From the News! – Your Daily News

Ronnel Domingo
Philippine Daily Inquirer

MANILA, Philippines – Toledo Mining Corp. said it had laid off some 600 workers and contractors while some directors took pay cuts as dampened demand took its toll on nickel operations in the Philippines.

According to an industry source, the 600 workers comprise 90 percent of the company’s workforce at the Berong nickel mine in Palawan.

TMC has a 56.1-percent stake in the Berong nickel project, which it shares with partners Atlas Consolidated Mining and Development Corp. and European Nickel Plc.

In an interim report covering six months to September, company chair Reginald Eccles said the management resolved “to manage the company’s assets on the presumption of an extended period of poor demand and low nickel prices.”

“The remaining staff in the Philippines now comprise a core team of sufficient skill mix to manage our nickel resources, to maintain the Berong mine and plant in good order and, very importantly, to convert the MOUs with Jiangxi into legally binding agreements and advance value added processing trials,” Eccles said.

The Berong partners have entered into memorandums of understanding with China’s Jiangxi Rare Earth and Rare Metals Tungsten Group Co. Ltd., mainly to finance and build a jointly owned nickel processing plant.

Also, Eccles said, TMC’s four non-executive directors have agreed to a 20-percent reduction in fees “as a demonstration of support for these harsh but essential cost-cutting measure.”

He said that the period April to September was Berong mine’s best in terms of record ore production, volume sales and progress in on-site ore processing.

However, these months were also the “worst because of the precipitous decline in Chinese demand for direct shipping ore, and a near halving in the Cash LME (London Metal Exchange) nickel price.”

Eccles said the price dropped to $15,750 per ton by end-September from $30,000 at the start of April.

“The price has continued to decline … to approximately $10,000 per ton (in December),” he added.

In the period under review, Berong mine shipped 370,355 wet metric tons (WMT) of laterite nickel ore at an average grade of 1.53 percent to customers in China and Australia. It was 5 percent higher than deliveries made in the same period in 2007.

The volume of ore mined reached 547,001 WMT, while ore inventories stockpiled at the end of September amounted to 323,115 tons.

Some two-thirds of the stockpile had been earmarked for delivery to BHP Billiton’s refinery in Australia under a long term supply agreement.

“The collapse in the nickel market occurred at a time when nickel inventories at Berong were being accumulated ahead of the scheduled operational shutdown from late October to end February, when offshore transshipment is impractical because of rough seas,” Eccles said.

Artemio Dumlao
Philippine Star

ITOGON, Benguet — Two mining giants – Lepanto Consolidated Mining Co. in Mankayan town and the Australian-owned Anvil Mining Ventures in Itogon town – have begun exploring tough measures, including work rotation and downscaling of operations, to survive the global economic slowdown.

Lepanto, which has been operating in mineral rich Mankayan town in Northern Benguet for 72 years, has implemented a work-rotation scheme for its 1,400 surface and underground workers.

“Otherwise, our option would be to retrench workers,” explained Lepanto resident manager Magellan Bagayao.

Workers, however, have contested the scheme saying it violates their collective bargaining agreement.

In Itogon town, Anvil-Philippines has suspended its exploration work in Poblacion and Ampucao to stem losses.

Anvil has a lease agreement with the Itogon Suyoc Mines Inc., a commercial mining firm that shut down in the mid-1990s.

In a letter to Benguet Gov. Nestor Fongwan, Itogon Mayor Mario Godio and barangay officials, Anvil’s project resource geologist Ivor Jones said there is a need to suspend the firm’s more than a year-old exploration activities because of the falling global prices of copper. But he said the firm would resume exploration activities as well as re-hire 20 retrenched workers as soon as the situation improves.

Jones, in his letter, stressed the firm’s unhampered social and development commitments in the towns where it operates.

Marianne V. Go
Philippine Star

The Philippine mining sector is expected to remain a bright spot for investments and economic activity despite the current financial turmoil resulting from the US subprime meltdown.

This optimism was expressed by Australian Trade Minister Simon Crean and Chamber of Mines of the Philippines president Benjamin Philip Romualdez.

In separate interviews with The STAR, Crean and Romualdez expressed continued optimism for the mineral sector as growth is still expected, albeit slower, for economic powerhouse China, India and the Middle East.

