THE EXTRACTIVE industries were tested by the sharp decline in demand caused by the pandemic, which put the sector’s traditional resiliency to the test, a finance department official said.
During the eighth National Conference of the Philippine Extractive Industries Transparency Initiative Thursday, Finance Assistant Secretary Maria Teresa S. Habitan said the shock was so great that the industry could not resort to its usual coping mechanisms.
She said in previous downturns, metallic and non-metallic mines were still able to meet their earnings targets by volume and price adjustments and adopting a cautious hedging policy.
Nevertheless, she said the sector is still well-positioned for growth.
“The extractive industry in the Philippines is poised to grow in the long term (until 2027) at an annual rate of 10.3% from 2020. This will mainly be driven by the oil and gas sector’s 20-year compound annual growth rate of 26% on the back of the Philippines’ relatively slow transition to decarbonization,” she said.
Non-metallic mining, meanwhile, will grow 10% annually, with growth rates for coal and metals mining estimated at 9.7% and 7.7%, respectively.
“The growth of the extractive industries was stymied by the onset of the COVID-19 pandemic. There was a huge slump in consumer demand and a consequent slowdown of the global economy,” she added.
Non-metallic mines were the hardest hit after seeing their production volume and sales drop by 50% last year, while majority of metallic mine operators said the crisis barely affected them.
The government’s move to lift the suspension of new mining agreements should provide a boost to the sector, Ms. Habitan said.
“Economic developments are also beneficial for metallic mines in terms of export revenue as import needs of Hong Kong, China, and Japan will drive greater demand for extractive commodities from the Philippines,” she said.
Increasing demand for gold and electric vehicles should also give a boost to the sector.
At the forum, Finance Secretary Carlos G. Dominguez III asked extractive industries to remain transparent with their monitoring and reporting of activities as better access to data can help the industry improve.
“With full transparency, we can better assess the costs and benefits of the extractive industries. Increased accountability will improve governance of the sector and management of natural resources,” he said. — Beatrice M. Laforga