Philippine Star: $3.2B in mining investments seen in next 5 years

$3.2B in mining investments seen in next 5 years
By Marianne V. Go

The Philippine Star 11/23/2004 The country’s mining industry is expected to attract investments worth $3.2 billion in the next five years, Trade and Industry Secretary Cesar V. Purisima said yesterday.

"In the next five years we can expect to attract $3.2 billion in investments, export some $1.2 billion worth of minerals annually and generate P21 billion in tax revenues," Purisima said.
According to Purisima, these mining projects would result in employment for 6,000 workers and create 36,000 indirect jobs.

At the same time, Purisima said, some P312 million worth of funds per year would be used for the development of the countryside.

Purisima said that at least one mining operation may start next year.

Philnico Mining Corp. (formerly Nonoc Mining and Industrial Corp.), the DTI chief disclosed, is being eyed for rehabilitation by two Chinese mining firms.

Philnico’s rehabilitation would entail an investment of $1 billion.

The two interested Chinese firms were identified as Jinchuan Nonferrous Metals Corp., the largest mine and refinery company in China producing nickel, copper and platinum metals, and Shanghai Baosteel Group Corporation which is one of the largest steel companies in the world.

The two Chinese firms, Purisima admitted are currently conducting a due diligence study on Philnico for a possible joint venture project.

Philnico’s plant is located on Nonoc island which is about eight nautical miles northeast of Surigao City in Mindanao.

Purisima earlier said the revival of the mining industry would definitely spur the development of the country’s economy.

He pointed out that big mining project need huge investments that cannot solely be provided by local firms.

Majority of the investments needed for big mining projects, Purisima acknowledged, "must come from foreign capital. These foreign investments are pre-requisites to developing our mineral resources in order to contribute to the country’s economy in terms of investments, employment and exports."

The Philnico project, he said, has the potential to generate around $350 million in exports annually and could create some 4,500 direct and indirect employment.

NMIC started operation in 1975 but ceased operation in 1986 due to technical problems. The DTI chief stressed the fact "that large-scale mining projects are capital intensive and very risky."

The Philippines, Purisima said, is richly endowed with world-class mineral resources, both metallic and non-metallic. The country’s mineral resources, Purisima said, are estimated to be worth $964.65 billion "but will remain to be just a potential if not developed." Multinational corporations, because of their expertise, Purisima argued, are able to lower the risk of mining ventures because "their technical expertise and financial clout are able to spread the risk over a number of projects in various sites and in many countries."

Thus, Purisima pointed out, "even if we take the optimistic view that five percent of mineral finds become moderate successes, a company must be willing to lose money in some projects to come up with one moderately profitable venture." But more than that, Purisima said, "one great advantage of the mining sector over the other industries is that this sector has an almost 100 percent value-added which means that almost all of the elements of production are sourced locally."

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Prudent Investor says....

WAY TO GO!!!!!!