To mine or not to mine?
The answer has been elusive indeed, judging from the mining debates including the recent one starring self-professed environmentalist Gina Lopez and tycoon Manuel V. Pangilinan.
And as talk continues, pro- and anti-mining advocates alike wait with bated breath for the issuance of an executive order that will spell out once and for all the government’s policy on mining.
One of the arguments against mining is that it contributes little to the economy compared to other sectors such as manufacturing yet carries significant environmental and health risks.
At a recent conference in Surigao City, stakeholders agreed that mining tends to be more beneficial to the communities where it exists than the macroeconomy as only certain areas in the country have successfully hosted mining operations.
The more significant questions, attendees said, are: Do communities manage such benefits well enough to make mining worth the potential environmental and other risks? Does government spend mining revenue (or other forms of revenue, for that matter) wisely and make each peso go a long way?
There is a huge potential for a mining windfall for the Philippines given its massive gold reserves and this could reduce poverty in the country if managed well, according to a report of the National Statistical Coordination Board (NSCB).
In a report posted on the NSCB website, the agency said that mining and quarrying contributes the least after Forestry to the domestic economy, but it is a major source of much-needed foreign exchange earnings from metallic exports.
Prices of gold are volatile but have been rising in recent years, hitting $1,570 per ounce in 2011, or more than five times the level a decade ago, the NSCB noted. The Philippines is seen to be able to produce some 4.914 billion metric tons of gold, with the largest gold reserves in Central Mindanao, Cordillera Administrative Region, Western Visayas and Caraga.
NSCB secretary general Romulo A. Virola said that based on 2011 world market prices, Philippine gold resources/reserves can amount to P7.36 trillion, or about 76 percent of the country’s gross domestic production (GDP) of P9.73 trillion in 2011.
“This is also equal to more than 65.1 times the income gap of P113.1 billion for 2011, the amount needed to completely eradicate poverty in the country. Secretary Dinky (Soliman) and her CCT [conditional cash transfer program] can surely use the money from gold mining!” Virola said.
In terms of foreign direct investments (FDIs), infusions in the mining and quarrying industry are on the average relatively small, accounting for only 2.6 percent of the total approved FDIs, NSCB data said.
“However, investor interest in mining surged in 2004-2005 by 3,086.95 percent, when the new mining law allowed foreign investments in 2005. Huge FDIs were also committed in 2007 and in 2010, boosted by high metal prices in the world market,” Virola said.
Data from the Mines and Geosciences Bureau said the combined mineral exports of gold, copper, silver, nickel ore and concentrates, and chromite generated an increasing stream of dollar earnings for the country from 1998 to 2010, with the highest amount recorded at $2,673.8 billion, or P117,932.6 billion, in 2010.
Arguments and answers to questions have led to more questions: Is it really possible for a mineral-rich country to blaze a trail to development without mining? Or will we just see a repeat of the effect of the logging ban, where wood producers and even creative industries like furniture makers are crying over wasted resources while illegally logged materials slip through the cracks?
The Philippine Stock Exchange (PSE) president and CEO, Hans B. Sicat, said that in the context of crafting rules and regulations governing the mining sector, a clear, decisive and practical solution is needed to enable the industry to remain a showcase of investment stability in the Philippines while ensuring that mining promotes sustainable growth.
Sicat noted that the stock market’s advance, as a barometer of economic growth, has been supported by the mining sector.
Sicat said the growth of the mining and oil index by 69 percent in 2011 helped push the stock market to become the best-performing market in Asia amid the uncertainties in the global environment.
“In the last five years, the sector index has registered an annual growth rate of 39 percent, much higher than the 15 percent annual growth registered by the next-best performing sector index—the holding firms sector—and the 8 percent growth of the entire market during the same period,” Sicat said.
“This growth of the mining sector is even more pronounced in the past three years as the sector posted a compounded annual growth rate of 94 percent since 2008 when markets globally suffered significant declines,” he added.
At the same time, the mining sector has, on aggregate, created wealth amounting to P378 billion, which represents a 951 percent increase in the sector’s market capitalization since 2008, according to PSE.
Meanwhile, the contribution of trades in mining stocks to total market turnover has jumped from 5.5 percent in 2008 to 14 percent in 2011.
“As the government and the various stakeholders continue to find ways to best utilize our rich mineral resources to help spur growth in the economy and provide wealth and livelihood to many Filipinos, it must be ensured that intervention in mining activities are geared first and foremost towards ensuring responsible and sustainable mining which includes stricter enforcement and monitoring of mining laws and guaranteeing that the host communities would be included among the beneficiaries of mining activities,” Sicat said.