MANILA (AFP)--Mining companies in the Philippines are cutting
staff, putting some projects on hold and scrambling for cash as the
global crisis financial drags down commodities prices, industry
officials say.
The economic slowdown couldn't have come at a worse time for the
resource-rich southeast Asian country, which had been trying to
rebuild the mining industry after a similar downturn in the
1970s.
But the government has scaled down its investment target for the
industry this year to about $800 million, down from the original $1
billion but still above last year's $650 million inflow.
"I expect a little downgrading (of investments) but we are still
optimistic," Environment and Natural Resources Secretary Joselito
Atienza said earlier this year.
Foreign-funded projects have been among the most high-profile
casualties.
To preserve cash, Australian miner OceanaGold Corp. (OGC.AU) has
put on hold its Didipio copper-gold project, which was among the
biggest Philippines mining projects set to start production this
year. No new schedule has been announced.
Berong Nickel Corp., a unit of London-based Toledo Mining Corp.
(TMC.LN), suspended production and cut 600 jobs at its mine on the
western island of Palawan last month amid depressed metals prices
and plunging demand from China.
Atlas Consolidated Mining and Development Corp. (AT.PHP),
Toledo's local partner in Berong, doesn't see production resuming
until the second half, but said shipments from its stockpiles to
BHP Billiton (BHP.AU) of Australia should resume in April.
Karsten Fuelster, a mining division business development
official for the World Bank's investment arm International Finance
Corp., said the global financial crisis is leading to "substantial
short-term demand destruction," while new capital expenditures and
debt-funded acquisitions would be delayed.
While the mining industry in Asia has "strong fundamentals," he
told an industry conference here last month that with growth easing
in key markets China and India, prices for metals apart from gold
are expected to fall.
Fund raising will become "nearly impossible for non-producing
companies," and "many will not survive," Fuelster said.
Projects will get delayed and exploration curtailed, while
"funding difficulties will get worse" before they get better, he
warned.
Among the Filipino mining outfits, the priority is to shore up
their capital bases. Philex Mining Corp. (PX.PH), Lepanto
Consolidated Mining Co. (LC.PH), and Manila Mining Co. (MA.PH) all
announced plans this month to ask shareholders to raise their
authorized capital by 60%, 100% and 67%, respectively.
With gold prices testing levels around $1,000 per ounce and
copper prices sinking, Philex, the largest Philippine mining firm,
has become "more a gold mine than a copper mine," its chief
executive Walter Brown said recently.
With declining demand in the housing and automobile sectors in
the U.S. and Europe, gold now accounts for 72% of the value of the
company's concentrate shipments, and copper only 28%, Brown
said.
Philex is now only drilling and developing gold properties and
copper deposits with gold values higher than the copper in the ore,
he said, adding: "Typically, these gold/copper prices take at least
three years to develop."
Philippine mineral exports rose 10% from a year earlier to $2.31
billion in calendar year 2008.
Director of the government's Mines and Geosciences Bureau
Horacio Ramos said the falling prices might lead to even lower 2009
shipments.
The bureau estimates the Philippines has 83 billion tons of
mineral ore deposits, including more than 14 billion tons of
metallic ore and more than 69 billion tons of nonmetallic ore.
The country's estimated gold ore reserve of four billion tons is
the world's third largest, its 7.9 billion tons of copper the
fourth largest and the 815.3 million tons of nickel ore the fifth
biggest in the world, it says.