Metal output surge spurs black market fears | Inquirer Business

Metal output surge spurs black market fears

/ 12:50 AM December 09, 2011

Philippine metallic production grew 15 percent despite lower gold output, spurring concern that small-scale miners, which make up the majority of gold suppliers, are selling the yellow metal to the black

market.

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Philippine metallic mineral output for third quarter grew 15 percent to P90.02 billion in 2011 from P78.58 billion in the same period of 2010, according to data from the Mines and Geosciences Bureau (MGB) of the Department of Environment and Natural Resources (DENR).

However, gold output fell to 25,249 kilograms, or 14 percent, during the period from 29,401 kilograms a year ago. In the third quarter alone, gold sales dropped sharply by 76 percent, the MGB said, citing data from the Bangko Sentral ng Pilipinas (BSP). In terms of value, it went down from P12.32 billion in 2010 to P3.55 billion for the same period.

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DENR Secretary Ramon J.P. Paje said in a briefing that he has taken up the matter with the Department of Finance (DoF) and will seek assistance from the Presidential Anti-Organized Crime Task Force.

“We suspect there is substantial smuggling of gold because of high gold prices and the central bank is now collecting taxes,” Paje said.

MGB director Leo L. Jasareno said that small-scale miners are the ones selling to the BSP and since prices are up, it seems impossible that there is no production. “With this scenario it is possible they are selling to the black market or are selling directly to buyers to avoid the taxes,” Jasareno said.

In reaction, the Chamber of Mines of the Philippines said in a statement, “Every ounce of gold produced by large-scale mining operators is strictly monitored by the MGB, BIR [Bureau of Internal Revenue] and the Bureau of Customs. The lower gold sales in the BSP may be indicative of loopholes in the system that result in tax evasion and avoidance by illegal small-scale mining operators.”

The boost was fueled by the unrelenting increase in metal prices in the world market and further complemented by the growth in the mine production volume of the nickel and copper sub-sectors which grew by 20 percent and 9 percent, respectively, MGB said. Metal prices for silver, gold, copper and nickel continued to enjoy better prices in 2011 as against 2010; prices were up by 101.56 percent, 30.63 percent, 30.05 percent and 21.96 percent, respectively.

MGB also said the implementation of tax laws regarding the sale of gold by small-scale miners to the BSP accounted for the sluggish performance of the sub-sector. Pursuant to Revenue Regulations No. 7-2008 dated March 25, 2008, of the Bureau of Internal Revenue or the “Taxation on the Sale to the BSP of Gold and Other Metallic Mineral Products Extracted or Produced by Small-Scale Miners..,” a 2 percent excise tax and 5 percent withholding tax will be imposed on the gold produced by small-scale miners and sold to BSP.

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TAGS: black market, Business, gold, minerals, Mining and quarrying
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