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DENR appointment spooks miners




Posted on June 22, 2016


THE GENERAL OPTIMISM in the country’s business community as the incoming administration unveiled its economic agenda was blotted yesterday on the mining front by news President-elect Rodrigo R. Duterte has named an anti-mining advocate to head the Department of Environment and Natural Resources (DENR).

Stocks of listed miners yesterday succumbed to news that Mr. Duterte offered the post last Monday to Regina Paz “Gina” L. Lopez, trustee of the Lopez Group Foundation, Inc. and chairman of the ABS-CBN Lingkod Kapamilya Foundation, Inc., the corporate social responsibility arm of media giant ABS-CBN Corp. that lists a “No to Mining Campaign” among its key advocacies.

ABS-CBN Lingkod Kapamilya Foundation confirmed in a statement late yesterday afternoon that Ms. Lopez has accepted the offer to head DENR, which oversees the country’s mining industry through its Mines and Geosciences Bureau.

In a brief, cautious statement before that, the country’s group of miners said that “[i]n light of recent developments, the Chamber of Mines of the Philippines (COMP) would just like to stress its continuing advocacy for responsible mining to benefit Filipinos, not just in mining communities but around the country.”

“This as we stress the need for a Department of Environment and Natural Resources secretary who has a solid background on the intricacies of natural resources management and someone who is able to balance economic growth and the needs of the people with that of environmental protection, the protection of indigenous communities and the society.”

Sought for further comment, COMP Executive Vice-President Nelia C. Halcon said in phone interview: “The industry can go with whoever will be appointed, we can’t do anything about that.”

That was before Mr. Duterte, in late-afternoon remarks, seemed to strike a conciliatory tone before an audience of business leaders gathered for consultations in Davao City with his designated economic officials.

LIKE A SORE THUMB
The 17-stock mining and oil sectoral index yesterday stuck out like a sore thumb in a bourse that joined global markets in cheering signs that a campaign to take the United Kingdom out of the European Union in a June 23 referendum -- with expected negative impact on the global economy -- appeared to be losing steam.

Mining and oil, which consists heavily of miners, lost 488.55 points or 4.09% to close 11,451.84 -- the only sectoral index among six that ended the day in red. In contrast, the Philippine Stock Exchange index gained 1.33% while the all-shares index rose 0.79%.

Philex Mining Corp. led the fall, crashing 12.17% to end P8.01 per share, while stocks of its subsidiary, Philex Petroleum Corp. -- which focuses on exploration and production of crude oil, natural gas, and coal -- fell by 10.94% to P4.07 each. Philex Mining is one of the three Philippine subsidiaries of Hong Kong-based First Pacific Company Ltd., the others being infrastructure-focused Metro Pacific Investments Corp. and Philippine Long Distance Telephone Co. (PLDT)., which has interest in BusinessWorld through the Philippine Star Group which it controls.

Manuel V. Pangilinan, who heads both Philex Mining and Philex Petroleum as chairman, said in a tweet before trading closed at 3:30 p.m.: “Crash in Ph Mining stocks this morning. There go the coal plants too. Can’t look.”



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Most other listed miners reeled as well: Atlas Consolidated Mining and Development Corp. lost 2.01% to P4.38; Coal Asia Holdings, Inc. dropped 1.01% to 49 centavos; Century Peak Metals Holdings Corp. fell 3.13% to 62 centavos; Global Ferronickel Holdings, Inc., 3.16% to 92 centavos; Lepanto Consolidated Mining Co., 7.78% to 24.9 centavos; Manila Mining Corp., 6.67% to 1.4 centavos; Marventures Holdings, Inc., 2.08% to P1.88; NIHAO Mineral Resources International, Inc., 3.57% to P2.70; and Nickel Asia Corp. went down 5.63% to P5.03 per share.

Abra Mining and Industrial Corp., which has not begun commercial extraction of minerals, ended flat at 0.42 centavos while Semirara Mining and Power Corp., which has a coal operating contract on Semirara Island but whose subsidiaries are heavily into power generation, gained 0.23% to P129.80.

‘ROUGH ROAD’ AHEAD
“[T]he initial response is negative because of Gina Lopez’ background. It may not be easy for the industry to put their agenda forward,” Justino B. Calaycay, Jr., head of marketing and research at A & A Securities, Inc., said by phone.

“There will be balance, but it will be a rough road. The appointment will be good for environmentalists but there will be challenges for the mining sector.”

Ralph Christian G. Bodollo, RCBC Securities research analyst for Property, Gaming & Mining, noted separately that “[f]or now, it’s just the uncertainty that is plaguing the investors in the mining-and-oil sector.”

“Coming from an administration that is not friendly, of course investors will take this [appointment] as very risky and [with] uncertainty in transaction. Investors are taking less risk opportunities.”

On June 30, Mr. Duterte’s government will succeed the administration of outgoing President Benigno S.C. Aquino III that had slapped a moratorium on new mining permits and had sought to significantly hike miners’ taxes. The 16th Congress ended without acting on this fiscal reform.

COMPREHENSIVE REVIEW LOOMS
But a little more than two hours after trading closed with mining stocks’ bloodbath, Mr. Duterte ended his speech before some of the country’s biggest businessmen who had gathered in the last two days in Davao City with what sounded like a conciliatory tone on the future of mining under his watch.

Still, he did warn the industry that it faces “a comprehensive review” of current applications and projects.

Ako, let it alone. Sa tingin ko: improve on it,” Mr. Duterte said of mining as he ended his reaction to resolutions submitted by businessmen at the end of their two-day consultation with incoming state economic managers.

Mr. Duterte emphasized the need for miners to take care of the environment and communities surrounding their projects.

“If you do not do it, I will cancel your permit.”

To this end, Mr. Duterte said “there will be a comprehensive review of mining claims and concessions given and you must endeavor to prove you have enough resources to do it.”

“That’s the bottom line,” the President-elect said.

“It is not that I do not want mining. There is a law... the law allows it,” he added, referring to Republic Act No. 7942, or the Philippine Mining Act of 1995.

“But in making money out of the precious metals of the earth that belong to the Filipino people, you have to do it right,” he stressed.

“If you cannot do it right, then get out of mining.” -- with inputs from Janina C. Lim