metals output dips by 8% in 2016 - mines and geosciences ... · metals output dips by 8% in 2016...

Metals output dips by 8% in 2016

Metallic mineral production value incurred an 8% shortfall in 2016 from PhP109.84

billion in 2015 to PhP100.56 billion, lower by PhP9.28 billion. Poor base metal price,

string of mine suspension and mine imposed non-operations due to unfavorable

weather conditions, low metal price and/or maintenance status catapulted the metallic

sector to its lackluster performance.

In terms of percentage contribution to the total production-value, gold continued to

dominate the production scene in 2016 accounting for 44% or PhP44.85 billion of the

total metallic minerals production value. While nickel direct shipping ore together with

mixed nickel-cobalt sulfide took the second spot with 37% or PhP36.84 billion followed

by copper with 18% or PhP17.76 billion. The remaining 1% or PhP1.11 billion came

from the consolidated output of silver, chromite and iron ore.

The PhP10.88 billion gain in the combined production value of gold and silver in 2016

due to the growth in mine production coupled with improved metal price of gold and

silver was not sufficient to offset the substantial PhP16.00 billion decline in the

production value of copper and nickel. Nickel direct shipping ore production volume

and value alone, went down by 23% and 41%, respectively, from 32,076,948 dry

metric tons valued at PhP36.60 billion in 2015 to 24,652,913 dry metric tons valued at

PhP21.77 billion in 2016.

It is important to note that of the twenty-eight (28) nickel mines, seven (7) are currently

in suspended status and four (4) temporarily stopped their respective mine

operations. The total production of nickel direct shipping ore of this group in 2014 was

about 5,237,416 dry metric tons with an estimated value of about PhP8 billion.

The seven (7) nickel mines in suspended status prior to the mine audit include: 1)

Zambales Diversified Metals Corporation (Sta. Cruz-Candelaria Mining Project); 2)

BenguetCorp Nickel Mines Inc. (Sta. Cruz Nickel Mining Project); 3) Eramen Minerals

Inc. (Sta. Cruz Mining Project); 4) LNL Archipelago Minerals Inc. (Sta. Cruz Mining

Project); 5) Berong Nickel Corporation (Berong Nickel Project); 6) Citinickel Mines

and Development Corporation (Toronto and Pulot Nickel Projects); and 7) Claver

Mineral Development Corporation (Tandawa Nickel Project). Location of the said

mines are as follows: four in Zambales; two in Palawan; and one in Surigao Del

Norte.

While the following nickel mining projects: 1) Minahang Bayan ng Mamamayan ng

Dinagat Island Cooperative (Bel-at Nickel Project); 2) Oriental Vision Mining Phils.

Corporation (Palhi Nickel Project); and 3) Wellex Mining Corporation (Wellex Area

II Nickel Mining Project); 4) Sinosteel Philippines H.Y. Mining Corp. (H.Y.

Nickel-Chromite Project) temporarily stopped their respective mine operations during

the year due to lower metal price, poor metal demand and/or under maintenance

status. All four companies are located in Dinagat Island in Mindanao

Still on nickel production, major producers like Rio Tuba Nickel Mining Corporation

in Palawan, Taganito Mining Corporation in Surigao Del Norte, Platinum Group Metals

Corporation in Surigao Del Norte and SR Metals Inc. in Agusan Del Norte, all incurred

production setback both in volume and value.

Another mining project in suspended status prior to the mine audit is the Camachin

Iron Ore Mining Project of Ore Asia Mining and Development Corporation located in

Bulacan.

Mt. Sinai Mining Exploration and Development Corporation located in Eastern Samar

has also temporarily ceased its operations due to poor demand and low metal price of

chromite. While the Special Mines Permit No. 01-2015 of Emir Mineral Resources

Corporation expired last 28 August 2016.

