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.