PH nickel output

* Written on October 22, 2013.

During the EITI International Secretariat and World Bank -sponsored “Conference on the Adoption of the 2013 EITI Standards”, September 27, 2013 at Crowne Plaza in Ortigas. Among the speakers was Dr. Elmer Billedo, Assistant Director at the Mines and Geosciences Bureau (MGB) of the Department of Environment. This is one of the slides he showed.

Table 1. Mining Industry Performance, 2008-2012

mine1
There was no breakdown how much of those gross value production came from (a) large scale metallic mining (LSMM), (b) small scale metallic/gold mining (SSM), and (c) large non-metallic mining (LNMM) like cement and coal firms.

Note that those taxes and fees generally come from LSMM as the firms here are highly regulated and monitored by the BIR-DOF, MGB-DENR and local government units (LGUs). Such taxes, fees and royalties comprise between 43 to 60 percent of the LSMM’s net revenues.

On nickel production, the Philippines has been ranked by the US Geological Survey as the biggest nickel producer worldwide. The estimated nickel reserves though is not very big compared to those in Australia, Brazil and Russia.

Table 2. Philippines as the world’s biggest nickel producer

mine2

During the open forum, I suggested that the BIR-DOF, MGB-DENR and LGUs-DILG should make data on  mining taxes, fees and royalties become more easily available online. Lack of updated and official data makes the anti-mining sentiment and biases become more convoluted. For instance, even known economist Ma’am Winnie Monsod is misinformed to insist that the government collects only two percent excise tax from LSMM which she says is peanuts, and proposed the Malampaya natural gas revenue sharing arrangement where the government gets 60 percent of the net revenues. The IMF says that if the Average Effective Tax Rate (AETR) formula is applied, LSMM in the country is paying up to 60 percent of their net revenues to the government, both local and national.

There is huge industrial potential for the country given our high mineral deposit and wealth. If those companies and investors are following existing environmental regulations, paying various taxes, fees and royalties, spending extra for the community via social development management program (SDMP), and creating lots of direct, indirect and auxiliary jobs to the people especially in rural municipalities and provinces, then they should not be demonized by the public.

With a $0.9 to 1.0 trillion value of mineral potentials, with potential net revenues of $400 billion (about 60 percent of gross production goes to operating costs like personnel salaries, depreciation of expensive capital equipment, fuel and electricity, etc.), and if government will collect about half of that in the form of taxes, fees and royalties, that is a whooping $200 billion revenues or P8.6 trillion at P43/$ exchange rate.

This amount can wipe out the total public debt of P5.45 trillion as of June 2013. It is a substantial revenue that the government and the rest of society should recognize.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s