NEWS

Philippines may tax nickel exports to follow Indonesia’s success

The Philippines is considering taxing nickel ore exports among options to push miners in the world’s second-biggest supplier of the metal to invest in processing instead of just shipping raw minerals, a route that top nickel producer Indonesia has taken and succeeded in.

“We want to move out from being just part of the supply chain. We want to be part of the value chain,” Environment and Natural Resources Secretary Antonia Yulo Loyzaga said in an interview in her office on Monday. Without facilities to process mineral ore, “we will just be a vendor country. And we don’t want to be a vendor country,” said Loyzaga, who’s also in charge of the mining sector.
President Ferdinand Marcos Jr.’s government is seeking to boost mining to further grow the economy that posted its strongest expansion in nearly five decades last year. With less than 3% being mined of 9 million hectares identified by the Southeast Asian nation as having high mineral reserves, the potential is huge. “We are open for business,” said Loyzaga, who assumed her post in July.

“There’s a range of actions including a progressive look at taxing exports” of raw nickel to boost investments in processing facilities here, Loyzaga said, adding that the agency’s Mines and Geosciences Bureau had earlier suggested for the Philippines to “go by way of Indonesia.”

Indonesia and the Philippines are the world’s biggest suppliers of nickel – used in making stainless steel and a key component in batteries for electric vehicles – to top market China. But Indonesia banned exports of metal ores in 2020 and limited shipments to refined products, boosting its nickel exports from $3 billion to $30 billion in two years as Chinese companies built refineries and smelters there.

Inspired by Indonesia’s success, Trade Secretary Alfredo Pascual said the agency is weighing whether to impose an export tax on raw nickel exports or ban ore shipments completely. While acknowledging concerns about “resource nationalism,” Loyzaga said the Philippines needs “to balance the pace at which we are going to be opening up this sector and make sure that we are not going to be running short.”

The Philippines has 55 metallic mines and seven mineral processing plants, including two for nickel operated by Nickel Asia Corp, which is partly owned by Japan’s Sumitomo Metal Mining Co. Loyzaga said her target is to add three more mineral processing facilities during her term.

The country’s nickel output dropped 17% to 22.5 million dry metric tons in January-September, according to the latest available government data. But Loyzaga says she expects shipments to rise this year amid “great demand” for nickel.

After overseeing a crackdown early in his term that shut most of the Philippines’ mines, Rodrigo Duterte, Marcos’s predecessor, who once said the nation can survive without a mining industry, eventually allowed new mineral deals and lifted a ban on open-pit mining in 2021. “So far we have assessed them and found them to be mining responsibly,” Loyzaga said on how mines are operating currently.

The government is talking with some large-scale miners from Canada and Australia that are keen on doing business here, she said, declining to give further details. At home, it is also pushing for mining projects stalled for years by changes in mining policy, including the Tampakan mine in southern Mindanao island.

The mine, one of the largest untapped mineral resource in Southeast Asia and estimated to yield 375,000 tons of copper and 360,000 ounces a year of gold in concentrate over a 17-year period, had been halted by the open-pit mining ban, prompting Glencore Plc to quit the project in 2015.

Loyzaga is scheduled to meet with local Mindanao officials this week and is hopeful any further hurdles for Tampakan will be cleared. “We need to move forward,” she said.

Source: https://www.mining.com/web/philippines-may-tax-nickel-exports-to-follow-indonesias-success/

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