In the eyes of mining officials, the country’s mineral reserves still hold glitters for investors.
This, even if BHP Billiton, the world’s largest miner, has refocused its Philippine investment to oil from nickel.
In 2007, the government announced BHP would invest up to $2 billion in the country, including the construction of a nickel processing plant. That was when nickel prices were at record highs of $54,050 per ton.
Nickel prices, however, have fallen sharply since then. Even as prices recovered somewhat this year, BHP went the way of Crew Gold Corp., Avocet Mining Plc and Ivanhoe Mines Ltd., which dropped their mining ventures in the Philippines in September last year.
Recession-hit Crew Gold signed an agreement to sell its interest in Mindanao to Malaysia-registered Mindanao Gold Ltd. for $7 million. That left Apex Mining Co. tending the Maco gold mine on its own while keeping hopes up that the new principal will be able to support a much needed expansion.
British mining company Avocet Mining PLC, a gold miner listed on the London Stock Exchange, was unimpressed with the potential of the gold-silver Kay Tanda project of Toronto-listed Mindoro Resources Ltd.
“While the district has potential, the company’s resource estimate does not meet internal thresholds for investment. Consequently, the company will not be pursuing the project further,” Avocet said after reviewing the ‘mineralization data’ for Kay Tanda.
Canada’s Ivanhoe, meanwhile, was mum on why it begged off a venture agreement with Omico Corp. to do the exploration, development and mining of the Macawiwili mining project.
Only last summer, Omico said Ivanhoe Philippines started exploration works for the Omico-Macawiwili Itogon Gold Project ahead of schedule. Now, however, Omico is pursuing the project with Macawiwili Gold Mining and Development Co. Inc., MPSA holder of the Macawiwili claim.
Mines and Geosciences Bureau (MGB) director Horacio Ramos said in an interview that there were other investors who might be interested in the sector, as economic recovery fuels infrastructure and production in coming years.
“There is demand from China, also India,” Ramos said.
Another MGB official said there should be other investors, “not necessarily large-scale miners,” ready to push the Pujada nickel project which BHP dropped.
Another official said there was increased interest, especially from Chinese investors, to engage in mining activities in the Philippines.
According to MGB assistant director Edwin G. Domingo, one development that may help lure more mining capital into the Philippines is an impending mining policy change in Indonesia, a major competitor of the Philippines for foreign investments.
A pending bill in Indonesia seeks to require all mining investors in that country to include downstream operations, such as the processing of mineral products into metal, within the country in their investment projects.
The MGB thinks such a policy will drive away mining investors to other countries, particularly the Philippines.
“We have gold, copper, and nickel, like Indonesia. So we stand to benefit (from that policy change), as investors would look for more flexible markets,” Domingo said.
Indonesia is targeting $1 billion in investments for 2009 after drawing in $1.6 billion in 2008.
In the meantime, another official said that Chinese, Indian and Japanese investors were also looking for investment opportunities in mining.
The Japanese Mining Engineering Center for International Cooperation has sent to the Philippines a team to study mining prospects, while Chinese and Indian investors are arranging meetings with concerned government officials.
At a mining summit in September, an official of British miner Anglo American Plc said it was looking for new copper and gold mining prospects in at least three areas, using proceeds from the sale of its shares in the Boyongan copper-gold mine which Philex Mining Corp. was developing.
More interest is seen to be generated as more projects go into production.
Not all that glitter is gold, even nickel may attract investors.
An MGB official said that nickel projects might be particularly active in 2010 as recovering prices of the metal signal good margins for miners.
There may be at least three developments in nickel mining in the Philippines by next year, he said.
Nickel prices have improved last year to $17,950 per ton from $8,800 per ton at the end of 2008.
Copper, used in energy infrastructure and construction, recently traded at around $6,900 per ton.
Gold prices are hovering around $1,200 per ounce as demand for the yellow metal, viewed as a safe investment, remain high.
“The key to mining is low cost. That’s where the Philippines has an advantage—in quality, low-cost projects,” Rusina Mining Ltd. company CEO Robert G. Gregory said.