Reyes: No Plunge In Mining Investments; Mining Contribution To Economy Steady

Reyes: No plunge in mining investments; mining contribution to economy steady

DENR website

5th February 2007

Environment and Natural Resources Secretary Angelo T. Reyes today said the contribution of the mining sector to the economy continues to expand with the growing mineral output and unprecedented increase in metal prices.

Reyes said the mining sector registered a sterling performance last year with gross production output from metallic mines rising 48% from P37 billion in 2005 to P55 billion in 2006.

The DENR chief issued the statement in reaction to an earlier report which said that the mining and quarrying sector suffered a 6% decline in production growth rate.

Reyes explained the figure was incorrect. "The mining industry is considered part of other sectors which fared badly in 2006, like crude oil, and nonmetallic minerals (e.g. coal) and this made the mining sector look like a poor performer too," he said.

Citing data from the National Statistical Coordination Board, Reyes said that gross value added from crude oil and other nonmetallic minerals, like coal, dropped by 11% last year. "The performance of other commodities in the sector (crude oil, and nonmetallic minerals) which comprise 55% of the sector's total gross value added pulled down the growth rate of the mining and quarrying sector," Reyes said.

"The contribution of the mining sector to gross domestic product is improving steadily," Reyes said. "The revitalization of our mining industry came at a most opportune time. We are seizing the opportunity even as we aggressively promote responsible mining."

Mines and Geosciences Bureau records show that gold and silver production, which accounts 63% of last year's gross production value, increased by 23% compared to its level in 2005. Nickel and copper demonstrated substantial increases in value from P5.4 billion to P14 billion or 159%, and from P3.2 billion to P5.8 billion or 78%, respectively. Chromite also exhibited a 33% increase from P91 million in 2005 to P121 million in 2006.

The average monthly prices last year of copper, gold, silver and nickel increased by 84%, 35%, 58% and 65%, respectively.

The DENR chief also clarified that there was no plunge in mining investments last year. He said the US$109 million investment poured into the 24 mining projects were made according to scheduled activities.

Clarifying an earlier report which said that mining investments had plunged from US$447 in 2005 to US$109 million in 2006, Reyes said this does not mean that there had been a pull-out of investments in the country. "Investment commitments by mining companies are still here. It just so happened that the bigger costs did not take place last year," Reyes said.

He added that majority of the 24 mining projects focused on exploration and feasibility studies last year and only the Carmen Copper Project of Toledo Plc in Cebu spent some US$13.9 million in its construction activities.

The other bigger investments generated last year were from the Palawan Nickel Project of Rio Tuba Nickel Mining Corp. and Coral Bay Mining Corp. with US$43.1 million investments; the Tampakan Gold Project of Sagittarius Mines Inc. with US$13.21 million and the Canatuan Gold Project of TVI Resources Phils. with US$8.69 million.

Didipio Copper and Adlay-Cagdianao-Tandawa (ACT) earlier scheduled to undertake construction projects but these were temporarily shelved. The change in construction schedule was a direct result of changes in ownership. Oceana Gold Ltd bought into Australasia Philippines Mining Inc. for the Didipio Project while Platinum Group Metals Corp. bought into Surigao Integrated Resources Corp. for the ACT project.

Reyes said bigger investments were posted in 2005 due to the construction activities of three major projects undertaken by Palawan Nickel Project, the Rapu-Rapu Polymetallic Project of Lafayette Philippines Inc., and the Canatuan Gold Project. These three projects poured in US$301.86 million or over 67% of total investments generated from the 24 projects in 2005.

The DENR chief said major construction period is projected to start in 2007, peaking in 2008 and 2009. If schedules push through, more than US$348 million in mining investments are expected to be generated by the 24 projects in 2007. The Carmen Copper Project is expected to pour in some US$97 million as it continues with its construction work this year, while the Palawan Nickel Project is expected to triple its investment from 2006 as it continues its expansion this year.

"We are really headed for a take off this year and we foresee a mining boom setting in in 2008," Reyes said.