Mining investments nearly halved | Inquirer Business

Mining investments nearly halved

Funds slow to a trickle due to policy uncertainties
/ 12:40 AM November 19, 2012

Uncertainties in the mining industry, partly due to recent policy changes, have resulted in project delays that, in turn, trimmed investments by nearly half.

Mines and Geosciences Bureau (MGB) director Leo Jasareno said in an interview that mining investments fell by some 48 percent to $160 million in the January to June 2012 period, from the $309.31 million during the same period last year.


According to government data, about $30 million of the realized investments during the period came from two major sources: Philsaga Mining Corp., the operator of a gold mine in Agusan del Sur; and Sagittarius Mines Inc. (SMI), which is facing mining permit challenges for its $5.9-billion Tampakan copper-gold project in Mindanao. SMI officials have said the miner will continue whatever work can be done in the meantime to develop the Tampakan Project, including dialogs with various stakeholders.

The rest of the investments made during the period were from smaller companies expanding existing projects, Jasareno said.


More data on Philippine mining investment and production will be available next week, Jasareno said. “Because of the slower inflow of investments, we will obviously revise our targets. We will consolidate it,” he said.

The government’s new mining policy embodied in Executive Order No. 79 prohibits the acceptance of new mining applications and the granting of permits until a new revenue scheme is legislated and pending the identification of sites where mining activities would be restricted or prohibited.

Industry observers have noted that aside from permit challenges, local government ordinances that ban mining methods such as open pit mining and the large amount of funds requirement amid high political risks are hampering investments. All this is happening at a time when the government is also seeking more revenues from the industry.

The Chamber of Mines of the Philippines has said that the moratorium on new permits has caused investment outflows in the sector beginning in 2011 to the tune of over P10 billion.

“The projected $16 billion of investments that were supposed to occur during this administration will not happen. The $2 billion that we as a country were expecting in additional foreign direct investments this year from the minerals sector will not happen. The $2 billion that we expect in additional investments next year will not happen,” Chamber of Mines president Benjamin Philip Romualdez said.

The Philippines aims to attract $2.27 billion in mining investments in 2012. In 2011, the Philippines missed its mining investment target of $1.44 billion due to deferred development in major projects, although mineral sales grew as existing mines continued to be productive. Actual mining investments in 2011 reached only $618.5 million from ongoing developments.

Since January 2011, the Department of Environment and Natural Resources (DENR) has banned new mining applications except for sand and gravel and mineral processing permits. New environmental compliance certificate and tree-cutting permit applications have recently been added to the moratorium. The department may start lifting that ban after the current work on the implementing rules and regulations of E.O. 79 are complete, but even then there is a question of when the actual lifting of the moratorium would be.

On May 22, 2012, DENR denied SMI’s appeal on the rejection of its environmental compliance certificate (ECC) application for the project because of the existing ban on open-pit mining in South Cotabato. The application was rejected in January 2012, with Paje explaining it is “practically useless” to give SMI the ECC when the open pit ban remains in South Cotabato. SMI submitted its ECC application in October 2011. SMI lodged an appeal with the Office of the President in July and a decision is not yet forthcoming.

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