involved an initial capex of $700 million, half of which would be raised through partnerships with foreign investors.
But Austin said the company’s potential financial backers were not entirely convinced of the local mining sector’s stability, and raised concerns on policy shifts that could derail the growth of companies.
“As of the moment, we don’t have fixed investors for the project yet. There are some issues being raised because of the regulatory environment but we are trying to convince them that Silangan is a different story,” he said.
“We support the increase in taxes but it should be equitable because mining industry is so dependent on metal prices … The tax regime should be structured in such a way that they take into account the volatile metal prices. This would help convince investors,” he added.
Finance Undersecretary Karl Kendrick Chua said in a roundtable discussion with the Inquirer early this year the administration had decided to put on the backburner plans to change the sector’s tax structure to focus on bigger policy shifts, such as the enactment of the rice tariffication law and the universal health care law.
Amid the dilly-dallying, potential investors do not know how to proceed.
Without investors, the opening of Silangan may be delayed and could put a dent on the company’s earnings.
Between January and September this year, the company’s net income decreased by 23 percent to P438.97 million from P569.89 million in the same period last year as its Padcal site nears the end of its mine life.
Philex is hoping to jump-start Silangan’s operations by next year.