Government urged to woo foreign investors in mining industry

Foreign investors are urging the Estrada administration to relax its ownership restrictions on mining companies to attract investments in the capital-intensive industry.

The Australian-New Zealand Chamber of Commerce said yesterday that government should improve what it called the unfavorable investment climate in the Philippine mining industry.

Without restrictions, Anzcham president William Mason told reporters that over the next five years, the industry could draw $3.2 billion in investment, making the mining sector the second largest capital magnet following the manufacturing sector.

According to Mason, the bulk of these investments would occur in less developed rural areas such as Mindanao and the Cordilleras, the bastion of aggressive environment groups wary of resource depletion and degradation.

These projects, Mason said, are estimated to generate export earnings of at least $1.2 billion because the Philippines is one of the top eight countries in the world for copper, nickel and gold.

"The revenue generated would almost certainly establish mining as the largest export sector and earner in foreign exchange in the Philippines," Mason said. However, he said investors have not found a clear message from government that it would support the mining industry and to date, the Estrada administration has not signed the National Minerals Policy Act which could have set the parameters for the development of the industry.

Mason explained that fears of environmental abuse could be easily allayed by the fact that the Philippines has one of the best environmental protection laws in the world capable of detecting and preventing poor mining practices.

"The industry needs to showcase new ‘world’s best practices’ mines," Mason said. "There are good local mining firms but they simply do not have the resources to fund development projects in the industry."

Five years ago, Mason said a large number of companies committed to investing in exploration and mining in the Philippines, with projects totaling $200 million for the exploration of three to four new mines.

The potential investments for these projects, then already in the advanced stage, have been estimated at $2 billion. However, these investments did not materialize because of delays and various disincentives, including security of investments and the restriction on the foreign ownership of mining companies.

"As a result, these companies have taken their investments elsewhere, to countries like South America, Indonesia, China and Vietnam," he said. "The Philippines could still attract these investments but some basic changes have to be made."

Anzcham executive director Chris Ward said the biggest hindrance was the 60-40 restriction on foreign ownership of mining firms. "The policy must take more favorable consideration of the investor who is supplying all the finance and taking all the risks," he said.

"An acceptable agreement is needed that must allow for an equitable sharing between the Philippine government and the investing company," he said.