Philippines cuts ’12 mining investment target

The Philippines has lowered its mining investment target this year due to slow developments in key projects, government officials said in a briefing.

Mines and Geosciences Bureau (MGB) director Leo Jasareno said Thursday that the new target is down to $509 million from the original of $2.27 billion for this year.

Environment Secretary Ramon JP Paje said that while the target cut was due to delays in the implementation of certain projects, “it’s not really due to new mining policy.”

Paje was referring to government’s new mining policy embodied in Executive Order No. 79, which 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.

In the first half, mining investments fell by some 48 percent to $160 million in the January-June 2012 period from the $309.31 million in the same period last year, the MGB said.

About $30 million of the realized investments during the first half came from two major sources: Philsaga Mining Corp., the operator of a gold mine in Agusan del Sur; and Sagittarius Mines Inc. (SMI), which has yet to get an environmental compliance certificate (ECC) for its $5.9-billion Tampakan copper-gold project in Mindanao due to a local ordinance banning open pit mining, which the company will use to mine copper and gold from its asset.

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

Industry observers have noted that aside from permitting challenges, local government ordinances that ban mining or methods such as open pit mining and high investment requirement amid high political risks are hampering investments.

This, at a time when the government is seeking more revenue from the industry.

The Chamber of Mines of the Philippines has said the moratorium on new permits has caused an outflow in foreign direct investments in the mining sector beginning in 2011 to the tune of over P10 billion.

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.