Drop in Bangko Sentral gold buying drags mineral output value lower

A 95-percent decline in the Bangko Sentral ng Pilipinas' gold purchases has caused the production value of metallic minerals to dip by 26 percent to P51.21 billion in the first half of 2012 from P69.24 billion the same period last year. The Bureau of Mines and Geosciences noted that the decline in gold purchases started in the second semester of 2011 when the Bureau of Internal Revenue (BIR) imposed a 2-percent excise tax and a 10-percent creditable withholding tax (CWT) on the sale of gold by small-scale miners and traders. The CWT was later reduced to 5 percent in April 2012. The BSP, through its five buying stations in Baguio City, Davao City, Zamboanga City, Naga City and Quezon City, deducts the corresponding taxes from small-scale miners and traders and remits them to the Revenue Bureau. Mines and Geosciences Bureau Director Leo Jasareno said that the substantial drop in the BSP's gold purchases was the telling factor for the sector's sluggish performance. He added that total gold production went down to 8,382 kilograms (kg) from 22,804 kg, with the value declining by 59.1 percent year-on-year to P18.18 billion. The BSP's gold purchases accounted for a minuscule 786 kg from 15,003 kg the previous period. “In effect, the BSP gold purchases shared only a dismal 9.37 percent of the entire gold production, compared to 74 percent a year ago,” said Jasareno. Other metals Gold has traditionally led other metals in production, making up around 50 percent of the country's metallic mineral output in previous years. But nickel is reportedly the top performer in 2012 so far, raccounting for 44 percent of the entire metallic minerals output value in the first semester with P22.40 billion. Gold came in second with 35 percent of the output, or P18.18 billion. Copper came in third at 18 percent, or P9.02 billion. Silver, zinc, chromite and iron accounted for the remaining 3 percent of the output, amounting to P1.61 billion. Black market “Given the continuing high price of gold and the increasing number of small-scale mining areas, the decrease in gold purchases by the BSP clearly indicates that gold outputs are going to the black market and smuggling activities,” said Environment Secretary Ramon J.P. Paje. The DENR chief is currently seeking the immediate constitution of the Anti-Illegal Mining Task Force as mandated under Executive Order (E. O.) No. 79 to address the ongoing smuggling problem. However, Paje expressed confidence that the mining industry will bounce back. “We see big mining projects in the pipeline, encouraged by the clearer direction the government is now taking in view of the issuance of E. O. No. 79 or the mining policy of the Aquino administration,” he said. "The developmental works of the $300 million Didipio Copper-Gold Project of Oceanagold in Nueva Vizcaya and the $1.2 billion nickel processing plant of Taganito HPAL in Surigao del Norte are in full swing. We can add to this the advance exploration works in the $800 million copper-gold project of Goldfields Limited in Benguet, the $800-Million Kingking copper-gold project of NADECOR in Compostela Valley and the $800-Million Silangan copper-gold project of Philex Mines in Surigao del Norte, and we are sure that the industry is bound for better times,” he added. — BM, GMA News