Mining shares sustain rise, but uncertainty remains

By Luisa Maria Jacinta C. Jocson

MINING stocks maintained their surge on Wednesday as the market cheered the lifted ban on open-pit mining, prompting traders and analysts to assess the longer-term impact on profits while staying wary on the move’s continuity when the country elects new political leaders.

“Definitely it’s a game changer for the mining industry, considering the lift will boost more investments towards the industry. What we saw today [in the stock market] was a knee-jerk reaction, as it will take time before formal business operations will take fruition,” Astro C. del Castillo, managing director at First Grade Finance, Inc. said in a phone interview.

Signed on Dec. 23, Department of Environment and Natural Resources (DENR) Administrative Order (DAO) 2021-40 lifted the nationwide ban on open-pit mining, repealing DAO 2017-10 issued by late DENR Secretary Regina L. Lopez, who was openly against mining.

Open-pit mining was first banned in the provinces in 2010 and later evolved into a nationwide ban in 2017.

“Mining related issues ended in green territory today, as market participants cheered the reports that mining regulators have lifted the four-year ban on open-pit mining,” Timson Securities, Inc. Trader Darren T. Pangan said in a Viber message.

“Over the short-term, this development boosted the sentiment towards the sector. In the longer time horizon, investors may be assessing the impact that this may have on the bottom-line results of the affected companies,” he added.

On Wednesday, the mining and oil index improved by 2.82%, with shares in Philex Mining Corp. gaining by 3.82% and in Global Ferronickel Holdings, Inc. by 2.84%.

“I’m sure the industry will shift to higher gear, considering the opportunities opened. I think investors are wary that hopefully the regulation will not change, considering that the National Government will be changing in the next few months,” Mr. Del Castillo said.

“The Philippines will be on the radar screens of investors, especially in foreign ones invested in our resource development, which is mines,” he added.

Officials of listed mining companies welcomed the government decision, which Dante R. Bravo, president of Global Ferronickel, described as a help to “restart the economy.”

“It is timely and an important policy change because it will signal to the investors that the government is already open to new mining investments. Open pit is one of the safest mining methods and this method will make a lot of mining projects viable and operable in a relatively short period of time,” Mr. Bravo said in a text message.

“Generally, we are bullish in the metals market next year. Demand is strong as we are short of so many raw materials as consumption is rising sharply, and governments are focused on more infrastructure spending,” he added.

In a Viber message Philex Mining’s Public and Regulatory Affairs Head Francis G. Ballesteros said, “Hopefully, this will create a friendly investment climate for the mining industry in the country and encourage investors to support big-ticket mining projects like our Silangan copper and gold project in Surigao del Norte.”

“Responsible mining can be a catalyst of economic recovery amidst the Covid-19 pandemic. Further, if allowed to flourish within the government regulations, it can unleash prosperity for all without compromising the needs of future generations,” he added.

Meanwhile, environmental groups opposed the lifting of the ban, citing the move’s environmental consequences.

Open-pit mining has been criticized for its effect on the environment, particularly the pollution and damage it causes. Acid mine drainage is one potential impact from mining that releases dangerous metalloids into local streams and groundwater.

“I think it’s not a surprise that there will be strong opposition to this, especially environmentalists. But as long as the government can walk the talk to implement the strict regulatory measures, then I guess it will be a win-win situation for government the environmentalists,” Mr. Del Castillo said.

“We hope these resources will trigger the government to look into manufacturing, not just importing the raw materials. The success of this mining industry should be a partnership with the public and government. The public should be responsible to report anomalies in the industry, while guarding the environment,” he added.

National Coordinator for Kalikasan People’s Network for the Environment Leon A. Dulce said the government decision would be detrimental to the environment, especially after Typhoon Odette (international name: Rai.)

“This is a despicable move by the Duterte government to sneak in the reversal on the open-pit mining ban while people are preoccupied with responding to Typhoon Odette. Adding insult to injury, destructive mining is actually responsible for the degradation of watersheds in the Caraga, Negros, and Central Visayas regions that aggravated the floods and other destructive impacts of Odette,” he said in an e-mail message.

The Kalikasan People’s Network for the Environment reiterated these sentiments in a statement, saying that lifting the ban is not a timely solution.

“We condemn the Duterte government’s lifting of the open-pit mining ban when people are still responding to the plight of millions affected by Super Typhoon Odette. Talk about priorities in these times of crisis,” the statement read.

“The promise that this move will bring in money for economic recovery is nothing but disinformation. Only 12% of mineral resources plundered in the Philippines by big mines trickle back to our economy as taxes, fees, and royalties. For every P10 worth of minerals they will plunder, only a peso will return to the Philippines,” it added.