Mining industry seeks stable business environment Mining industry’s big players on Thursday expressed concern over the ongoing review of the fiscal regime for the mineral development sector and want the government to put in place a stable environment to ensure the industry’s growth and development. The concerns were raised during the Mining Philippines 2013 Conference and Exhibition at the Sofitel Hotel on Thursday, the biggest gathering of mining industry’s big players, to tackle the challenges faced by the mining industry. Published on Thursday, 12 September 2013 20:15 Written by Jonathan L. Mayuga Mining investment has, for the past two years, fallen short of government targets owing to mining policy inconsistencies and uncertainties that tend to put on hold mining investments. Top executives of government’s mining contractors, including New Zealand-based Oceana Gold, MRL Gold Inc. and Atlas Consolidated Mining Corp. expressed interest to see a stable fiscal regime in the country. Oceana Gold, which is now the country’s only operating financial and technical assistance agreement (FTAA) contractor hopes rules will not suddenly change midstream, according to Mick Wilkes, Oceana Gold Philippines Inc. (Ogpi) managing director and chief executive officer. “The FTAA is a contract between Oceana Gold and the government. We invested on the basis of that tax regime which is on the high side. We’re hoping to get a comfortable return from Didipio even though the tax is high. That’s the contract that we entered into,” Wilkes said at the sidelines of the Mining Philippines 2013 Conference and Exhibition. The Ogpi, which launched commercial operation on April 1 this year, has poured in close to $500 million into the copper-gold project in Didipio, Kasibu, Nueva Vizcaya. The company projects an $8.5-billion benefit to the Philippine economy in terms of its multiplier effect behind its estimated $3.3-billion export revenue. “Mining by itself is capital intensive. You have to put in a lot of money to find it [resources]. If you’re lucky enough to find it, you’ve got to have hundreds of millions if not billions of dollars to develop it,” Wilkes said. “To make that decision to invest that money, you need certainty that the tax regime will not change. It’s very important.” MRL Gold Inc., a subsidiary of the Singaporean Red Mountain, meanwhile, has two mineral production sharing agreement (MPSA) contracts to develop a gold project in Lobo, Batangas. While it believes it may not be affected by the ongoing government review on revenue sharing, it may not pursue mine development if rules are changed to its disadvantage. “If we are allowed to pursue development and get it into production under current fiscal regime, then we’ll start to work on the financial models. Then we go to the banks and say ‘This is the fiscal regime, you lend us the money.’ If government changes it, we may not get the funding,” MRL Gold Inc. Philippines Manager Geoff Boswell said. “You may get a greater percentage of nothing because they’re changing the rules. It’s a very sensitive thing. The model that we used for funding may no longer be viable,” Boswell added. Clariden Holdings, a unit under San Miguel Corp. that is buying into metallic mining properties, cannot immediately pursue acquisition plans due to the moratorium on new mining permit issuances. “We’re having problems with rights because new issuances for MPSA had been stopped. The other thing is not only MPSA. The NCIP [National Commission on Indigenous Peoples] followed suit. They’re not giving free and prior informed consent to new applications,” Clariden President Horacio Ramos, a former secretary of the Department of Environment and Natural Resources (DENR), said. Foreign investors are imperative to mining development, added Ramos. “Mining is highly capital intensive. The money you can utilize to explore development is normally not in the Philippines. You access it abroad, so you need foreign banks,” Ramos a former environment secretary, said. Assuming Philippine companies have capital, they still could not carry out many big projects, he added. “Filipino companies with capital like San Miguel can get foreign loans. But that’s not all. What about technology? Who among us, despite being big like Philex or Atlas, can operate a big mine like Tampakan? None. It has to be foreign firms with technical experience.” Ramos said the best approach to a foreign partnership policy on mining is the adoption of a “big brother, small brother” tie-up. “Foreign groups should joint venture with Filipino companies as big brother on 50-50 sharing or whatever system there can be, defining the role of each. One can take care of the operations, the other takes care of the social, political tasks,” he said. Atlas Consolidated Mining has also been eyeing new projects to make its operations sustainable even after exhaustion of its Carmen copper mine in Cebu. But it could not pour in investments in exploration since new permit approval is on hold while the fiscal regime review is ongoing, its officials said. Costs of projects that can be easily put to production are also more prohibitive. “We’re evaluating most copper and gold [prospects]. But most the MPSAs are quite expensive,” ACMDC Executive Vice President Adrian Ramos said. Jose P. Leviste, Ogpi chairman, quoted a Department of Finance statement that given more investment in mining, the Philippines can hit an additional 2-percent growth in gross domestic product even on top of the 7.8-percent growth registered in the first quarter of the year.
Posted on: Fri, 13 Sep 2013 13:44:31 +0000
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