Sees new mining investments in 2012-2016 to hit $12 billion
MANILA, Philippines - Investment in the Philippine mining sector last year fell $700 million short of the government forecast, the chief of the mines bureau said on Friday, and the country risks losing more this year without providing clearer rules under a new mining policy.
The Southeast Asian country expects to attract about $2.3 billion in investments in new and existing projects this year, although some of that hinges on the removal of a moratorium on new mines, Mines and Geosciences Bureau director Leo Jasareno told Reuters in an interview at his office.
"Our assumption is it will be lifted this year, which means we will miss the forecast if it is not lifted this year," he said.
Jasareno is hopeful a new policy will be unveiled this month or in June, which would set guidelines to ensure responsible mining and pave the way for the lifting of the moratorium on new mining permits, in place since January last year.
"It's a priority of the government. The document is now being fine-tuned," Jasareno said.
Last year a Maoist rebel attack at miner Nickel Asia Corp's facilities delayed the company's additional investment of about $400 million, and another $300 million in new projects stalled because of the mining moratorium, Jasareno said. Manila had expected total mining investments of $1.4 billion in 2011.
The bureau expects new mining investments in the next five years to reach as much as $12 billion, including the $5.9 billion Tampakan mine in southern Philippines, Southeast Asia's biggest undeveloped copper-gold reserve which is partly owned by Xstrata Plc and Australia's Indophil Resources NL.
Jasareno said, however, the unresolved issue of revenue-sharing between the government and the industry, which the new policy also seeks to settle, remained a concern.
The country's only group of large-scale miners, the Chamber of Mines of the Philippines, has warned that the imposition of additional taxes on mining could kill the industry.
The group is also opposed to a possible review of existing contracts. Manila has said it wants a review of existing fiscal incentives given to miners such as income tax holidays.
Jasareno said he supported a proposal for a 50-50 sharing of profits from mining, net of taxes.
"Definitely the new policy will ensure a fair share for the government," he said.
Jasareno said he also was hopeful the new mining policy would ensure the primacy of national laws over local codes would be enforced.
But the issue is "still one of the concerns being reviewed", he said.
"Admittedly, it's a contentious matter. But the administration wants to make sure the mining policy will not backfire. The purpose of the mining policy is to find industrial peace."
Global miner Xstrata is awaiting the executive policy as it seeks clarity on its Tampakan project in southern Philippines, now under threat from a local ban on open-pit mining and the government's refusal to grant an environment clearance for construction of the mine.
Foreign and local investors seeking to explore for minerals in the Philippines are closely watching the Tampakan situation.
The government estimates that the Southeast Asian country is sitting on metal resources, mostly gold, nickel and copper, worth around $1 trillion.
Jasareno remained optimistic that growth in metal output will speed up in 2012, after record production last year worth $2.9 billion, once issues that trouble investors are cleared up.
Metallic and non-metallic mining made up 1 percent of the Philippines' gross domestic product in the last two years, up from 0.8 percent in 2009.
Jasareno said that once the moratorium on the processing of mining permits is lifted, new investors are expected to come in.
"I heard that BHP Billiton was in talks for a possible partnership with local groups," he said. He did not give further details.
BHP Billiton pulled out of a $2 billion nickel project in the southern Philippines in late 2009, partly due to problems with its local partner and after it decided to exit the nickel business.
Officials at BHP Billiton declined to comment.