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The State and Prospects of the Philippine Mining Industry

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Information about The State and Prospects of the Philippine Mining Industry
News & Politics

Published on March 3, 2014

Author: ronnierecidoro

Source: slideshare.net

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EO79 and Beyond: the State and Prospects of the Philippine Mining Industry Atty. Ronald S. Recidoro Vice President, Legal & Policy Chamber of Mines of the Philippines

Key Points in Mining History 1974 1991 – 1997 – President Aquino signs RA7076 ‘People’s Small-scale Mining Act’ President Marcos signs PD463, Th e Mineral Resources Dev’t Act 1984 – President Marcos signs PD1899 defining small-scale mining. 1995 President Ramos signs RA7942 ‘The Philippine Mining Act’ – President Ramos signs RA8371 ‘Indigenous Peoples’ Rights Act’ – 1995 – The Marcopper Tailings Disaster 2004 – The Supreme Court declares the Mining Act constitutio nal. 2004 President Arroyo signs EO270 – 2012– The Philex Tailings Spill 2012 - President Aquino signs EO79 Institution alizing Reforms in the Mining Industry

The Current Situation  All signs point to a mineral resource boom;  CSOs have intensified their anti-mining campaign;  Many large-scale operations now in their twilight years with mining investments started in mid 2000s only now poised to take off;  However, with the issuance of EO79, the industry is in limbo;

A Mining Boom 20-Year Copper Price $/lb. 4.50 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

20-Year Nickel Price $/lb. 18.00 16.00 14.00 12.00 10.00 8.00 6.00 4.00 2.00 0.00 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

20-Year Gold Price $/tr.oz 1,800.00 1,600.00 1,400.00 1,200.00 1,000.00 800.00 600.00 400.00 200.00 0.00 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Large-scale Mining is still largely misunderstood. Perceived environmental destruction of watershed and key biodiversity areas;  Pollution; Displacement of indigenous peoples; Violence and conflict in mining areas.

The Philippines: A Poor Man Sitting on a Pot of Gold?  3rd in GOLD;  4th in COPPER;  5th in NICKEL.

Our country’s mineral resource

 Only 2% are covered by mining contracts/ permits; High-Potential Our Total Land Area: 30 million hectares

Footprint of Major Operating Mines COMPANY LOCATION FOOTPRINT Lepanto Benguet TD 100 has Philex Benguet TD Subsidence 450 has 200 has Rapu-Rapu Albay Open Pit, TD 230 has Filminera Masbate Open Pit, TD 650 has Taganito Surigao Open Pit 200 has Cagdianao Surigao Open Pit 200 has CTP Surigao Open Pit 360 has Atlas Cebu Open Pit 1200 has Rio Tuba Palawan Open Pit 1200 has Other Mines Total ~3,700 hectares 8,500 hectares

Footprint of Future Mining Projects COMPANY LOCATION FOOTPRINT OceanaGold Cu, Au Nueva Vizcaya ~750 hectares Maricalum Cu Negros Oriental ~750 hectares Boyongan Cu, Au Surigao del Norte ~500 hectares Batong-Buhay Cu, Au Kalinga-Apayao Far Southeast Cu, Au Benguet Kingking Cu, Au Compostela Valley ~1,000 hectares Tampakan Cu, Au South Cotabato ~2,000 hectares Red5 Au Surigao del Norte ~300 hectares Diwalwal Au Compostela Valley ~400 hectares Runruno Au Nueva Viscaya ~700 hectares Philnico Ni Surigao del Norte Mindoro Ni Mindoro ~700 hectares Pujada Ni Davao Oriental ~700 hectares Total ~1,000 hectares ~200 hectares ~1,000 hectares 10,000 hectares

Our Estimated Inventory 8.03 Billion tons of COPPER; 4.91 Billion tons of GOLD; 0.81 Billion tons of NICKEL; 480.26 Million tons of IRON;  39.66 Million tons of CHROMITE; 433.88 Million tons of ALUMINUM.

US$1,000,000,000,000.00 (Yes, that’s TRILLION, with a T.)

