Mining is the field for green opportunities
Part of the world’s response to the climate emergency is to shift to renewable energy, specifically using wind, solar, and geothermal technologies to generate electricity for industries and transportation. But to manufacture these clean energy technologies a steady supply of raw material in the form of metallic minerals must be extracted from the earth. Over three billion tons of minerals and metals will be needed to meet this new and substantially greater demand, according to the World Bank. Indeed, a low-carbon future is a mineral intensive future, it said in its publication, Mineral for Climate Action: The Mineral Intensity of the Clean Energy Transition.
According to the International Finance Corp. in its Climate Smart Mining initiative, the annual nickel supply has to increase by 208% and annual copper supply by 156%, relative to 2020 levels, to meet the needs of clean energy deployment.
The World Bank enumerated the benefits that countries rich in mineral resources can gain — net direct economic benefits such as taxes and royalties, net indirect economic benefits (for example, shared infrastructure development catalyzed through mine investments), climate change benefits, and community development benefits.
For the Philippines, which is rich in nickel, copper, and cobalt, the global shift promises the same benefits. Government revenues will be boosted, livelihoods will be generated, and sustainable economic growth will be catalyzed. Ultimately, people and communities will benefit from the responsible and well-regulated use of resources.
In fact, the Philippine mining industry is expected to perform well in 2024.
But the opportunities can only be realized if there are changes made to the current policy and bureaucratic setup. Only if these roadblocks are addressed can we harness the full potential of our mining resources.
What are these barriers? These are the same barriers that hamper other investments in other industries, but the urgency is great in mining because of the opportunities and potential that may be lost if these are not ad-dressed quickly.
Not surprisingly, the barriers are administrative and bureaucratic in nature. For example, the process of obtaining permits for businesses remains slow and cumbersome. This presents a problem for those who want to establish a presence and begin the work at the soonest possible time. Excessive LGU impositions have to do with having to comply with requirements set by the local government over and above what has been identified in the law. In this, the cooperation of local executives needs to be secured. It is important that they understand that ease of doing business is a critical factor in encouraging business activity in their area and that they have the power to influence such an outcome.
A stable fiscal regime should be implemented in an even and consistent manner. The revenues generated and properly used will greatly improve social services and infrastructure in host communities.
On the national level, experts estimates that if only a few major mining projects, long delayed by regulatory uncertainties, will finally see full operations, these will potentially boost the country’s Gross National Product by at least 1%, which is huge on the macro level.
Harnessing the opportunity requires a stable and conducive policy environment on the part of the government, with the support and input of the private sector. This entails addressing regulatory roadblocks, streamlining permitting and regulation procedures for mining projects, enacting progressive and competitive mining fiscal regimes, harmonizing national and local mining taxation, and fostering an environment that attracts investors, among others.
Fortunately, the potential is not lost on the current administration of President Ferdinand Marcos, Jr. who has expressed a renewed interest in optimizing the country’s mineral resources. The government has been actively working on policy reforms to unlock the potential of the Philippine mining industry to become a key player in the global market for critical minerals and a major economic driver with long-term impact at the local and national levels.
Last year, for instance, President Marcos Jr. declared that mineral exploration and extraction are crucial components of his administration’s economic agenda.
And then, recently, the Department of Trade and Industry announced that the Philippine government is considering acceding to the critical minerals agreement between the United States and Japan. This aligns with the statement made during the inaugural Japan-Philippines-US Trilateral Summit, where the three nations pledged to support their critical minerals industries to promote resilient and reliable global supply chains for critical minerals.
Indeed, there are many encouraging points for conversation and collaboration in this field, which is poised to see significant action in the years to come. We already know that the opportunities are there, but how we can maximize these opportunities for the betterment of our economy and our people remains to be realized.
In doing its part in supporting the country’s drive to seize the enormous opportunities of a global critical mineral boom, the Stratbase ADR Institute, in partnership with the Department of Environment and Natural Resources, is organizing a hybrid event entitled, “Revitalizing the Philippine Mining Industry: A Pillar for Inclusive and Resilient Economic Growth and Development” on Friday, May 10. This event, which will bring together the country’s top government officials, diplomats, and industry experts, envisions increased collaboration with the government on actionable policy reforms that will address regulatory roadblocks in transforming the Philippines into an important player in the green global economy.
We at Stratbase, as always, hope to provide a platform for conversations in which members of all sectors, from the government, business, civil society and the diplomatic community can come together and agree on actionable points to finally dismantle the policy barriers and unleash the full potential of the Philippine’s mineral resources. This week’s forum is one such platform. Through the event, we hope to emphasize how urgent it is to revitalize the mining industry to take advantage of recent trends and developments, and to ensure that ultimately it will be the Filipino people who would benefit from responsible mining.
Victor Andres “Dindo” C. Manhit is the president of the Stratbase ADR Institute.