Crean, citing projections from the International Monetary Fund, foresees continued growth for China and some ASEAN countries such as Malaysia.

For China, Crean said, that growth is expected to be around nine percent to 9.5 percent, while for Malaysia, it would be around 4.5 percent to five percent, slightly lower than the projected seven-percent growth.

“There will still be strong growth that will demand resources,” Crean pointed out.

Romualdez, likewise, projected a much needed and even desired cooling down of the Chinese economy from its double digit growth to a more comfortable eight percent to nine percent this year and perhaps down to six percent to seven percent in 2009.

“That is still strong, robust growth,” Romualdez stressed, with China, thus, continuing to invest in infrastructure which would, in turn, require continued production of base metals.

Furthermore, Romualdez added, India and the new players in the Middle East continue to invest in infrastructure.

“They will pick up the slack left by the US and Europe given their current financial difficulties,” Romualdez assured.

The Philippines, then Romualdez said, would be “well positioned” with its mineral resources.

However, Crean, for his part, reiterated the need for the Philippines to address the concerns of investors in the mining sector, particularly in the granting and processing of mining licenses and permits, as well as the distribution of royalties and dividends to the local governments where the mining activities are located.

According to Crean, “there are opportunities, if we get the process right.”

The timing, thus, of the five-day 9th ASEAN Senior Officials Meeting on Minerals (ASOMM) and 2nd ASEAN Ministerial Meeting on Minerals (AMMin) and other related meetings hosted by the Philippines from October 13 to 17 at the Sofitel Philippine Plaza Hotel in Manila, Romualdez said, would enable the mining sector to assess the effect of the current financial turmoil and plan a future for the mineral sector.

The five-day meet is aimed at drawing up regional policies that will promote regional cooperation among ASEAN member countries and develop the ASEAN mineral sector as an engine for economic growth and social progress.

To be held also on the same date and venue is the five-day mining conference of the private-sector-led ASEAN Federation of Mining Associations (AFMA).

Environment and Natural Resources Secretary Jose L. Atienza said the events, the biggest mining activities in the country this year, are significant in shaping up the immediate and long-term future of the minerals industry for the region to be able to cope with the effects of the financial crisis in the United States and other parts of Europe.

The meeting is expected to both enhance trade and investments in the ASEAN mineral sector, as well as promote environmentally sound and socially responsible mineral development practices in the management and utilization of mineral resources.

The ASEAN countries include the Philippines, Indonesia, Malaysia, Singapore, Thailand, Brunei Darussalam, Cambodia, Lao PDR, Vietnam, and Myanmar.

A consultative meeting on minerals cooperation with the ASEAN+3 nations (China, Korea and Japan) will also be held. The three nations are the major consumers and investors in mining in the region.

Philippine Star

The government and stakeholders of the mining sector must work harder to restore confidence in the Philippine economy and convince investors to proceed with their investments   in the Philippine mining industry.

This was the appeal of Chamber of Mines of the Philippines president Benjamin Philip Romualdez yesterday at the press conference announcing the 8th Asia Pacific Mining Conference and Exhibition to be held from Oct. 14 to 16 at the Sofitel Philippine Plaza Hotel.

Romualdez said the conference would be part of the “confidence building” measures that the private sector and the government must undertake to prevent investors in the mining sector from postponing their investments in the light of the current financial market turmoil caused by the US real estate mortgage crisis, as well as continuing local problems with the local government units, local communities and security problems.

“We are still hopeful that investments will come in,” Romualdez said.

However, he admitted that in the light of current events “the timetable may be delayed.”

The effect of the current financial turmoil stemming from the US real estate mortgage crisis, Romualdez explained, is that there will be a tightening of credit and heightened “risk aversion” among investors.

However, Romualdez is confident that such aversion will be temporary.

He said the Philippines, is “well placed”, with its mineral resources and policies to compete once the US situation finally settles down.

At the end of the day, Romualdez assured, the global economy is still growing and would continue to industrialize. The cornerstone of industrialization, is mineral resources of which the Philippines has an abundance, he added..

Philippine mining projects, will just have to exert more effort in convincing potential investors that they are worth investing in, Romualdez said.

– Marianne Go

Othel V. Campos
Manila Standard

The value of metal production in the Philippines declined 20 percent in the first six months of the year to P33.97 billion from P42.52 billion year-on-year mainly dut to lower nickel output.