The Philippine Mining Industry  In 2011, all mines in the Philippines had a total GROSS MINERAL PRODUCTION of Php163.2 Billion;  Large-scale mines accounted for Php88 Billion;  Small-scale mines and non-metallic mines produced Php75.2 Billion;

Philippine Mining Now   Operating metallic mines Nickel processing plant Gold refinery Copper Smelter = = = = 35 1 1 1  Approved/registered tenements = 730  Some 1,818 mining and exploration applications are currently under process. ------------------------ As of October 2012, based on MGB data.

Mining’s Contribution to the Economy Mining’s contribution to GDP:  2011: Php99.2 Billion (1.00% of GDP) Mineral Exports  2011: US$ 2.659 Billion (5.6% of Total Exports) Taxes, Fees & Royalties from Mining  2010: Php17.364 Billion

The people we employ. 340,000 jobs as of 2010. *Mining Industry Statistics Table of MGB (Release Date: May 6, 2011)

The Taxes we pay.  Corporate Income Tax  Excise Tax  Withholding taxes  Customs Duties  Value-added Tax  Mineral Reservation Royalty  Additional Government Share in FTAAs  Local Business Tax  Real Property Tax  Social Development Management Program  Indigenous People’s Royalty  Landowner’s Royalty

COPPER PROJECTS Far Southeast Project 2018 Philex Oceana Project $1.5B (Operating) 2013 $320m Atlas Copper Project (Operating) Maricalum Project Boyongan Project TVI 2016 2014 $250m $1.5B (Operating) Kingking Project 2016 $1.3B Tampakan Project 2017 $5.9B 3 operating mines 6 large scale projects in the pipeline

GOLD PROJECTS Victoria Gold Project (Operating) Runruno Gold Project 2014 Masbate Gold Project $150m (Operating) RED5 Gold Project 2014 Philsaga Mining (Operating) Apex Gold Project (Operating) 4 operating mines 2 gold projects in the pipeline $83M

NICKEL PROJECTS • Eramen Nickel Project (Operating) • Sta. Cruz Nickel Project 2011 • Mindoro Nickel Project 2015 • Philnico Nickel Project 2013 • Berong Nickel (Operating) • Coral Bay (Operating) • Taganito Project (NA) 2012 • Carrascal (Operating) • Marcventures (Operating) • Pujada Nickel Project 2016

Potential Growth for 17 New Projects Philippine Metallic Investments and Revenues 2011 2012 2013 2014 2015 2016 Total Investment (Million $) 730 1,369 2,072 3,302 3,995 2,892 Total Revenues** (Million $) 2,820 2,820 3,955 4,954 7,163 9,248 2017 Total investments from 2011 to 2018: Total Annual Revenue: 2011, ramps up to $12.1 billion in 2018; Mining contribution to GDP: 6% in 2018 2018 812 11,171 12,114 US$15.2 billion US$2.8 billion in 1.7% in 2011, increases to 5-

Opportunities  Construction companies to do contract work for infra-structure projects;  Service contractors for open pit and underground mines;  Foundry and steel fabrication shops;  Suppliers of heavy equipment, explosives, steel balls/rods, and lime plants.

Challenges & Roadblocks to Growth  Need for clear, stable and predictable policies on minerals development;  LGU ordinances banning open pit mining;  Illegal SSMs that give mining a negative image;  Heightened opposition from CSOs;  Security issues for mining investors.

The Latest Challenge: A New Mining Policy.

E.O. 79 and its IRR: The Good, the Bad, and the Ugly.

The Aquino Administration’s Mining Policy: A case of Waiting for Godot?

The GOOD: It mostly reiterates existing laws, rules and regulations on mining; It recognizes and upholds existing mining tenement rights; It takes steps to improve the small-scale mining industry; It has a clear aspiration for consistency and harmonization of laws; It makes a clear commitment for the PHL to join the EITI;

The BAD: It expands “no-go” areas for mining applications; It disqualifies applicants with previous “record(s) of environmental incidents”;

The UGLY: It imposes an indefinite moratorium on new mining agreements until a new revenue sharing law is passed; It manifests Government’s intention to review and renegotiate all existing contracts; It says nothing about promoting mining as a driver for the Philippine economy.

The Challenges Continue Meanwhile… The moratorium on new permits continues; An Alternative Mining Bill in Congress; Tedious permitting process: NCIP Guidelines on FPIC; LGUs continue to ban mining in their jurisdictions.

THANK YOU. The Chamber of Mines of the Philippines. Working for responsible mining.

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