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Released January 04, 2013 | MANILA, PHILIPPINES
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Researched by Industrial Info Resources (Sugar Land, Texas)--The value of metallic mineral production in the Philippines recorded a significant drop in 2012, from $2.4 billion in 2011 to $1.95 billion at the end of 2012 financial year, a total of 18.85%. The country's Mines and Geosciences Bureau (MGB) said the decrease is caused by the suspension of production in several mines across the country and a corresponding decrease in the activities of Bangko Sentral ng Pilipinas (BSP), the central bank of the Republic of the Philippines and a major gold buyer.
In an interview recently, MGB Director Leo Jasareno said the purchase power of BSP in gold was seen to decline about 94%, contributing to the 18.85% drop in value in the sector.
With 18 branches spread across the country's three regions, BSP operates with specific functions, one of which is the purchase of gold, especially from small-scale miners and traders in the country, through its five buying stations in Baguio City, Davao City, Zamboanga City, Naga City and Quezon City.
The purchase power of BSP has always been affected by several sensitive changes in the metals and minerals sector. In 2011, when the Bureau of Internal Revenue strictly imposed a 2% excise tax and 10% creditable withholding tax (CWT) on the sale of gold by small-scale miners and traders (pursuant to Revenue Regulations No. 7-2008 dated March 25, 2008), the bank's gold purchases dropped accordingly for the first time.
Fortunately, the tax collection scheme was superseded by Revenue Regulations No. 6-2012, which reduced the CWT from 10% to 5%, effective April 2012.
Thus, this time, Jasareno said the substantial drop in the gold purchases of BSP from small-scale miners and traders is far beyond taxation, but a telling factor for the sluggish production performance of the small-scale miners. The value of BSP gold purchases from small-scale miners fell 94% in the first nine months of the year to $50 million from $802.2 million in the same period last year. The volume of gold purchases likewise fell 94% to 945 kilograms from 16,724 kilograms.
Jasareno also attributed the lower metals production to the suspension of the copper-gold mine in Padcal, Benguet, following a massive tailings spill; the Nonoc Island Nickel project of Philnico Industrial Corporation, which is in contract with Shuley Mine Incorporated, because of unsettled obligations to the government; and the magnetite operations of Nicua Corporation, because of environmental violations.
Total gold production dropped 54% to 12,369 kilograms between January and September 2012, as compared to 26,976 kilograms a year ago; while the value of gold production declined 50% to $66.21 million from $1.32 billion.
Gold contributes 34% to the total production value of Philippines metals sector during the year under review. This is next to nickel, which has a 47% contribution with a production value of $916.16 million. Industrial Info gathers that nickel production was boosted by the approval of several nickel operations by the government, like the nickel mines of Pilipinas Mining Corporation (PMC) in Zambales and Oriental Vision Mining Corporation in Dinagat.
Copper generated 16% of the total production value, but not without a drop to $30.69 million from the previous $346.84 million stand. Other metals, such as silver, zinc, chromite and iron, accounted for 3% of the year's total production value, placed at $64.76 million.
In 2013, experts are forecasting that the country's metallic output eventually will double in value due to expected start-ups for delayed and suspended projects, which include an $811 million nickel project from Intex Resources in Mindoro Oriental; the $39 million Siana Gold project from Australian miner Red 5 Limited (ASX:RED); the $350 million King King gold project in Compostella Valley from St. Augustine Gold & Copper Limited (TSX:SAU), a Canadian miner with Philippines partner Queensberry Mining and Development Corporation; and a $66 million gold-copper project from Far Southeast Gold Resources Incorporated, a subsidiary of Lepanto Consolidated Mining Company Incorporated, which shifted mine development and construction of a processing plant in its Mankayan-Benguet operations to 2013.
