MGB studying merits of ore export ban bill

MANILA, Philippines - The Mines and Geosciences Bureau (MGB) is studying the merits of the bill filed by Senator Paolo Benigno “Bam” Aquino banning exports of mineral ores prior to processing.

MGB director Leo Jasareno said the MGB received from Aquino the other day a letter seeking comment on the provisions of the bill. Prior to that, Aquino did not consult the MGB on the effects of the bill to the mining industry.

Aquino filed late in August a bill that would stop the export of unprocessed mineral ores, similar to the export ban imposed by Indonesia to develop its mineral processing industry.

The bill seeks to attract more investments and generate more income from the extractive industry.

The filing of the bill spooked the international nickel market, leading to a price spike of the commodity.

With the Indonesian ore export ban in place, the Philippines is now the main supplier of nickel ore to China’s nickel pig iron industry.

The proposed legislation was filed at a time of uncertainty for the mining industry when the approval of new mining contracts are suspended pending the passage into law of a new revenue sharing scheme that would increase the government’s revenue share from the industry.

The MGB, however, continues to process and approve exploration permits for mining prospects.

Jasareno said the intention of the bill conforms to the provisions of the new mining policy issued in 2012 for the development of strong downstream operations in the country, but it still has to be determined if the country has sufficient resources to support a robust mineral processing industry.

“Somehow, it runs parallel to the new mining policy which calls for the strengthening of value-adding in the minerals industry,” Jasareno said in a phone interview yesterday.

“As stipulated in the policy, there is now a study being conducted by the DTI (Department of Trade and Industry) on value-adding. In that roadmap, the direction is toward having a strong downstream industry. In creating the roadmap for value-adding in the minerals industry, we also need to consider the availability of resources, power and other utilities, and favorable investment climate,” he added.

Businessman Manuel V. Pangilinan, chairman of Philex Mining Corp., believes the local mining industry is not large enough to attract investment in smelting plants.

According to Pangilinan, the government must first encourage growth in the extractive industry to encourage investments in the downstream sector.

There are only two nickel processing facilities in the Philippines, both owned by Nickel Asia Corp. Most of the country’s nickel ore is shipped to Japanese and Chinese smelters. There are also just two gold processing plants and one for copper processing.