Mining to the Philippines

Trends and opportunities

The market

After a continuous decline in the last decade, the Philippine mining industry is poised to regain its status as a leading producer of minerals, particularly gold, copper, nickel and chromite. The Philippines is one of the most highly mineralised countries in the country with untapped mineral wealth equivalent to US$840 billion. 

Recent legal developments upholding the legitimacy of the Philippine Mining Act and allowing 100 per cent foreign participation in Philippine mining activities have brought back investors into the sector with on-stream investments from both local and mining companies expected to reach US$3 billion in 2005.

Australian companies are leading the charge with the following Australian companies already active in the Philippines:  Lafayette, Indophil, Climax-Arimco, QNI/BHP Billiton Minerals and Red 5. Some of the Australian technology suppliers in the Philippines include: Environmental Systems and Services; Slope Indicator and Boart Longyear. 

More Australian companies can be involved in the development of the Philippine mining industry supplying not only to other Australian firms but also to Canadian, US, Filipino and possible Chinese firms as mining projects move into the implementation phase.

Most of the Philippine mining companies are familiar with the capability of Australia in the mining industry and already source their equipment from Australia. An example is Lepanto Mining Corporation, one of the major Philippine mining companies, which purchases more than 50 per cent of its mining equipment requirements from Australia.

Opportunities

Opportunity areas in Philippine’s mining industry include:

• Development and expansion projects:
• Palawan Nickel by Coral Bay & Rio Tuba
• Rapu-Rapu Polymetallic Project by Lafayette and LG Colllins and KORES
• Canatuan Gold Project by TVI Pacific of Canada
• Teresa Gold Project by Lepanto Consolidated Mining
• Pacdal Expansion Project by Philex Mines in Tuba, Benguet
• Nonoc Iron Fines Project by Pan Pacific
• Diwalwal Direct State Utilization Project by Natural Resources Mining
• Development Corp Phils
  


• Some projects with final feasibility study/mine plan design:
• Adlay-Cagdianao-Tandawa Nickel Project by QNI/BHP Billiton
• Didipio Copper Project by Climax-Arimco Mining, Australia
• Aroroy Gold Project by Filminera Resources and Thistle Mining of Canada
• Siana Gold Project by JCG Resources/Red V Australia
• Tampakan Copper Project by Sagittarius Mines/Indophil Resources
• Toledo Copper Project by Alakor Mgt and Toledo Copper of London, England
• Itogon Gold Project by Itogon-Suyoc Mines, Inc.
• Pujada Nickel Project by QNI/BHP Billiton
  


• These projects will require:
• Drill rigs
• Reduction plants, fans, winders, winches, pies, transformers
• Underground mining equipment such as, longwall mining system, continuous conveyor haulage, roof bolters, belt conveyor system
• High pressure water spray system
• Bulldozers, wheel track loaders, backhoes, excavators, paving equipment and trailers
• Slope indicators and seismic instruments

Tariffs, regulations and customs

Australia has 'most favoured nation (MFN)' status with the Philippines so is subject to lower tariffs than some other importers. Special privilege import tax tariff is applicable to goods imported from ASEAN countries in accordance with the agreement CEPT/AFTA for 2003–2006. Tax rates for import goods within ASEAN countries are mostly from zero to five per cent.

The tariff duty on mining equipment from Australia will average from 1-10 per cent depending on the type of equipment. A 10 per cent value added tax is likewise applied on imported equipment, goods and services.

Marketing your products and services

Market entry

There are three modes by which Australian companies can do business in the Philippines mining sector:

• Exploration Permit – grants the foreign company exploratory rights in specified areas for a term of two years, renewable to a maximum of eight years for metallic minerals and six years for non-metallic minerals



• Mineral Agreement – grants the contractor the right to conduct mining operations within a contract area and share in the gross output; these agreements have a term of 25 years, renewable for another 25 years and are open to Filipinos or to corporation with 60 per cent Filipino equity:
  
• minerals production sharing agreement
• co-production
• joint venture agreement
  


• Financial or Technical Assistant Agreement (FTAA) – a contract involving financial or technical assistance for large-scale exploration, development and utilisation of mineral resources; this contract is open to Filipino and foreign corporations with up to 100 per cent foreign equity and has a term of 25 years, renewable for another 25 years

Australian mining equipment, technology and services providers should foster a strategic business relationship with existing Philippines mining companies in the Philippines in order to get a first crack at supplying the equipment, technology and service requirements of these companies.

The Philippine-based mining companies are already familiar with the mining technology services of Australia. It is accepted that Australia’s high quality equipment will command higher prices than its competitors.

Australian suppliers should appoint local agents/distributors to market their mining equipment and monitor business opportunities in the sector. Local agents/distributors normally put, on the average, a 15 per cent mark-up to help defray their marketing and consulting expenses.

Most local agents/distributors have an engineering background and are thus able to conduct technical demonstrations and presentations to their potential customers. Australian suppliers, if possible, shoulder 50 per cent of the cost of conducting technical seminars to Philippine mining companies.

Links and industry contacts

Mining-related resources

Chamber of Mines of the Philippines - www.chamberofminesphilippines.com
7/F, Room 706-A, Ortigas Building
Ortigas Avenue, Pasig City
Philippines
Tel: (63 2) 635 4123
Fax: (63 2) 635 4160

Mines and Geosciences Bureau - www.mgb.gov.ph
2/F, MGB Compound
North Avenue, Diliman
Quezon City, Metro Manila
Philippines
Tel: (63 2) 920 9120
Fax: (63 2) 920 1635 

Philippine Mine Safety and Environment Association
Mining Environmental and Safety Division
3^rd Floor, J.C. Fernandez Building
North Ave., Diliman, Quezon City
Philippines
Tel: (63 2) 926 0935
Fax: (63 2) 926 5545

Philippine Society of Mining Engineers
7^th Floor Guada Bldg.,
No. 31 EDSA, Mandaluyong
Tel: (63 2) 531 4791 to 4794
Fax: (63 2) 531 0227 or 533 2249

Contact details

The Australian Trade Commission (Austrade) is the Federal Government agency that helps Australian companies win overseas business for their products and services by reducing the time, cost and risk involved in selecting, entering and developing international markets.

Austrade offers practical advice, market intelligence and ongoing support (including financial) to Australian businesses looking to develop international markets. Austrade also provides advice and guidance on overseas investment and joint venture opportunities, and helps put Australian businesses in contact with potential overseas investors.

A list of Austrade offices (in alphabetical order of country) is available.

More information

For further information please contact Austrade on 13 28 78 or email info@austrade.gov.au

(Last updated: 31 Jul 2007)