Data from the mining bureau show that nickel production dropped 44 percent to 2.3 million metric tons from 4.2 million MT, while value fell 75 percent to P3.1 billion from P12.17 billion because of a sharp drop in world nickel prices to $12.40 a pound from $20.31.

Nickel concentrate production was flat at 4.7 million MT.

Production of silver production, the country’s second- most precious metal, dropped 54 percent from 170 million kg. Value declined 51 percen to P348 million from P8.1 billion.

Chromite output fell 58 percent to 18.41 million MT from 44.4 million MT. Value dropped 49 percent to P87.7 million from P44.4 million.

Several chromite companies stopped operating due to the expiration of their permits. They include Heritage Resources and Mining Corp., whose permit expired March 2008; and Benguet Corp. with Consolidated Mines.

CRAU Minerals halted production due to its inability to sustain operations.

The only remaining chromite producer is Krominco Inc., whose operations is based in Surigao del Norte.

Gold production and value stayed robust.

Gold output rose 3 percent to 19,202 kg from 18,680 kg while value increased 19 percent to P22.9 billion from P19.3 billion.

The bureau cited the entry of Maco Gold Operation of Apex Mining Co. Inc. in Compostela Valley and the Enargite project of Lepanto Consolidated as major contributor to the growth of gold production.

Gold purchases of the Bangko Sentral ng Pilipinas from small-scale miners reached 15,551 kg, valued at P18.55 billion.

The government earlier said seven of the 63 priority mining projects would be commissioned by 2009.

These are Carmen Copper Corp., Oceana Gold, Coray Bay, Platinum Group; and Philsaga’s Banahaw gold project.

Reuters
Philippine Daily Inquirer

MANILA, Philippines — The Philippine mining sector drew over $200 million in investments in the second quarter, a senior official said Thursday, bringing the first-half figure to about a third of the government’s target for the year.

Investments reached about $300 million in the six months to June, including the $68 million registered in the first quarter, Horacio Ramos, director of the mines and geosciences bureau, told reporters.

Ramos said he was confident that investments by mining companies would reach $1.0 billion this year, higher than the initial target of $838 million, with investors expanding and preparing mine sites for next year.

“I wouldn’t say (the mining sector) is slowing down just because one mine is slowing down,” Ramos said, referring to OceanaGold’s Didipio copper and gold project, where start of production was moved to the second half of 2009 while the Australian gold miner looks for a partner.

The government is hoping its mining sector, one of the world’s biggest and most profitable in the 1970s, will attract $10 billion in investments in the next three years.

Ramos said investments had reached $1.8 billion so far since 2004 when the Supreme Court allowed foreign companies 100-percent ownership in local mining projects.

Legal uncertainties, disputes with local partners and opposition from the Catholic Church have made it difficult for foreign miners to do business in the Philippines.

The government has given financial and technical assistance agreements, which allows 100-percent foreign ownership of a mining project, to only two groups since 1995.

Katherine G. Adraneda
Philippine Star

Environment and Natural Resources Secretary Lito Atienza said the local mining industry is capable of growing five times in the next three years.

Atienza, who led the Philippine delegation in the Asia Mining Congress held in Singapore last week, told global mining investors and ranking state mining officials from different parts of the world that the country’s mining industry is capable of sustaining its growth with output seen soaring  by as much as five times to at least $10 billion until 2011.

“The bulk of the projected investments is expected to come in between 2008 and 2010 when the bigger, world class mining investors progress to the construction and development stages,” Atienza said.

DENR data shows that 43 mining processing and exploration projects, and 23 other exploration projects have invested a total of $1.4 billion from 2004 to end of 2007. These, it noted, have potential additional investments of another $9 billion up to 2011 for a total of $10.4 billion.

Atienza also disclosed DENR projections, which show a dramatic increase in volume of mineral production beginning this year in almost all sub-sectors: gold, nickel, copper, chromite, cobalt, zinc, ferronickel and calcined nickel.

The DENR projections also cover the priority projects and were based on their submitted production schedule.

“The rise in production volume will expectedly raise the production value of the minerals industry, which is seen to reach over $10 billion, which would be almost five times that of 2007’s $3 billion,” Atienza pointed out.

Based on Atienza’s calculation; the expected rise in the production value of the local mining industry at such level would make its contribution to Philippine exports reach the vicinity of 6.5 percent.

