Mining groups buck export ban on raw ore

MANILA, Philippines — Mining industry groups are opposing a provision in a Senate bill that will impose an export ban on ore, arguing it will do more harm than good for the country’s mineral sector.

The Chamber of Mines of the Philippines (COMP) and the Philippine Nickel Industry Association (PNIA) issued a joint statement expressing their support for Senate Bill (SB) 2826, but disclosed their apprehensions regarding a provision imposing an export ban on the country’s ore production.

SB 2826 puts forward the implementation of the long-awaited rationalized mining fiscal regime in the country by proposing a tax scheme based on margins and windfall profits. However, the groups lamented the inclusion of a provision in the bill that would bar the export of raw ore.

“The proposed ban on the export of raw ores as also contained in SB 2826, however, is the last thing our country needs. Its intended purpose of compelling mining companies to build processing plants within five years before the enforcement of the export ban will not happen,” the groups said.

“It will even most likely lead to considerable unintended consequences,” they added.

The groups explained that some “formidable” challenges continue to persist that keep potential mining investors at bay such as high power costs and lack of transport networks.

“The Philippines has arguably the highest power costs in Asia. We lack the necessary infrastructure such as power pants, transport networks and facilities to support large-scale domestic mineral processing,” they said.

“Moreover, several local ordinances remain in conflict with national mining laws. Unless these issues are fully addressed, mineral processing will remain but a dream. Simply, there are no shortcuts,” they added.

The groups warned that an export ban on raw ore would even lead to mine closures that would consequently result in unemployment for hundreds of thousands of Filipino workers who depend directly or indirectly on mining.

“The closures will also reduce government revenues and economic activities in mining communities. The mining sector is a significant contributor to government revenue through taxes, royalties and fees,” they said.

“A decline in mine operations could negatively impact public funds for infrastructure, social services and community development programs,” they added.

Limiting the export of ore by the Philippines would also have adverse global implications as the country serves as the second largest exporter of raw nickel, the groups argued.

The export ban, the groups said, would also disrupt supply chains, with domestic mining companies suffering the most as their long-term contracts would have to be canceled and may even lead to penalties, disputes and loss of trust in the Philippine mining industry.

“We highly recommend an extensive study to assess the economic and social implications of the proposed raw ore export ban,” they said.

“We submit that a more sustainable approach would be to focus on improving infrastructure, reducing energy costs and enhancing regulatory stability to attract investments in mineral processing,” they added.

The mining industry has been looking forward for the legislation of a fiscal regime that is seen to spur investment and unlock the potential of the country’s mining sector.

COMP chairman Michael Toledo has earlier stated that the absence of a clear-cut law on the mining fiscal regime is one of the primary concerns raised by foreign investors.

In October last year, President Marcos renewed his call for the passage of a bill seeking to introduce a new fiscal regime for the mining industry, making the sector more sustainable and generate higher revenues for the government.