Beware of mining speculators

With the Supreme Court’s reversal of its earlier decision declaring the 1995 Philippine Mining Act as unconstitutional, the local mining sector is on a roll. Now is the time for government to ensure that all issues are addressed before things really get hot. With the mining law clearly allowing 100-percent foreign ownership in exploration and mines development, even dormant mines are being reactivated. The Mines and Geosciences Bureau of the Department of Environment and Natural Resources (DENR) is likewise being swamped by a slew of inquiries from both legitimate and dubious investors.

For the first half of 2005, the Philippine Stock Exchange’s mining index emerged as the best performer among six sectors, surging 111.2 percent compared to a year ago. Formerly dormant mining issues are now waking up.

New investments trickling in

Investors are indeed coming in, albeit in trickles, to put up needed mining facilities to expand operations. For instance, Climax-Arimco, through its local unit, Australasian Philippines Mining Inc. is investing $17 million in the next five years to build a mining plant and expand its underground mining operations in Nueva Vizcaya. The company is also currently exploring prospective mining areas in Mindanao.

Lafayette Mining, which earlier commissioned its polymetallic plant in Rapu-Rapu Albay, has expanded its exploration drilling to the Hixbar area, which is within the Ungay orebody it is now developing. Indophil Resources is reportedly ready to spend $100 million yearly to develop the Tampakan mines straddling North and South Cotabato in Mindanao, and will go into commercial production by 2009. Other mining firms are negotiating with financing companies to bankroll their mining projects.

Getting the message across

In a serious bid to regain the Philippines’ former prominence as one of the world’s top mineral producers, the government has identified 23 mining flagship projects to produce gold, copper, nickel, bauxite, and aluminum, This will require total investment of $7 billion, but so far, there has been only $730 million in firm or committed investments. It is not surprising that the investment inflow is still cautious considering that the mining sector in the Philippines was badly scarred in the past by environmental disasters and incompetent policymaking. The Chamber of Mines of the Philippines will have to sustain its blitzkrieg international road shows to convince foreign investors that government policy on mining is now more stable and will not likely change for a long, long time.

Cleaning up

The Department of Environment and Natural Resources, on its part, has cancelled at least 65 non-performing mining tenements covering 68,570 hectares throughout the country. The cancellation will weed out speculators and contractors who fail to develop the mine areas within the period provided for by their mining tenements. Once these are cleared, it will enable the government to maximize the resource potential of the country’s mineral lands. The Philippines is considered a highly mineralized area with mineral resources estimated to cover nine million hectares or about 30 percent of the country’s total land area. Currently however, less than half a million hectares are being explored or developed.

Caution on stock trading

Also with the new optimism in the industry come speculators, specifically in the local stock market. Very recently, the Philippine Stock Exchange relaxed its listing rules, waiving the required three-year track record of profitability to encourage more mining companies to raise capital through the stock market.This is beneficial to mining companies that are still mostly in the exploration stage in prospective mining areas in the Philippines. The downside, however, is that this would open up opportunities for dubious mining companies.

Those intending to buy shares in the stock market must carefully look at who are behind these companies. The safer investments are with companies with international track record in actual mining operations. One must be careful about buying the stocks of companies that are merely dealmakers and purely indulged in speculation, and without on the ground mining experience.

Concerns on environment impact

There are still numerous issues that have to be resolved to really sustain the interest of foreign investors in the Philippine mining sector.

For one, there are still various resistance groups protesting the opening of mining interests as they see this as the perfect recipe to destroy the country’s fragile environment and its biodiversity. Who can blame them? Years of bad practices have destroyed surroundings in old and abandoned mining areas, the forests gone, the waterways and rivers filthy with mercury and other lethal chemical residues.

The government should collaborate with the foreign mining firms, through their local units, to go on a massive information drive to explain and actually implement best-practices technology to minimize the damage on the environment. The bottom line is that in the government’s efforts to raise revenues and provide jobs and incomes, the environment issue should be non-negotiable.

The mining sector if developed or handled properly this time around, can deliver to us the economic salvation that has eluded us for so long. We now have the opportunity to finally turn the economy around through a commodities-driven sector, rather than pitifully aiming to be a tiger economy in the region that is mostly into manufacturing and services. Let’s hope that all the hard work put in won’t go to waste like so many previous projects intended to bring this country out of its economic rot.

Time tested ties

Portugal’s ties with the Philippines date way back more than four hundred years ago. Despite the passage of time and pressures of current day trade realities, Portugal continues to preserve and nurture these links.

What are the programs and activities being undertaken by Portugal to strengthen trade and cultural ties with the Philippines? In what way is the Philippines responding to these initiatives? Are there opportunities for OFWs in Portugal?

Join us in "BREAKING BARRIERS" on Wednesday, 21st September 2005, IBC-TV13 (12 p.m.) and gain insights into the views of Ambassador Joao Caetano da Silva of Portugal on the ties that exist between the Philippines and Portugal and how to strengthen them for the mutual benefit of both countries. Watch it.

Non-wager poker tournaments

The Poker Club of the Philippines is reminding poker enthusiasts in Cebu City about the 4th Leg of the Poker King Challenge which will be held on 24th and 25th September at Casino Mactan, Waterfront Hotel.

This is the first non-wager poker tournament in the area and will give participants the opportunity to experience poker competition as shown on television.

At stake during the competition are trophies and prize certificates with total value of over P100,000 from tournament sponsors, namely the Poker Club of the Philippines, Philippine Gaming Corp. (Pagcor), Jack Daniels, Bicycle Playing Cards/Star Paper, Hyatt Hotel and Casino, Ralph’s Wine, and MyReviewerOnline, the Internet knowledge-builder.

Those interested to join may call the secretariat (c/o Cindy) at 817-9092 or visit www.PokerClubofthePhilippines.com for details.

Should you wish to share any insights, write me at Link Edge, 4th Floor, 156 Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at [email protected]. If you wish to view the previous columns, you may visit my website at http://bizlinks.linkedge.biz.