Firms, analysts mixed on Mining Act review

Major players in the mining industry are confident a planned review of the Mining Act will not drive away foreign and domestic mining investments, but analysts said the surprise move has spooked foreign firms vital to the industry’s revival. Chamber of Mines of the Philippines president Benjamin Philip G. Romualdez said that following President Gloria Macapagal Arroyo’s order on Friday to review the Mining Act of 1995 or Republic Act 7942, the government assured the chamber that its policy on revitalizing the mining industry will be maintained and that only the environmental policy will be strengthened. "What’s important to emphasize is while the government will review the Mining Act, it has not changed its policy. In this case, we welcome any review that will strengthen environmental protection," Mr. Romualdez said. The Philippines is dependent on foreign investors to tap an estimated $1 trillion in mineral wealth but analysts say the apparent willingness to rewrite laws could jeopardize efforts to attract $6.5 billion in funding for the once mighty mining sector. "That’s not good news for the Philippines, there was a perception policy was going the other way," Ted Leschke, mining analyst for Shaw Stockbroking in Sydney, said. "From a geological standpoint, the Philippines is A-1, but if they keep changing things, miners will go to Mongolia or somewhere else." The Philippines ranks in the world’s top five for its deposits of copper, nickel and iron ore and is geographically closer to resource-hungry China than the region’s other major mining center, Indonesia. During the 1970s and 1980s, the country hosted one of the biggest mining industries in the world but two decades of neglect, environmental mishaps and clashes over land rights have seen its potential stunted. Political instability has also deterred prospectors from pouring money into the Philippines, where there have been more than a dozen coup attempts since the ousting of Ferdinand Marcos in 1986. Last month, President Gloria Macapagal Arroyo uncovered a coup plot and declared a week-long state of emergency. "The Philippines will need to demonstrate significant changes in the way the country is run to attract a meaningful level of foreign mining investment. That clearly is not happening," Keith Goode, director of Eagle Mining Research of Australia, said. Local communities are concerned about the danger from mining. Australia’s Lafayette Mining became the first foreign firm in nearly four decades to develop a Philippine mine but cyanide leaks at its Rapu-Rapu project last year triggered a wave of anti-mining protest, particularly among the mainly Catholic country’s bishops. "The review was triggered by the environmental concerns raised by the Rapu-Rapu incident and because the government and the bishops agreed that a similar incident must be avoided in the future," Mr. Romualdez said. Australasian Philippines Mining, Inc. (APMI) Chairman Jose P. Leviste, Jr. said mining industry players would want to be consulted in the impending review. "We accept the initiative of the President, as well as the House and the Senate to look into the law again," he said. APMI is the local unit of Australia-listed mining company Climax-Arimco Mining Corporation, and is the Financial or Technical Assistance Agreement-holder of one of the 24 priority mining projects, the Didipio Copper-Gold Project in Bayombong, Nueva Vizcaya. Mr. Romualdez said the mining industry does not expect investment prospects to wane because of the impending review but reiterated that the review has to be clear on its objectives. Mr. Leviste, also the concurrent resident representative of the Australia-Philippines Business Council in the Philippines, stressed that the review must be finished at the soonest possible time. "A protracted review will create wrong signals to both foreign and domestic investors as well as the banking and the financial sector. The uncertainty that it creates serves the interest of no one," he said. Lafayette Philippines Inc. chairman and chief executive Carlos G. Dominguez said, meanwhile, said it is in fact high time for the government to undertake a review of the mining law. "The administration is correct in calling for a review. The law was passed 10 years ago and these laws need to be reviewed regularly to see if improvements need to be done," he said. He said the review even opens the industry to needed inputs. "Looking at it in a positive light, this will also be an opportunity for investors to make their views known," Mr. Dominguez said. Lafayette’s Rapu-Rapu Project in Albay is also one of the government’s 24 priority mining projects. The government expects least $347 million in investments this year from its 24 priority mining projects. -- Beverly T. Natividad, BusinessWorld Reporter