Economist pushes reforms in mining production chain

MANILA, Philippines - Improvements and reforms, particularly in the production chain, can transform the country’s mining industry into an economically, socially and environmentally helpful and desirable sector, a state-run research institute said.

In a study conducted by the Philippine Institute for Development Studies (PIDS), it said the mining industry has not reached its full potential partly because it has generally remained an extractive activity.

Dr. Danilo Israel, PIDS senior research fellow, said that the primitive process has made “the country a mere exporter and supplier of raw materials whose valuation is lower compared to that of mining products that have been processed.”

He pointed out in the study that the mining industry has contributed to the country’s economy despite the lack of value addition.

In the 2000s, particularly after the Philippine Mining Act of 1995 was finally declared as legal, the gross value added (GVA) in mining and quarrying, total mineral exports, and employment in mining increased annually on average.

“Such trends could have been higher perhaps had there been further processing in mining,” the study said.

The PIDS executive encouraged industry leaders and government officials to explore these opportunities for value addition, as higher value mining products generated through more processing would result in higher production, income and employment.

“And these benefits may in turn go a long way toward addressing the various economic, social, and even environmental problems that mining communities are facing,” he said.

One of the immediate actions that can be done to promote value addition is conducting a situational analysis of the mining industry and identifying the areas where mining products can be enhanced to increase their value.

He further added that conducting a full-blown value chain analysis for the mining sector, and its subsectors, would be a very important step for the development of the industry.

Israel explained that beyond the economic aspects, the mining sector continues to suffer from significant social and environmental problems that need to be urgently addressed as well.

He said that although value addition by itself may help alleviate some of these problems, much more clearly needs to be done by all concerned, for mining to grow beyond just being an economically gainful sector and also become a socially and environmental desirable one as well.

The recent tragedies that devastated the mining communities in Compostela Valley and Camarines Norte clearly magnified the issue.