MINERS EYE GOLDEN OPPORTUNITIES IN ‘22

Miners expect golden opportunities this year

Mining companies turned bullish on industry prospects as the administration of President Ferdinand Marcos Jr. seeks to reinvigorate the sector as part of the strategy to grow the domestic economy.

The mining industry, which has stagnated since 2012 following the imposition of a moratorium on new mining contracts, is enjoying the benefits of prevailing high metal prices.

“We are very happy that the new administration is pro-mining,” DMCI Holdings president and chief executive Isidro Consunji said in a recent investors’ forum.

DMCI’s mining unit has operations in Zambales and Palawan provinces, but at least 90 percent of its assets have yet to receive government permits.

The Philippines is considered the fifth most mineralized country in the world, with the third largest deposits of gold, fourth for copper, fifth for nickel, and sixth for chromite. However, most of the country’s mineral resources remain untapped because of strong opposition from various sectors.

A moratorium on new projects was imposed during the Aquino administration following a series of mining incidents.

Former President Rodrigo Duterte also had an anti-mining stance at the onset of his administration and threatened to impose a total ban on open pit mining. He ordered mining companies to rehabilitate mined-out areas.

Towards the end of 2021, President Duterte lifted the ban on new mining projects to boost the economy which was badly affected by the pandemic.

Philex Mining Corp. president Austin Eulalio Jr. said the industry holds the greatest potential to drive economic recovery and growth.

“We believe that mining, being an export industry, will play an important role in the economic recovery of the country, particularly in increasing our dollar reserves,” Eulalio said.

“The Philippines is one of the highly mineralized countries in the region, and it must take advantage of the opportunity considering the stable metal prices, global direction to move into green energy, in which copper and nickel are very important,” he said.

DMCI’s Isidro Consunji Philex’s Eulalio Austin

HOUSE COMMITTEE APPROVES NEW TAX REGIME FOR MINING

AHouse of Representatives panel has approved a new fiscal regime for the mining sector, which is expected to generate PHP37.5 billion in its first full year of implementation.

The House ways and means committee approved a bill proposing a rationalized and single fiscal regime applicable to all existing and prospective large-scale metallic mines, regardless of location.

The committee adopted the version of the Department of Finance, which would “bring the country’s effective tax rate on mining (considering all taxes) to 51 percent, up from 38 percent under the current system.

Albay Rep. Joey Salceda, committee chair, said this would bring the Philippines “closer to the middle of the pack” among major mining countries, instead of near the bottom of the list.

“51 percent is a good number, because it brings us closer to Australia’s effective tax rate, at around 51 percent as well, counting royalties. Among major countries, only Chile and South Africa have lower effective tax rates than us. This proposal brings us closer to Australia and Indonesia, which are our regional comparatives. China is at a very high 71 percent effective tax rate for gold mines,” Salceda said.

He said the proposal would fulfill the panel’s commitment to President Ferdinand “Bongbong” Marcos Jr. and the Department of Finance to raise revenues to fund the administration’s priority programs.

“With this measure, we are fulfilling our commitment to the President and to the DOF to raise revenues to fund PBBM’s priority programs,” Salceda said.

Salceda explained that under Marcos’s Medium Term Fiscal Framework, the revenue program assumes a tax-to-gross domestic product (GDP) growth of 0.3 percent annually.

“The mining tax reform takes care of half of that assumption already. So, if enacted, it will be very good for President BBM’s bigger ambitions for infrastructure, agricultural revolution, and a solid Filipino middle class,” he said.