Mineweb.com: Philippines wants Chinese mining investment

Philippines wants Chinese mining investment
By: Dorothy Kosich
Posted: '23-AUG-04 05:00' GMT
© Mineweb 1997-2004

RENO--(Mineweb.com) For the second time this month, a top economic development official of the Philippine government has publicly declared the nation's intention to attract Chinese investment in mining in the Philippines.

Philippine Socio-Economic Planning Secretary Romulo Neri said that his nation considers China "a potential huge investor" in domestic mining. However, under the Filipino Constitution, mining and exploration are limited to local investors. Nevertheless, Neri believes that the mining sector could become the main engine of the nation's economic growth in the nation if foreign investors are permitted to invest. Neri is also director general of the National Economic Development Authority, which is the social and economic development planning and policy coordinating body for the Executive Branch in the Philippines.

Last January, President Gloria Macapagal Arroyo issued Executive Order 270, a National Policy Agenda on Revitalizing Mining in the Philippines, aimed at reviving the mining industry and developing the mineral potential of the country. The government, through the Mines and Geoscience Bureau, is now promoting mining investment.

"If the Philippines promulgates proper policies, it has a great opportunity of attracting China, which has exchange reserves of more than 400 billion U.S. dollars," Neri declared. He said that foreign investors are badly needed since the development of a single large-scale mining operation would require between $850 million to $1.2 billion in investment, well beyond the reach of Filipino investors.

Neri said the mining industry is critical in stabilizing the nation's macoeconomy and that the sector is expected to increase tax collection, reduce risk perception, and improve the country's credit rating. He also insisted that reform of the Filipino mining sector would also generated a substantial increase in exports and boost the country's precarious foreign exchange reserves, as well as strengthen and stabilize the peso.

Meanwhile, many foreign mining and exploration companies tend to believe that the Philippines does not have exceptional geology. The country also suffers from business policies viewed as unfavorable to foreign investors, a perception of being corrupt and politically unstable, and of being a haven for terrorists.

"The growth of the mining industry is critical in inducing greater economic growth, attracting more investments, creating more jobs and reducing poverty," Neri declared, predicting that mining could create 10,000 jobs. The former director of the Philippines Congressional Planning and Budget Office, Neri said mining had a six-time multiplier effect on the economy, which would generate up to 36% of GDP. He estimated the Philippines' potential mining wealth at $840 billion, which is ten times the country's GDP.

Among the foreign mining and exploration companies doing business in the Philippines are TVI Pacific and Crew Gold of Vancouver, Mindoro Resources of Edmonton, and Oxiana and Climax Mining of Australia. ,p aling="justify"

UNFAVORABLE LEGAL RULING

Despite Neri's overtures to foreign mining investment and the Chinese, the Philippine government still must prove successful in its challenge of a Supreme Court ruling that threatens millions of dollars in foreign investment in the mining industry. The Supreme Court of the Philippines last February overturned portions of a law, originally aimed at opening up country's mining industry to foreign investment. The Natural Resources Department, the President and the mining industry have submitted a motion asking the Supreme Court to reconsider its ruling.

The Supreme Court ruled that portions of 1995 Mining Act, which allowed 100-percent foreign ownership in the exploitation of the country's mineral resources, were unconstitutional. The law had been challenged in court by an anti-mining environmental group, backed by the Roman Catholic church. The ruling may impact as many as 13 foreign companies involved in 15 mining projects, the majority in exploration. Business leaders claim that the Supreme Court order has further harmed the nation's image as a country that welcomes foreign investment and will scare off foreign capital from the mining sector and other key industries.