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Industry official warns ban on ore exports will hurt miners

AN Indonesia-style ban on ore exports will not work for the Philippines, which has fewer reserves of nickel that are also of lower quality, a mining executive said.

“An ore export ban will be detrimental to the industry, which is still reeling from the decade-long policy roadblocks,” Chamber of Mines of the Philippines Chairman Michael T. Toledo told BusinessWorld, referring to the uncertainty created by industry shutdowns to inspect miners for environmental compliance, as well as the non-issuance of mining permits as the government sought to arrive at an appropriate way to tax miners.

“Our nickel resources — mostly the limonite type — are also far smaller and with lower ore grades on average compared to Indonesia,” he added in an e-mail.

Indonesia banned nickel ore exports in 2020, propelling the Philippines to the top spot in nickel exports by 2022.

Indonesia cited the need to process more ore domestically to capture greater value-added from its natural resources.

The ban was imposed by Indonesia’s outgoing president, Joko Widodo. It is uncertain whether his successor will continue the policy.

Mr. Toledo said efforts to make Philippine mining more attractive to investors will hinge on improving the stability of power supply and making it less expensive.

The Philippines’ industrial electricity rates are the second highest in the region, making it less attractive for potential mining investors to set up shop in the country, he added.

“Power is a critical production input,” he said. “High energy costs and unstable power supply put the Philippines at a disadvantage vis-à-vis other mining jurisdictions.”

The unreliability of the energy supply as well as high production costs affect the profitability of domestic mining firms, scaring off potential investments, he said.

Mr. Toledo said the government should consider providing incentives for renewable energy developers to expand power generation.

“Developers of renewable energy facilities, including hybrid and cogeneration systems using both renewable energy sources and conventional energy… should continue to be encouraged with fiscal and non-fiscal incentives,” he said. — Kenneth Christiane L. Basilio