The 6.5 percent rate, Atienza stressed, would be enough for the Philippines to be classified as a “mining country” based on World Bank (WB) standards.

Although Atienza said that the that production figures could vary according to plans of the mining projects, he nevertheless predicted that production of certain minerals would reach, as follows: Copper production will rise four times from 216, 000 dry metric tons (DMT) in 2007 to 830, 000 DMT in 2008; chromite output would almost double from 37, 000 DMT in 2007 to 63, 000 DMT in 2008; gold production would increase twice from 1.2 million to 2.7 million ounces; and silver will shoot up six times from .89 million to 5 million ounces

On  direct nickel ore production, the DENR chief expects it to slow down by about 20 percent, but expects improvement in nickel concentrate production by almost 10 times with additional nickel processing plants coming on stream.

As for other minerals, Atienza said the government expects to have cobalt and zinc production of 4, 500 MT and 20, 000 MT, respectively; ferronickel production is projected at 50, 000 MT; while calcined nickel ore production is anticipated to reach around 300, 000 MT by 2011.

The government launched its revitalization program for the minerals industry in 2003 in a bid to utilize the country’s rich mineral resources in generating investments, and thus, boost the economy.

Since 2003, the government claimed it has grown, having generated more than $1.4 billion in mining investments from its priority projects, and improved metallic output in terms of volume and value owing to rise of new mines.

To date, the DENR said that of the 63 priority mining projects in the country, 10 are already in its production stage.  These are:  Palawan Nickel Project of Coral Bay/Sumitomo; Rapu-Rapu Polymetallic Project of Lafayette Mining; Canatuan Silver-Gold Project of TVI Philippines; Sto. Tomas II Copper Expansion Project of Philex Mining Corp.; Teresa Gold Project of Lepanto Mining Consolidated Co.; Berong Nickel Project of Atlas Mining and Toledo Mining; Masara Gold Project of Apex Mines; CTP and PGMC Nickel Projects of Surigao Integrated Resources Corp.; and PASAR Refinery Expansion.

The DENR said eight more projects are expected to go on-stream within this year and early 2009. These include Carmen (Toledo) Copper Project; Didipio Copper-Gold Project; Palawan HPAL Nickel Project (Line 2); Canatuan Base Metal Project; Filminera Masbate Gold Project; Iligan Ferronickel Smelter Plant; Manticao Ferronickel Smelter Plant; and Phisaga Gold Project.

Mike Frialde
Philippine Star

Two party-list groups yesterday asked the Supreme Court to scrap the Philippine Mining Act or Republic Act 7942 for being unconstitutional.

In the petition, Akbayan Rep. Ana Hontiveros-Baraquel and Bayan Reps. Lorenzo Tañada III and Teodoro Casiño asked the Court to issue a temporary restraining order enjoining the Department of Environment and Natural Resources from approving any application for Mineral Production Sharing Agreements in three municipalities in Davao del Norte and to nullify the seven MPSAs that the DENR had already reassigned to respondent mining firms Hallmark Mining Corp. and Austral-Asia Link Mining Corp.

The MPSAs cover 17,215.4474 hectares in the three municipalities of Mati, San Isidro and Governor Generoso.

According to the petitioners, RA 7942 is unconstitutional as it violates Article XII Section 2 of the 1987 Constitution which states that “all lands of public domain, waters, minerals, coal, petroleum and other mineral oils, all forces of potential energy, fisheries, forests, timber, wildlife, flora and fauna and other natural resources are owned by the State.

“The State may directly undertake such activities, or it may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or corporations or associations at least sixty per centum of whose capital is owned by such citizens.”

Such agreements, according to the same provision, may be for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and under such terms and conditions as may be provided by law.

However, the petitioners asserted that Section 80 of RA 7942 and Section 212 of Department Order 96-40 violate the Constitution since they provide that the government share shall be excise taxes.

In addition, the petitioners said DENR has no basis to enter into MPSAs as the law did not constitutionally provide for the basis for sharing.

The petitioners also said the basic rights of the people are at risk if the MPSAs will not be voided.

Daxim Lucas
Philippine Daily Inquirer

(Conclusion)

The country’s top mining regulators continue to be bullish about the industry, despite the roadblocks that remain in the way of many foreign investors and their local partners.

In recent months, however, this bullishness has given way to guarded optimism as the harsh realities slowly take hold.

