The world’s top five miners are looking again at the Philippines for possible investments even as the Department of Finance (DOF) is set to review the revenue-sharing in the mining industry, according to the Chamber of Mines of the Philippines (COMP).
The Philippines is set to establish a new fiscal regime for the industry to boost government revenue.
A pending legislative bill proposes royalty payments of 3 percent on gross output of large-scale miners, a margin-based windfall tax, on top of other taxes.
Mike Toledo, chair of of COMP, told reporters mining companies from Canada, Australia among others have taken a sudden interest in the Philippines’ mineral resources especially nickel, copper and gold. This after the government lifted the ban on open pit mining and the moratorium on new mining permits.
Toledo said the COMP is negotiating with the DOF on what should be a “fair” tax in mining.
Toledo said the idea of the review of the revenue-sharing is to rationalize the tax and settle once and for all, the taxes that the mining industry has to pay.
“Definitely they will raise (the rates) so that is why we are negotiating (with DOF),” Toledo said
He added it has been established that the Philippines has the highest tax among other mining jurisdictions.
“The excise tax has been raised to 4 percent and we pay royalties, corporate taxes, local taxes. There are so many taxes that we’re paying aside from what we do for the community where we put up hospitals, roads, etc,” he said.
Toledo said the DOF recognizes that mining if allowed to flourish can be a big source of revenue to fund government projects and pay off its debt that has risen due to the pandemic.
Toledo said aside from taxes, mining companies consider other factors in investing in the Philippines: the flip flopping of policies and the very strong voice of anti-mining.
Meanwhile, Toledo said COMP supports government’s thrust to encourage nickel processing in the country to support the switch to renewables since nickel is an important component of batteries in electric vehicles (EVs).
“We have four (nickel) processing plants and we need more. But you need to see volume.
You also want to review the cost of power. You need to (look at granting) incentives because putting up a processing plant is very expensive. It’s not cheap,” Toledo said.
A Reuters report yesterday quoted Dante Bravo, president of the Philippine Nickel Industry Association, as saying government’s plan to impose an up to 10 percent tax on nickel ore exports could force local producers to close up shop.
“The initial proposal in the House of Representatives was 10 percent. That will kill the industry,” Bravo told Reuters.
“We need to be heard so the government will understand our side,” said Bravo, who is also the president of miner Global Ferronickel Holdings Inc.
The Philippines is looking at taxing nickel ore exports to encourage miners in the world’s second-biggest supplier of the material – which is used in making stainless steel and batteries for EVs- to invest in local processing instead of just selling raw ore.
Bloomberg News on Monday quoted Environment and Natural Resources Secretary Antonia Yulo Loyzaga, whose department also oversees the mining sector, as saying “there’s a range of actions including a progressive look at taxing exports” of raw nickel.
The idea is to follow in the footsteps of Indonesia, where a ban on nickel ore exports has attracted massive investment into processing plants. Indonesia wants to replicate the policy for other metals, including tin.
But, Bravo said, a comparison to Indonesia is flawed because it has more reserves to support investments in local mineral processing.
The Philippines has 34 operating nickel mines and exports most of its nickel ore to China and some to Japan. But it has only two nickel processing plants, which are both partly owned by the Philippines’ biggest ore producer Nickel Asia Corp.
Nickel Asia is partly owned by Sumitomo Metal Mining Co Ltd.
Latest government data show the Philippines produced 22.5 million dry metric tons (dmt) of nickel ore in January to September last year, valued at 46.8 billion pesos ($859 million), compared with 27.2 million dmt in the same period in 2021.
Based on data from the Mines and Geosciences Bureau, as of third quarter 2022, nickel ore together with its nickel by-products, mixed nickel-cobalt sulfide and scandium oxalate continued to have the largest share with P86.94 billion or 49.40 percent in the country’s metallic mineral production value for the period.
For the period, total metallic mineral production value was at P175.61 billion.(Irma Isip, Reuters)
