AFTER the government lifted the moratorium on new mining agreements, the chairman of the House Committee on Ways and Means last Thursday said fiscal regimes and ground rules for mining should be established to ensure that the benefits of the industry are maximized for the country’s economic recovery post Covid 19-pandemic.
House Committee Ways and Means Chairman Joey Sarte Salceda said the establishment of new mining agreements will pave the way for the country’s bid for competitiveness in the electric vehicle and renewable energy battery sector, as well as the country’s long-term economic recovery.
“We now have the power and the prospects to create millions of jobs in renewable energy, battery manufacturing, sustainable mining, and related sectors. This will be a key driver of economic recovery post-Covid, but we have to be very wise with our policies,” Salceda said.
Over the next 10 years, Salceda said, some 1.3 million jobs await the country in nickel-related industries.
“It can only mean well for our economic recovery, especially if we can set up the ground rules and the tax regime for mining well.”
But he said officials should now develop a plan so the country can aggressively play a role in developing inputs to electric vehicles using its mineral resources.
“We are currently in a mineral boom, and metallic resources that we have in abundance, like gold and silver, are at elevated prices. Because there has been much monetary expansion all over the world, investors want to hedge their bets on some store of value. Gold has been the first choice for that, historically,” Salceda said. The lawmaker also emphasized that the Philippines has some of the world’s largest deposits of the precious metal.
“We also have Asia’s second-largest reserve of nickel in Asia, and we have large reserves of copper. These minerals are crucial to the global push for electric vehicles, as they are critical inputs to the batteries that power these vehicles. Nickel has also seen historic highs this year,” Salceda added.
The lawmaker noted that the government hasn’t relied on renewable energy because of fluctuations in supply.
“When there’s no wind, there is little wind-powered energy supply. Solar energy requires consistent sunlight, and so on,” Salceda said. “With powerful battery technology, driven by nickel and cobalt—another Philippine product—renewable energy can be stored better, so that fluctuations are managed.”
The lawmaker added that the country “can become a global power in renewable energy and in the electric vehicle supply chain, but only if it makes the right policy moves.”
“The Philippines remains among the world’s largest producers of nickel. Despite taking a small production dip between 2017 and 2018, when nickel production fell from 366,000 metric tons (MT) to 340,000 MT, the nation increased its output to 420,000 MT in 2019. That is very strategic, when you account for the potential growth in prices of nickel,” he said.
Five polices
MEANWHILE, Salceda recommended five key policies that Congress and the executive “have to work together on” to ensure that the benefits of the industry are maximized.
First, Salceda said, the fiscal regime on mining has to be enacted so that tax uncertainty can be removed. Salceda is a principal author of the existing proposal in the House on the matter (House Bill 6135).
“Second, we have to establish a counter-cyclical mining trust fund that will accumulate revenues during commodity booms, and distribute aid to mining communities during commodity busts. It will help smoothen the impact of global prices on the communities that depend on mining for its economic survival,” he said.
“Third, we must secure our energy supply. Mining has very high energy requirements. We may need to integrate mines with the downstream natural gas sector as the cleanest source of cheap power among the non-renewables,” he added.
Fourth, the lawmaker said the country needs to encourage value-added.
“To maximize the benefits of its extractive industry, the Philippines should promote domestic value-added. The launching of the Leyte Ecological Industrial Zone (LEIZ) roadmap, accompanied by the Copper Industry Development Roadmap, is a welcome development in this direction. The country should make a push to occupy significant portions of the electric vehicle and battery manufacturing space,” he saod.
“Fifth, we need to keep investing in research and development to find new ways to create value in mining. I strongly believe that R&D in mining should be part of the Strategic Investment Priorities Plan (SIPP) under Create, and should get the highest tier of benefits,” Salceda added.
The lawmaker said he will coordinate with the Department of Finance for needed additional legislation.
“My committee will continue to exercise oversight over the fiscal aspects of this new development. There are matters that need to be settled as to how the revenues will be shared with communities and the national government. Remember this is national patrimony,” Salceda said.
“I will confer with the Secretary of Finance to see what we can do. The EO says the DOF and the DENR will have to harmonize the existing revenue sharing agreements, but they have very limited power to do that without legislation,” he added.