On metal prices, precious metals gold and silver both enjoyed growth of almost 17%

and 19%, respectively. The average price of gold grew from $1,163.59 per troy ounce

to $1,360.85 per troy ounce, up by $197.26. Silver on the other hand, went up from

US$15.72 per troy ounce to US$18.63 per troy ounce up by US$2.91. While base

metals, copper and nickel both recorded declines of 3% and 11%, respectively.

Copper slipped from US$2.48 to US$2.40 per pound, while nickel went down from

US$5.34 per pound to US$4.75 per pound year-on-year.

On Department of Environment and Natural Resources (DENR) Memorandum Order

(DMO) No. 2016-01 which covers auditing of all operating mines including mines under

suspension and/or care and maintenance status. On 27 September 2016, DENR

Secretary Regina Paz L. Lopez announced the initial result of the mine audit. The

initial result of the audit team recommended the suspension of 20 metallic mines. The

composition of which in terms of minerals being produced is as follows: three (3) gold

with silver mines; one (1) copper with gold and silver mine; two (2) chromite mines;

and 14 nickel mines. All the 14 nickel mines in the list are located in Mindanao.

The metallic mining companies who passed the mine audit include: 1) Philex Mining

Corporation; 2) Rio Tuba Nickel Mining Corporation; 3) Atlas Consolidated Mining and

Development Corporation; 4) Techiron Resources Inc.; 5) Cagdianao Mining

Corporation; 6) Platinum Group Metals Corporation; 7) Greenstone Resources

Corporation; 8) Philsaga Mining Corporation; 9) Taganito Mining Corporation; 10)

Pacific Nickel Philippines, Inc. and 11) Apex Mining Company, Inc. According to

DENR, the final result of the mine audit will be released soon.

To date, although the initial result of the mine audit were announced in September

2016 and recommended for the suspension of twenty (20) operating mines, no

suspensions from the said list were actually made or imposed. The mine audit did not

substantially affect the production performance of the metallic mines in 2016.

In a worst case scenario where operating recommended for suspension are finally

suspended, the immediate impact to the economy in terms of investment, employment

and production are conservatively estimated to be as follows:

o Affected investment will be 27.54% of the total investment or US$1.69

billion from US$4.45 billion.

Investment of 41 Operating Metallic Mines

NUMBER OF

PROJECTS

% INVESTMENT INVESTMENT (US$ Million)

INVESTMENT (Php Million)

Operating Mines 11 72.46 4,446.67 204,546.82

Mines in suspended status prior to mine audit/Mines recommended for suspension

30 27.54 1,689.93 77,751.08

Total 41 100.00 6,136.60 282,297.90

Foreign exchange rate used US$1.00 = Php46.00 As of December 2015

o In terms of employment generation, 42.79% or 19,674 of the current workforce stood to lose their jobs in case of mine closures. Not to mention, the employment generated from livelihood/enterprises/small businesses created due to the presence of mining operations in the host and neighboring communities. The role of mining when it comes to employment generation whether direct or indirect in the rural areas cannot be overly emphasized. It is estimated that about four (4) indirect jobs may be generated for every direct employment in the upstream and downstream sectors.

Employment of 41 Operating Metallic Mines

NUMBER OF PROJECTS

EMPLOYMENT % EMPLOYMENT

Operating Mines 11 26,303 57.21

Mines in suspended status prior to mine audit/Mines recommended for suspension

30 19,674 42.79

Total 41 45,977 100.00

While estimates vary, it is conservatively assumed that for every job in the company, about four (4)

indirect jobs may be generated in the upstream and downstream sectors.

