Mining Companies in Philippines Face Many Travails – by Trefor Moss (Wall Street Journal – May 12, 2015)

http://www.wsj.com/

Red tape, opposition from indigenous people mar efforts to fulfill country’s mining potential

MINDORO, The Philippines—The island’s name means “gold mine” in Spanish, but it was nickel that was ultimately found in the mountains of Mindoro two decades ago.

Since then, like so many Philippine mining ventures, the proposed Mindoro Nickel project roughly 100 miles south of Manila has struggled to break ground because of onerous red tape and opposition from the indigenous people who inhabit these remote highlands.

Intex Resources ASA, the Norwegian company licensed to mine the nickel, secured a key environmental permit last month, clearing one of many regulatory hurdles, but still faces the uphill task of persuading the local Mangyan tribe to endorse the project.

“We want things to stay as they are,” said Lonito Dasa, a community leader. “We don’t want mining to threaten our way of life.” Indigenous peoples like the Mangyan have special rights under Philippine law that would make it hard for a project like Mindoro to go ahead without their approval.

The travails of Intex are symptomatic of a Philippine mining sector that has always struggled to fulfill its potential. The country has a $1.4 trillion trove of untapped mineral reserves, including gold, copper and nickel, according to industry estimates, yet mining contributed just 0.7% of national gross domestic product in 2013—comparing with 8.3% for South Africa that year.

Even the generally pro-business administration of President Benigno Aquino has restricted the mining industry, imposing a moratorium on new mining permits three years ago. It is now proposing to lift the moratorium, but also to levy higher taxes on newly approved mines and on mines where permits are renewed.

That “would make mining uncompetitive,” said Nelia Halcon, executive vice president of the Chamber of Mines of the Philippines, deterring new mines and driving operational ones out of business. Intex, for example, would potentially face higher taxes after its existing permit expires. Congress is deliberating the proposed tax changes.

The Philippines already has a dismal reputation among mining professionals, who last year rated its mining policy framework the second-worst in the world, behind only Honduras, according to a poll by the Fraser Institute, a Canadian think tank.

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