Friday, October 17, 2008 Mining giants wary to pour investments in RP By Edwin G. Espejo Contributor
SEVERAL mining giants are reportedly wary on pouring in more investments in the Philippines because of potential risks involved that include volatile government policy on mineral development in the country.
Phil Carney, who spoke on strategic risk and management planning during the 8th Asian Pacific Mining Conference, said although there has been a shift in policy direction in the Arroyo government towards mining -- one from "tolerant to active promotion" -- big mining firms want "100 percent assurance that their investment here are protected."
He said the 60-40 rule on local and foreign ownership in mining firms are holding back foreign investors from pouring in more capital to fast track the exploration and development of existing and potential mining projects.
In December 2006, the Supreme Court however upheld the constitutionality of the Philippine Mining Act of 1995 which allow big ticket mining firms to own 100 percent of local mining companies under the financial technical assistance agreement (FTAA).
FTAAs are granted to mining firms with claims in areas in excess of 8,000 hectares.
Mineral development projects below 8,000 hectares are granted mineral production sharing agreements (MPSA).
So far, only two firms have been granted FTAAs.
One of them is Sagittarius Mines Inc., holder of the Tampakan Copper and Gold Project.
The Tampakan Gold and Copper project is the biggest in Southeast Asia and Western Pacific region and reportedly has a potential ore deposits of f 2.2 billion tons at a grade of 0.6% copper and 0.2 grams per ton gold and contains 12.8 million tons of copper and 15.2 million ounces of gold using a 0.3% copper cut-off grade.
Carney also said eyes are now focused on China following a projected decline in its gross domestic product over the next few years.
"China used to have a 12 per cent annual GDP growth. Now it is down to something like eight per cent," he said.
China is the world's biggest consumer of commodities products because of the demands of its ever growing economy.
Any slowdown in China's economic growth, Carney warned, will affect the global mining industry.
At the same time, he likewise said the global financial meltdown and possible recession in the US could take their toll on foreign investments in the mining industry in the country.
Carney said while prices of minerals in the international market have been relatively steady, how the US can recover from its current financial crises two or three years from now is crucial to the local mining sector.
The Arroyo government has been pushing for the revitalization of the mining industry and has vowed to make the Philippines a "mining country" in 2011.
Environment secretary Lito Atienza earlier said the Philippines could attain that target if the mining sector will contribute six percent of the country's GDP.
But while Carney said foreign mining firms have now viewed the Arroyo administration as mining-friendly, a change in leadership when the president steps down from office in 2010 could also affect the future on the country's mining industry.
Aside from the aforementioned risks, the Philippine mining industry is also facing strong opposition from environmentalists and the Catholic Church which has traditionally taken an anti-mining stance.