Possible Impact of the Initial Result of the Mine Audit to Metallic Mineral Production

o Based on 2016 data, Masbate Gold Project of Filminera Resources

Corporation (FRC)/Philippine Gold Processing and Refining

Corporation (PGPRC) and Didipio Gold Project of OceanaGold

Phils., Incorporated (OGPI) Incorporated were the top gold producers

accounting for 28% or 6,414 kilograms and 20% or 4,576 kilograms

of the total gold produced, respectively. While in terms of silver

production OGPI took the second spot with 23% or 7,901 kilograms

and FRC/PGPRC followed at third spot with 22% or 7,430 kilograms

of the total silver production. The absence of these two (2) mining

projects to the production stream would certainly create a vacuum

since said companies are among the top precious metal producers

in the country.

o Likewise, for base metals copper and nickel, we are looking at a

decline of 26% and 67%, respectively. Currently, we only have three

(3) copper mines Carmen Copper Corporation, Philex Mining

Corporation and OceanGold Phils. While for nickel of the twenty-

eight (28) nickel mines only five (5) passed the initial metallic mine

audit result released last September 2016.

o It is important to note that the decline in mineral production is

tantamount to lower taxes, fees and royalties collected by the

government both national and local. Mineral exports is also expected

to go down.

Still on DMO No. 2016-01 which also covers the moratorium of acceptance,

processing and/or approval of mining applications and/or new mining projects for all

metallic and non-metallic minerals. The processing of the feasibility studies of the

following mining projects were put on hold because of the said moratorium:

1) Silangan Copper-Gold Project of Silangan Mindanao Mining Company located in

Surigao del Norte; 2) Nickel and Chromite Mining Project of Westchinamin

Corporation in Zambales; 3) Mabilo Mining Operation of Mt. Labo Exploration &

Development Corporation in Camarines Norte; 4) Camachin Iron Ore Mining Project

of Ore Asia Mining & Development Corporation; and 5) Pargum Gold Project of

Pargum Consolidated Corporation in Camarines Norte.

The government is firm in its policy that the utilization of the country’s mineral

resources should only be allowed when the proposed mining operation is technically

feasible, environmentally compliant, socially acceptable and financially viable. The

absence of any of these imperatives means that it is not the time to mine.

To realize the true potential of our mineral resources, the government shall pursue

policy directions toward a long term and stable policy environment. Focus shall be on

the following areas: 1) Minerals and metal led industrialization initiatives; 2)

Streamlining of application procedures; 3) Mines and Geosciences Bureau led inter-

agency coordination of regulatory agencies in mining projects; 4) Strong community

relations programs; and 5) Final land use options of mineral lands.

Table 1. Philippine Metallic Mineral Production, CY 2016 vs CY 2015

Table 2: Philippine Gold Production

Quantity: Kilograms Value: PhP

Table 3: Philippine Silver Production

Quantity: Kilograms Value: PhP

Quantity Value Quantity Value Quantity Value

PRIMARY PRODUCERS

Lepanto Cons. Mng. Corp. Victoria Gold Project 735 1,399,721,328 659 1,109,753,615 11 26

Benguet Corporation Acupan Contract Mng. Project 450 826,367,963 686 1,137,774,375 -34 -27

Mindanao Mineral Processing and

Refining Corporation (MMPRC)/Philsaga

Mining Corp.

Co-O Gold Project

2,676 5,127,177,225 3,385 5,716,457,168 -21 -10

APEX Mining Company Inc. APEX Maco Operation 1,445 2,997,110,268 1,450 2,062,293,293 0 45

Various Small Scale Mines based on

Purchases of BSP* 140 174,215,444 63 96,847,288 124 80

Filminera Resources Corporation/Phil.

Gold Processing & Refining Corp. Masbate Gold Project 6,414 13,566,213,132 5,470 9,169,501,495 17 48

Greenstone Resources Corporation Siana Gold Project 1,721 3,317,570,566 821 1,476,814,349 110 125

FCF Minerals

Runruno Gold-Molybdenum

Project 254 494,692,639 0 0

SECONDARY PRODUCERS

Philex Mining Corp.

Padcal Copper-Gold Operation

3,213 6,236,337,705 3,356 5,642,864,781 -4 11

Carmen Copper Corporation

Toledo Copper Operation -

Lutopan Miining Area 0 0 12 16,792,852 -100 -100



Carmen Mining Areai 1,050 1,994,658,801 933 1,492,479,100 13 34

Oceana Gold Philippines Inc. Didipio Copper Gold Project 4,576 8,713,120,373 3,809 6,318,672,611 20 38

TOTAL 22,674 44,847,185,443 20,643 34,240,250,925 10 31

Name Of Producer Project NameCY 2016 CY 2015 % Change


PRIMARY PRODUCERS

Lepanto Cons. Mng. Corp. Victoria Gold Project 1,218 32,199,889 1,543 35,024,911 -21 -8

Mindanao Mineral Processing and

Refining Corporation (MMPRC)/Philsaga

Mining Corp.

