Taxes seen to dampen PH gold output in 2012

Lower gold output due to tax issues with small-scale miners and global price movements may cause the value of Philippine metallic mineral production to drop substantially this year, the Mines and Geosciences Bureau (MGB) warned.

In a report, the bureau said the overall value of metallic mineral production is projected to decline by 9 percent to P110.57 billion in 2012 from P121.99 billion last year.

“This lackluster outlook can be attributed to the expected lower turnout in the gold purchases of Bangko Sentral ng Pilipinas (BSP) from small scale miners,” MGB said. Another reason is the volatile prices of metals, not just gold, it said.

MGB director Leo L. Jasareno said in a phone interview that the overall performance of the gold subsector in terms of production volume and value is expected to go down by 24 percent and 39 percent, respectively.

For 2012, gold production is expected to reach 23,527 kilograms valued at P38.64 billion from 31,120 kg at P63.14 billion in 2011.

“BSP’s gold purchases from small scale miners alone are expected to decline by as much as 79 percent from 17,389 kg in 2011 to about 3,658 kg in 2012,” he said.

Gold accounts for about 55 percent of the country’s total mineral output, of which 70 percent came from small-scale mining, the MGB said.

In the third quarter of 2011, the Bureau of Internal Revenue (BIR) started collecting the 2 percent excise tax and 10 percent creditable withholding tax from small-scale miners.

Meanwhile, mine output for base metals like copper, nickel, chromite, zinc and iron will be positive in 2012 with the entry of producers to the production stream.

The new projects include the Casiguran nickel project of Century Peak Corp in Quezon, Sta. Cruz; the Candelaria nickel project of Eramen Minerals, Inc. in Zambales; HY nickel-chromite project of Sinosteel Phils. HY Mining Corp. in Dinagat Island; the Elluvial chromite mining and concentration project of Mt. Sinai Mining Exploration and Development Corp. in Eastern Samar; and Leyte iron sand project of Strong Built Mining Development Corp. in Leyte.

“Precious metals, particularly gold and silver, will continue to benefit from safe haven flows due to the dull state of the global economy and limited supply vis-à-vis increasing demand,” Jasareno said.

Analysts expect that prices will remain at “favorable levels”

but “will not be as upbeat” as in recent years.

Aside from being a major consumer of copper and nickel brought about by its continued urbanization and economic development, China is now a major market for precious metals jewelry.

The MGB chief said that China is now being eyed as a major market for precious metals jewelry aside from being one of the biggest consumers of copper and nickel brought about by its continued urbanization and economic development.

The World Gold Council, for the third quarter of 2011, listed “Indian jewelry demand at 125.3 tons while Chinese jewelry demand at 131 tons.”

In 2011, in terms of the total global copper and nickel consumption, China accounted for 40 percent and 31 percent, respectively, of the global total.

As for Philippine metals, an MGB report showed that China imported almost 91 percent and 40 percent of the country’s total nickel and copper output.