BSP gold purchases down 98% in Q2

By Erik dela Cruz, Reuters

Posted at Aug 20 2012 10:51 AM | Updated as of Aug 21 2012 01:11 AM

MANILA - The amount of gold sold by small-scale miners and traders to the Philippine central bank in the second quarter fell 98 percent from a year earlier, government data showed on Friday, suggesting that smuggling of the precious metal out of the country continues unchecked.

The dramatic drop in gold purchases began in the second half of 2011 when the Bureau of Internal Revenue started collecting a 2 percent excise tax and 10 percent creditable withholding tax from gold sales by small-scale miners and traders.

The Bangko Sentral ng Pilipinas, mandated by law to buy the output of small gold miners, bought a total of 168 kg of gold in the April-June quarter, valued at P334.9 million ($8 million), substantially lower than the 7,510 kg it purchased in the same period last year.

The central bank's total gold purchases for the first half of the year reached 786 kg, down 95 percent from a year earlier, figures from the Mines and Geosciences Bureau (MGB) showed.

The country's gold output in the first half fell 63 percent to 8,382 kg from a year earlier, the MGB said, bringing down the value of metallic minerals produced in the six months to June by 26 percent to P51.2 billion.

The Southeast Asian country produced 37.1 tonnes of gold in 2011, down from 41 tonnes in 2010, ranking it 18th among global gold producers, according to Thomson Reuters GFMS.

However, official Hong Kong data showed that in 2011 the Philippines shipped more than 80 tonnes of gold to Hong Kong -- about 14 percent of the city's total gold imports, suggesting that loosely regulated small scale gold producers are understating their output. Hong Kong is a gold-trading hub and the main conduit for gold flows into China.

The Department of Environment and Natural Resources said a proportion of local gold output in recent months had either been sold on the black market or smuggled out of the country, although it did not give an estimate.

The department added that it had sought the help of the Presidential Anti-Organized Crime Commission to prevent gold smuggling.