During the long wait for the COVID-19 vaccine, officials from the National Task Force Recovery Cluster said that they expect the Philippine economy to be up for a long-term growth trajectory following the 9.5% contraction in 2020. The National Economic and Development Authority (NEDA) indeed launched the Updated Philippine Development Plan (PDP) 2017-2022, gearing the country towards economic recovery by responding to the challenges brought by the COVID-19 pandemic.
Such a recovery hinges on the continued efforts of the government to stimulate the economy, address the devastation the pandemic has wrought on micro, small, and medium enterprises, and revive consumer consumption.
“Now more than ever, the Duterte government must find ways to raise revenues and generate business activities to hasten economic recovery. Fortunately, the country has an untapped treasure trove of resources to fall back on,” economist Andrew J. Masigan wrote for BusinessWorld in December.
Mining could be the answer. According to data from the Mines and Geosciences Bureau (MGB), the country’s mining sector contributed around US$4.38 billion to the economy in 2019 through the exports of metallic, non-metallic minerals, and mineral products, with Japan, Australia, Canada, and China as the major buyers.
That year, the total estimated production value for metallic minerals was P130.73 billion, up by 7.03% or P8.59 billion compared to 2018’s P122.14 billion. Around P107.4 billion was estimated to be Gross Value Added (excluding crude oil) in mining at recorded prices.
Mr. Masigan notes that gold deposits in the Philippines are among the largest in the world with reserves estimated at 101.6 million metric tons. Iron ore reserves are at 298 million metric tons. Among non-metallic minerals, limestone reserves are approximately 19.5 billion tons while marble reserves are at 14.5 billion tons. The Philippines leads the world in chromite resources as well.
“Despite our enormous mineral resources, the contribution of the mining industry to the economy remains minuscule. As of last year, the share of the mining output to GDP (gross domestic product) was a mere .06%. It contributed only 1.2% to national tax collection, and comprised only 6.3% of exports. In terms of jobs, it employed less than .04% of the workforce. In contrast, the mining sector in Indonesia accounts for 21% of exports and 7% of GDP,” Mr. Masigan wrote.
According to S&P Global Market Intelligence, the Philippine mining sector is hopeful that the country’s government will recognize the importance of the industry in the wake of the pandemic, representing a potential silver lining after almost a decade of struggling with a moratorium on new permits and a ban on open-pit mining.
“In general, we feel that the pandemic will make the government realize that this sector of our economy can even be more important during times of crisis given the support that large-scale operations provide to their local government units and host communities through social expenditures and crisis management teams,” Gerard H. Brimo, chairman of the Chamber of Mines of the Philippines and president and CEO of Nickel Asia Corp., told S&P Global Market Intelligence.
“What stymies the industry’s growth and its ability to further contribute to the economy are policy roadblocks, principally the moratorium on new mining permits that has been in place since 2012 under Executive Order 79 and the ban on open-pit mining,” he added.
A new tax bill in the House of Representatives has been passed at the committee level, pending approval in plenary, that could potentially see the lifting of the moratorium. Mr. Brimo added that the new tax structure is competitive and progressive in nature, and will be beneficial both to the sector and the government, with the latter’s coffers currently hit by social amelioration programs implemented during the pandemic.
“If this happens, three pending mining projects can bring the industry’s exports to over 9% of the total Philippine exports and increase the industry’s contribution to about 1.4% of the country’s GDP,” he added, noting that mining accounted for 5.99% of exports and 0.69% of GDP as of 2018.
Meanwhile, the MGB echoed the optimism on the mining industry’s potential role in the economic rebound in the coming years if those hurdles are lifted.
Speaking to S&P Global Market Intelligence, MGB Director Wilfredo G. Moncano said, “The mining sector is in a struggle right now, but I am positive that the industry will rebound. It may not be seen this year but in the succeeding years. We, in the industry, are confident that the mineral sector will play a crucial role in the recovery of the economy in the next two to three years.”
He added that the lifting of the moratorium on new projects will open the doors to at least 12 new mining projects worth several billions of pesos, all without sacrificing the environment and the rights of indigenous people following the MGB’s recent issued order to mining companies to realign their annual social development and management program or community development budget and to use it instead in assisting workers and affected local communities. — Bjorn Biel M. Beltran