From touting the possibility of monetizing as much as $840 billion just two years ago — more than enough money to pay off the entire national debt several times over — government officials now recite more conservative numbers.

Some $1.6 billion worth of foreign money is expected to come into the local mining industry this year, Mines and Geosciences Bureau Director Horacio Ramos says.

Relative to other booming sectors of the economy like the business process outsourcing industry or even the remittances sent home by expatriate Filipinos, this amount is peanuts.

But the number — if it materializes — masks a marked acceleration in mining investments since the start of the industry’s revival in 2004. From 2004 to 2007, only about $1 billion in mining investments have so far entered the economy, Ramos says.

The expected 60-percent increase in mining investments this year will be due mainly to the funds that investors will pour into the various projects run by CGA Mining Corp., Atlas Consolidated Mining and Development Corp. and Oceana Gold all over the country.

Ramos adds that the country can expect to see as much as $9 billion worth of investments coming in by 2010 — if everything will proceed smoothly, that is.

If the present state of the industry is any indication, however, some outstanding issues will have to be ironed out before the government can encourage these investments to come in.

Apart from the security risks frequently encountered by mining firms, the bureaucracy at the national and local levels is another main concern that must be addressed.

In an interview, Chamber of Mines of the Philippines executive vice president Nelia Halcon points out that the cumbersome approvals process for mining permits at various levels remains a sore point between the regulators and the private sector.

Approval process

“The approval of exploration permits should be done faster,” she says. “Remember, we have had several DENR [Department of the Environment and Natural Resources] secretaries. Changes in certain policies disrupt plans and programs.”

Halcon points out that the peculiar nature of the industry — where mining firms live on a hand-to-mouth basis as long as they are not yet in full production — makes for a deadly combination with the red tape foe which the government is known for.

“As far as I know, several are waiting for the approval of their mining tenements,” she says. “As you know, [this] business lives by the day and this is oftentimes taken for granted by government.”

“When investors decide to go with a project, they also seek financing. They are not able to work on the ground when their tenements are not approved yet,” the Chamber of Mines official explains.

Thankfully for the mining community, the importance of the situation is not lost on the current leadership of the DENR, led by Secretary Lito Atienza.

Atienza, a former Manila mayor, candidly admits in an interview that the cumbersome bureaucracy remains a major challenge, and said that steps are being taken to streamline the approvals process for projects which often run into several years before permits are handed out.

“On the part of the DENR, we are helping to hasten the process and time it takes for a mining company to start operations,” he says. We want them to be able to start operations in 8 to 10 years, instead of the present time needed of 12 to 15 years.”

These delays, he says, are caused by “too much red tape” as well as “the attitude of people” involved in the industry, whether they are private or pubic stakeholders.

Atienza stresses, however, that most delays in mining operations are caused by poor preparations by the mining firms themselves, especially in dealing with the local communities where they operate (the main cause of the chronic security problem, he believes) — a view opposed to the private sector’s version which blames regulatory hurdles as the main cause for the sluggish inflow of investments.

For the industry to move forward faster, stakeholders will first have to agree on how to address these issues. At stake is no less than the future of an industry that has the potential to single-handedly turn the country’s economic fortunes around, for good.

Manila Times

The Department of Environment and Natural Resources has taken steps to address the complaints of tribal communities affected by mining concessions in Nueva Vizcaya.

Environment Secretary Lito Atienza ordered a thorough review of mining permits given to companies operating in the province to resolve the issue of lack of consultation raised by the tribal groups and other community stakeholders during a dialogue with the department.

“We will look into this lack of consultation issue carefully and if found to be going against the provisions of the law, we will impose sanctions to the erring mining firms,” Atienza said in a statement.

Australia’s OceanaGold, London-listed Metals Exploration and Royalco, also of Australia, all have operations in Nueva Vizcaya.

Atienza had asked the complaining group to keep an open mind as he enumerated the many benefits both the people and country will gain from a thriving mining industry.

“We are blessed with minerals, we must use it to uplift our lives,” he said, adding “We have to do what is right and not what a few want.”

Under Philippine laws, miners have to get permission from tribes before they can explore and extract minerals from their lands.

Antimining groups and some tribespeople in Nueva Vizcaya have accused the companies of failing to consult and bribing some people to get their consent.

–Chino S. Leyco