Hiccups in the mining sector

It’s amazing what a vibrant mining industry can do to an economy. Take the case of Africa, which in the past decades hogged the world’s news headlines largely for its tribal wars, famine and poverty.

Today, after a significant number of its countries had made the decision to develop their mining reserves, there is a large-scale mobilization of resources by the respective governments that have enabled the generation of much needed capital essential to jumpstarting or fueling their economies.

In such countries as Botswana, Gabon, Ghana, Guinea, Mali, and Niger, joint mining ventures between the government and big mining firms are able to draw on the capital and technology investments of the private developers under a reasonable regulatory regime of enlightened governments.

Even in African countries like Namibia, Sierra Leone, Tanzania, and Zimbabwe where mining ventures are wholly owned by the private sector, governments have been able to ensure that the country gets its fair share of the revenues while providing an environment of transparency and stability for investors.

Where did we go wrong?

Once again, the Philippines finds itself in a position where it has to ask the question: Where did we go wrong? One African country, Tanzania in particular, offers some answers.

Tanzania (population: 37 million) and the Philippines both introduced new mining policies in the late 1990s. But our attempt to bring Philippine mining laws up to date in keeping with changes in global trends had been badly delayed by the Supreme Court’s initial decision declaring as unconstitutional the 1995 Philippine Mining Act.

In was only last year, after the Supreme Court reversed its decision in December 2004, that things started moving on the country’s mining front. It helped that the local mining industry, perhaps also inspired by rising metal prices, initiated several trade missions seeking foreign capital and expertise.

Tanzania had not been hampered by meddling judicial decisions, and with a genuinely firm resolve to reform its fiscal measures, was able to introduce not only new investment laws but also new mining policies. According to Tanzania’s Deputy Minister for Energy and Minerals Lawrence Kego Masha, during a short visit to the Philippines, the vision was to have a strong, vibrant, and well-organized public sector-led large and small scale mining industry contributing over 10 percent of its GDP.

And boy! were they able to translate this vision into a powerful program. Among the salient features of Tanzania’s new mining act was the removal of discretionary powers of their energy and minerals minister, guarantees to security of tenure, transparency in the issuance and administration of mineral rights, a guarantee of commercial operations, and no mandatory government participation.

With the stage set for a revitalized mining sector for Tanzania, the number of mineral exploration licenses grew to 1,500 from nine — and we’re talking only of large-scale contracts. Six gold commercial mines were also opened since 1998 with an annual production capacity of over 50 tons of gold. They are now reaping the benefits of high metal prices.

The contribution of gold at current prices makes up some 60 percent of Tanzania’s income. And for a country with a high incidence of poverty, this will go a long, long way to uplifting the lives of millions of Tanzanians.

Resurrecting RP’s mining industry

Now if only the Philippines could inject more life in its mining industry to jolt it from its still current anemic state. It’s not that things are not moving; it’s just that the pace is a tad slow. If we quickly don’t get our act together, metal prices may not be as hot tomorrow as they are today.

No wonder the country’s Chamber of Mines expressed concern about the taciturn state of mining in the country. It does not help that the Department of Environment and Natural Resources has changed hands far too many times under the current administration. The adjustment to new work styles and tactical directions do cause delays.

The recent slide in gold prices, while still close to the $600 an ounce level, is also causing some panic reactions among local mining firms that are banking on foreign investors to rescue them. With so much pressure for today’s mines to be environmentally responsible, state-of-the-art extraction methods can be very expensive, thus the need to partner with the world industry’s big boys.

The Philippines is still considered one of the world’s countries that boasts of large reserves of gold and copper, plus substantial deposits of nickel, chromite, iron and limestone. Some estimate this resource to be worth at least $3 trillion. The challenge is to get it out of the ground.

More challenges

Environmentalists pose substantial challenges to existing and potential mining investors. More open communication lines in recent times, though, on the side of civil society — together with the Church in some instances — and mining firms on the other front has paved the way for grounds to move forward.

It is unfortunate though that one of the biggest foreign investors in the Philippines in recent years was confronted with accusations of irresponsible mining practices. This should provide some solid lessons for those who take local communities and their environmental welfare with less than serious intentions.

The real problem, as some of our mining industry leaders have reservedly expressed, is in the slow processing of mining tenement applications, the idle state of mineral lands that interested investors cannot seem to open up, and the continued layer of bureaucratic licensing and reporting requirements.

If it’s any consolation, the current DENR chief Angie Reyes has made some statements in recent days that promise to address the private sector concerns. Angie has also been talking also about developing the downstream mining industry, something that had been neglected for decades past.

We normally give our elected and appointed officers a period of adjustment. For Angie, who assumed his current post last Feb. 15, time is ticking fast. Let’s pray, for the sake of our country, that things get cracking at the environment and natural resources department.

Poker Tour visits Bacolod

Philippine Poker Tour (PPT) starts its Southern Islands swing on Saturday, Oct. 21, 2006 with the Bacolod Hold’em Challenge to be hosted by Casino Filipino Bacolod. This will give local poker tournament enthusiasts the opportunity to earn seats to the Grand Finals of the Million-Peso Hold’em Philippine Championship to be held at Casino Filipino Pavilion, Manila on 16th and 17th December 2006.

The tour moves to Cebu on 28th October 2006 where the qualifying tournament will be held at Casino Filipino Waterfront Hotel at Lahug. Casino Filipino Mactan-Cebu will, in turn, host the next satellite tournament on Nov. 11 with Casino Filipino Davao following on Nov. 25, 2006.

Details about the venues and schedules of other qualifying/satellite tournaments are posted in the Philippine Poker Tour (PPT) official web site at www.PhilippinePokerTour.com <http://www.philippinepokertour.com/>. Those interested to join these satellite/qualifying tournaments and win seats to the Grand Finals on 16th to 17th December 2006 may also call the PPT Secretariat (c/o Cindy) at 817-9092 or 812-0153.

Should you wish to share any insights, write me at Link Edge, 4th Floor, 156 Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at [email protected] or at [email protected]. If you wish to view the previous columns, you may visit my website at http://bizlinks.linkedge.biz