MANILA (UPDATE) - A Philippine senator has filed a bill urging a halt to exports of unprocessed mineral ores, similar to a ban introduced by Indonesia that led to a sharp spike in nickel prices and cut exports of other ores.
The Philippines, which has vast but largely untapped mineral resources, has been looking at ways to raise the contribution of mining to its economy.
The bill, filed in late August by Senator Paolo Benigno Aquino, a first cousin of President Benigno Aquino, would require domestic processing of all minerals extracted in the country prior to export if passed into law.
This may require nickel miners, for example, to build more smelters to process the ore before shipment. Some ores are shipped directly to China and Japan for processing.
The Philippines currently has two processing plants for nickel, both owned by the country's top producer Nickel Asia Corp, two for gold, and one for copper, according to the Mines and Geosciences Bureau.
Paolo Benigno Aquino is one of 24 members of the upper house Senate, which is dominated by allies of the president.
"This measure seeks to generate more domestic income, attract more investments, and lead to more jobs and livelihood for the Filipino people," the bill said in its explanatory note.
Mining contributed less than 1 percent of the Philippines' gross domestic product from 2003 to 2012, the note said.
But the mining industry believes investments in mineral processing plants will only come once the government addresses issues of high power costs, poor infrastructure and security threats from communist rebels in the countryside.
"It will be like the Indonesian situation where thousands lost their jobs because of the mine shutdown due to the ban. We are not ready for that," Ronald Recidoro, Chamber of Mines of the Philippines' spokesman and vice president for legal and policy.
"If we want to attract quality investments, the government must first address those issues. Rather than make it mandatory, they should instead offer incentives, tax incentives," he said.
In January, Indonesia, the world's biggest nickel ore exporter, imposed a ban on outbound shipments of unprocessed mineral ores as it sought to extract more value from its mineral resource.
The proposed legislation comes at a time when the Philippine mining industry faces an uncertain future as the government aims for new tax legislation to boost its share of mining revenues.
Conflicting regulations, such as whether or not to ban open-pit mining, and a strong anti-mining lobby led by the leadership of the local Roman Catholic Church have also deterred investment and hampered projects, such as Glencore Plc's $5.9 billion Tampakan copper-gold mine in southern Philippines.
A similar bill was filed in July in the House of Representatives by Congressman Erlpe John Amante, a copy of which was seen by Reuters.
Mines and Geosciences Bureau head Leo Jasareno told Reuters the state agency had not been consulted prior to the filing of the Senate bill, and it was premature to say whether it would recommend that the government support the bill.
The office of Senator Aquino said the bill was filed without any consultation with the government. The Senator hoped state agencies will support the measure once it is discussed by the Senate environment committee.
The timing of any potential ban on exports was unclear.
The Senate bill proposes six- to 12-year imprisonment plus a fine equivalent to twice the value of seized mineral ores for those found guilty of exporting mineral ores. The existing law does not have limits on mineral ore exports.
The bill also seeks to amend certain provisions in the Philippine Mining Act of 1995, which allow 100 percent foreign ownership of mining.