Also expected to hit production stage is the Nonoc Island Nickel Mine, located at Surigao del Norte, Philippines. Industrial Info gathered that San Miguel Corporation (PSE:SMC), one of the Philippines' diversified conglomerate investment firms, is already taking steps to shoulder and defray existing debts between the Philippines government and Philnico Corporation in order to re-start the Nickel mine soon. The memorandum of understanding regarding this deal was disclosed to Philippines Stock Exchange on December 18, 2012. The restart arrangement includes construction of a $2.5 billion modern nickel refinery as an addition.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
In an interview recently, MGB Director Leo Jasareno said the purchase power of BSP in gold was seen to decline about 94%, contributing to the 18.85% drop in value in the sector.
With 18 branches spread across the country's three regions, BSP operates with specific functions, one of which is the purchase of gold, especially from small-scale miners and traders in the country, through its five buying stations in Baguio City, Davao City, Zamboanga City, Naga City and Quezon City.
The purchase power of BSP has always been affected by several sensitive changes in the metals and minerals sector. In 2011, when the Bureau of Internal Revenue strictly imposed a 2% excise tax and 10% creditable withholding tax (CWT) on the sale of gold by small-scale miners and traders (pursuant to Revenue Regulations No. 7-2008 dated March 25, 2008), the bank's gold purchases dropped accordingly for the first time.
Fortunately, the tax collection scheme was superseded by Revenue Regulations No. 6-2012, which reduced the CWT from 10% to 5%, effective April 2012.
Thus, this time, Jasareno said the substantial drop in the gold purchases of BSP from small-scale miners and traders is far beyond taxation, but a telling factor for the sluggish production performance of the small-scale miners. The value of BSP gold purchases from small-scale miners fell 94% in the first nine months of the year to $50 million from $802.2 million in the same period last year. The volume of gold purchases likewise fell 94% to 945 kilograms from 16,724 kilograms.
Jasareno also attributed the lower metals production to the suspension of the copper-gold mine in Padcal, Benguet, following a massive tailings spill; the Nonoc Island Nickel project of Philnico Industrial Corporation, which is in contract with Shuley Mine Incorporated, because of unsettled obligations to the government; and the magnetite operations of Nicua Corporation, because of environmental violations.
Total gold production dropped 54% to 12,369 kilograms between January and September 2012, as compared to 26,976 kilograms a year ago; while the value of gold production declined 50% to $66.21 million from $1.32 billion.
Gold contributes 34% to the total production value of Philippines metals sector during the year under review. This is next to nickel, which has a 47% contribution with a production value of $916.16 million. Industrial Info gathers that nickel production was boosted by the approval of several nickel operations by the government, like the nickel mines of Pilipinas Mining Corporation (PMC) in Zambales and Oriental Vision Mining Corporation in Dinagat.
Copper generated 16% of the total production value, but not without a drop to $30.69 million from the previous $346.84 million stand. Other metals, such as silver, zinc, chromite and iron, accounted for 3% of the year's total production value, placed at $64.76 million.
In 2013, experts are forecasting that the country's metallic output eventually will double in value due to expected start-ups for delayed and suspended projects, which include an $811 million nickel project from Intex Resources in Mindoro Oriental; the $39 million Siana Gold project from Australian miner Red 5 Limited (ASX:RED); the $350 million King King gold project in Compostella Valley from St. Augustine Gold & Copper Limited (TSX:SAU), a Canadian miner with Philippines partner Queensberry Mining and Development Corporation; and a $66 million gold-copper project from Far Southeast Gold Resources Incorporated, a subsidiary of Lepanto Consolidated Mining Company Incorporated, which shifted mine development and construction of a processing plant in its Mankayan-Benguet operations to 2013.
Also expected to hit production stage is the Nonoc Island Nickel Mine, located at Surigao del Norte, Philippines. Industrial Info gathered that San Miguel Corporation (PSE:SMC), one of the Philippines' diversified conglomerate investment firms, is already taking steps to shoulder and defray existing debts between the Philippines government and Philnico Corporation in order to re-start the Nickel mine soon. The memorandum of understanding regarding this deal was disclosed to Philippines Stock Exchange on December 18, 2012. The restart arrangement includes construction of a $2.5 billion modern nickel refinery as an addition.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
