Govt sets to lure mining projects anew
13-OCT-2008 Intellasia | Reuters
Oct 13, 2008 - 7:00:00 AM
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Mining companies lured by attractive prospects in the country but wary of vociferous local opposition could avoid the hurdles by partnering with the government, the country's natural resources minister says.
The Philippines sits atop an estimated US$1 trillion worth of unexplored copper, gold, nickel and zinc reserves, and hopes to attract around US$10 billion into its mining industry by 2011.
Making the government a partner with foreign investors in mining ventures would defuse opposition from local communities and the powerful Catholic Church, and boost investment in the once-booming sector, Lito Atienza told Reuters in an interview.
He envisioned the government taking a 40% stake in such enterprises, while the foreign investor held the rest.
"The major issue raised by practically all sectors opposed to mining is how much really is the share of the Filipinos in any mining activity," said Atienza, who has spent just over a year in his job. "This is the answer."
The scope of the government's role in such collaborations was not immediately clear, however, prompting some analysts to urge that speeding up Manila's approvals process and cutting down on red tape would bring better results.
The Southeast Asian nation uses financial and technical assistance agreements (FTAA) with investors to allow 100% foreign ownership of mining projects, and this will not be changed, Atienza said on Thursday.
But persistent opposition from the Catholic Church and environment groups has slowed approval of such deals, with just two FTAAs issued so far and the last one struck in 1995.
Investments of just US$300 million have flowed into the sector in the first half of the year, against the Philippines's target of US$1 billion for all of 2008.
Atienza, a close ally of President Gloria Macapagal Arroyo, and a former mayor of the capital, Manila, said he hoped to discuss his plan with Arroyo soon.
The government would not contribute any investment to mining projects but the mineral deposits would serve as equity, he said.
But there was no plan to alter the law, and foreign investors could still own 100% of mining ventures in the archipelago if they decided to, Atienza added.
Analysts were skeptical about the plan.
"The foreign company would spend billions of dollars and the government gets the 40% for free. How do you think that's going to fly?" asked Tom Green at the Pacific Strategies and Assessments risk consultancy.
"Some form of this might work but it would have to be structured pretty carefully. The benefits to the mining companies would have to be clear. It would have to be long-term in order to entice the big mining companies."
If Atienza's goal was to speed the start-up of mines, the government should stay out of projects and hasten processing of applications instead, said Peter Wallace, of the Wallace Business Forum consultancy.
There are more than 30 foreign companies with investments in the Philippine mining sector, including the world's biggest, BHP Billiton.
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