The Philippines stock market has reacted positively as the country’s mining sector celebrates the decision of President Rodrigo Duterte to lift a nine-year-old moratorium on the signing of new mineral agreements.
After a significant period where mining was out of flavour with senior sections of the Philippine government – including the President – a new law has been signed that miners and investors are hoping will breathe new life back into the South East Asian nation’s resources sector.
The President surprised many, including environmentalists, when he overturned a recent trend to stall mining activities in the mineral rich nation with the issuance of a new order to reverse sections of the controversial Executive Order 79.
In a decision that is being labelled as a move to revive an economy hard hit by COVID-19, President Duterte signed Executive Order 130 which makes key changes to Executive Order 79 and lifts the 2012 Moratorium on Mining Agreements.
His aim, reportedly, is to stimulate economic growth in the country including increased employment opportunities in remote rural areas which have mining activities.
TSX-listed RTG Mining Inc. (TSX: RTG) was amongst the many miners which welcomed the news of the signing of Executive Order 130.
The company announced on the TSX that the decision to remove the nine-year ban on granting new mining agreements will stimulate economic growth in the country and in particular will provide increased employment opportunities in remote rural areas, such as the Municipality of Labo in the Province of Camarines Norte, where the company’s Mabilo Project is located.
Mt.Labo Exploration and Development Corporation owns the high-grade new development Mabilo copper-gold project, which is permitted to proceed to development and operation.
“Mt.Labo is pleased with the show of support by the President and his Administration for the mining industry, with a clear message that mining, where done in full compliance with the Philippines Mining Act of 1995 and all other applicable laws and regulations, is encouraged by the Government,” RTG Mining stated.
Executive Order 130 amends Section 4 of Executive Order 79, which prohibited the grant of mineral agreements “until a new legislation rationalising existing revenue sharing schemes and mechanisms shall have taken effect”.
Under Section 4 of the newly signed Executive Order No. 79, the government may enter into new mineral agreements, subject to compliance with Philippine Mining Act of 1995 and other applicable laws, rules, and regulations.
Section 4 of the new Executive Order, covering the Grant of Mineral Agreements – now states that “The Government may enter into new mineral agreements, subject to compliance with the Philippine Mining Act of 1995 and other applicable laws, rules, and regulations. The DENR may continue to grant and issue Exploration Permits under existing laws, rules, and guidelines.
“The grantees of such permits shall have the rights under the said laws, rules, and guidelines over the approved exploration area and shall be given the right of first option to develop and utilise the minerals in their respective exploration area upon the approval of the declaration of mining project feasibility.”
The new legislation also directs the Philippine Department of Environment and Natural Resources (DENR) to “formulate the terms and conditions in the new mineral agreements that will maximize government revenues and share from production, including the possibility of declaring these areas as mineral reservations to obtain appropriate royalties, in accordance with existing laws, rules, and regulations.”
“The DENR shall likewise undertake a review of existing mining contacts and agreements for possible renegotiation of the terms and conditions of the same, which shall in all cases be mutually acceptable to the government and the mining contractor,” the Executive Order read.
The DENR and the Department of Finance have also been tasked with undertaking “appropriate measures to rationalise existing revenue sharing schemes and mechanisms.”
“The mining industry can support various government projects, such as the Build, Build, Build Program, by providing raw materials for the construction and development of other industries; and the Balik Probinsya, Bagong Pag-asa Program, by increasing employment opportunities in remote rural areas where there are mining activities thereby stimulating countryside development,” the Executive Order stated.
The positive Presidential decision is expected to attract new players to the country and a number of current and former Philippine miners. There are reports that close to 300 mining applications have been stalled while awaiting government approvals.
The nation is already a major part of the portfolio of a number of TSX-listed companies, including: TVI Pacific (TSXV: TVI), OceanaGold (TSX: OGC), B2Gold (TSX: BTO) and St. Augustine Gold & Copper (TSX: SAU).
There is no doubt that the Philippine’s mineral riches will be a major attraction at a time when commodity prices are strong across the globe.
According to Austrade, the Philippines is rated the fifth most mineralised country in the world, with the third largest deposits of gold, fourth for copper, fifth for nickel and sixth for chromite. The nation’s mineral resource assets are valued at around A$1.32 trillion, but according to President Duterte the country has tapped into less than five percent of its mineral resources endowment.
In terms of non-metallic minerals, the country has untapped coal resources estimated at about 2.4 billion tonnes.
Mining is now seen as being a potentially major employer in a country where millions cannot find work. According to one politician, Rep. Joey Salceda, Chair of the House Committee, “Over 1.3 million jobs await in the country’s nickel-related industries in the coming decade,” he said.
Mining as a key export earner
The Philippine’s Mines and Geoscience Bureau (MGB) reported recently that the nation’s metallic mineral production value ended the year on a positive note with a 1.13% gain from PhP130.74 billion in 2019 to PhP132.21 billion in 2020, a PhP1.47 billion increase.
Nickel ore together with the nickel by-products – mixed nickel-cobalt sulphide and scandium oxalate ruled the production scene with PhP68.48 billion or 51.80%.
Gold earned the second spot with PhP47.60 billion or 36.00%. with Copper coming in third accounting for PhP14.88 billion or 11.25%. While the shared value of silver, chromite, and iron amounted to PhP1.26 billion which was less than 1%.