Gold Processing Plant 682 17,741,122 882 20,055,422 -23 -12

Benguet Corporation Acupan Contract Mng. Project 74 1,441,198 196 3,120,116 -62 -54

APEX Mining Company Inc. APEX Maco Operation 8,380 237,857,081 7,947 149,382,119 5 59

Filminera Resources Corporation/Phil.

Gold Processing & Refining Corp.

Masbate Gold Project

7,430 198,128,951 4,309 97,906,341 72 102

Greenstone Resources Corporation Siana Gold Project 1,888 46,087,855 816 21,028,206 131 119

FCF Minerals Runruno Gold-Molybdenum

Project 68 1,891,251 0 0

SECONDARY PRODUCERS

Philex Mining Corporation Padcal Copper-Gold Operation 3,109 86,846,077 3,109 69,756,652 0 24



Lutopan Miining Area 0 0 0 0



Carmen Mining Areai 3,465 89,083,075 2,358 53,276,489 47 67

Oceana Gold Philippines Inc. Didipio Copper Gold Project 7,901 206,037,320 8,621 197,466,856 -8 4

TOTAL 34,216 917,313,821 29,780 647,017,112 15 42


Table 4: Philippine Copper Production

Quantity: Concentrate in DMT Copper content of concentrate in MT Value: PhP

Table 5: Philippine Chromite Production

Quantity: DMT

Value: PhP

Table 6: Philippine Iron Ore Production

Quantity: In DMT

Value: In PhP

Table 7: Philippine Mixed Nickel Sulfide Production

Quantity: Mixed Sulfide in DMT

Mixed Sulfide in MT

Value: PhP


Philex Mining Corporation Padcal Copper-Gold Operation

Concentrate 73,109 3,781,363,677 69,988 3,639,396,637 4 4

Copper content of concentrate 15,860 15,471 3


Toledo Copper Operations

(Lutopan Mng Area)

Concentrate 0 0 2,377 154,632,228 -100 -100

Copper content of concentrate 0 632 -100


Toledo Copper Operations

(Carmen Mng Area)

Concentrate 175,700 9,088,807,112 170,920 9,407,672,461 3 -3


Oceana Gold Philippines Inc. Didipio Copper Gold Project

Concentrate 86,856 4,889,748,289 93,900 5,718,912,067 -8 -14

Copper content of concentrate 21,123 22,917 -8

TOTAL

Concentrate 335,665 17,759,919,078 337,185 18,920,613,393 0 -6




Techiron Resources Inc. Homonhon Chromite Project 25,745 182,618,406 12,469 90,400,325 106 102

Krominco Inc. Dinagat Chromite Project 0 0 3,033 23,127,641

Total 25,745 182,618,406 15,502 113,527,965 66 61



Ore Asia Mining & Development

Corporation

Camachin Iron Ore Mining

Project 6,549 12,273,594 107,119 226,760,752 -94 -95

Total 6,549 12,273,594 107,119 226,760,752 -94 -95



Coral Bay Nickel Corporation Coral Bay HPAL Project

Mixed Sulfide in DMT 36,783 9,359,256,000 40,991 10,485,341,000 -10 -11

Mixed Sulfide in MT 21,010 23,687 -11

Taganito HPAL Nickel Corporation Taganito HPAL Project



TOTAL




Table 8: Philippine Nickel Production

Quantity: Direct Shipping Ore (DMT) Nickel Content of Ore (MT) Value: PhP

metals output dips by 8% in 2016 - mines and geosciences ... · metals output dips by 8% in 2016...

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