MANILA -- The Philippine nickel industry has projected lower production in 2019 due to the new regulation of the government limiting the areas for mining operations.
Philippine Nickel Industry Association (PNIA) President Dante Bravo, in a forum Wednesday, attributed the projected decline in nickel shipments to a policy of the Department of Environment Natural Resources (DENR).
Under the DENR Order, a mining firm producing a million wet metric tons (WMT) or less would be allowed to extract ore in a maximum of 50 hectares, while those producing nine million WMT and above would have a maximum disturbed area of 100 hectares.
“If you limit the open areas, that means you lose certain flexibilities because the mineralization is different across mining concessions,” Bravo said.
“There are areas that have bigger deposits, while there are areas wherein deposits are less. With that, it is likely that production would be reduced by 10 to 20 percent,” he added.
The industry also attributed the projected decline to a consolidated bill filed at the House of Representatives, which rationalizes and institute a single fiscal regime applicable to all entities with mineral agreements in the Philippines.
The bill’s highlights include the royalty tax imposed on mining operations with varying rates for small and large-scale mining operations located within and outside mining reservations.
The proposed measure also include a Margin-based windfall profits tax, which will impose limitation on interest expense deduction, and non-consolidation of income and expenses of mining projects by mining contractor.
It also proposes that mining firms outside areas declared mineral reservations should pay a royalty equivalent to 1-5 percent of their profit margins on a sliding scale, as well as an additional tax on their windfall profits.
The royalty comes on top of the corporate income tax, excise tax, local business tax, and other levies paid to indigenous people (IP), among others.
At present, most mines in the country operate outside mineral reservations and do not pay royalty. Those operating within pay a royalty of 5 percent on gross output.
The proposed bill lowered the royalty payable by firms inside mineral reservations to 3 percent.
Data from the Mines and Geosciences Bureau (MGB) of the DENR showed that the country’s nickel exports from January to September fell slightly to 22.170 million dry MT, from 22.401 million dry MT recorded in the same period last year.
In terms of value, Bravo, who is also president of the Global Ferronickel Holdings Inc., expressed optimism that revenues from nickel shipments would expand in 2019 due to the projected recovery in international prices.
He, however, did not provide an estimate as to the rate of increase of receipts from nickel exports.
The country's nickel shipments have been declining for the past three years.
The country ships around 90 percent of nickel ore to China. The value of the nickel shipments for the period January to September rose by 25 percent to PHP24.57 billion, from PHP19.731 billion recorded a year ago, due to higher global prices. (PNA)
