A congressman from Mindanao on Wednesday said the full resumption of mining activities is one sure way to alleviate the economy that is suffering from recession caused by lockdowns imposed to contain the spread of the coronavirus disease 2019 (COVID-19).
Surigao del Norte Rep. Robert Ace Barbers urged President Rodrigo Duterte's economic managers to review present practices and come up with better policies to attract foreign investors in the mining sector.
“This is a feasible and realistic solution. While we are months or years away from a COVID-19 vaccine, our economy needs immediate vaccination. And mining is the solution,” Barbers said in a privileged speech.
“With the end goal of increasing our mining output’s contribution to our currently threatened economy, I shall be reviewing the current laws and attempt to aggressively drive these forward to dramatically allow for increased financing, exploration, production and regulation in the mining industry,” he added.
Barbers, chairman of the House Committee on Dangerous Drugs, said proper exploration, exploitation and utilization of the country’s mineral resources would help the government repay its massive debt accumulated to fight COVID-19 and recover from the -16.5 percent drop of the gross domestic product (GDP) in the first quarter of this year.
Two of the country’s main sources of dollar revenues, the business process outsourcing or call centers and workers abroad, that combine for an estimated US$60 billion annually and has kept the economy afloat for two decades, are also under threat, he said.
“If we simulate a 10 to 20-percent decline in these two sectors, our net dollar position will suffer by US$6 billion to 12 billion.”
“Before the economy could spiral down, both in GDP and in dollar reserves, the government needs to implement a concerted effort with the private sector to aggressively advance and finance the mining sector,” Barbers added.
“Exploration to production takes time, and we can reap the benefits probably five to 10 years down the line, depending on the various stages of exploration of existing mining companies. If we target, say a 5 to 10 percent share in GDP, the mining sector can contribute $18 billion 36 billion, more than enough to cover the gap that will be created by the reduced OFW and BPO sectors,” he explained.
From a global perspective, he said the total value of the top 50 mining companies in the world stood at $957 billion as of June 30. In comparison, the entire value of listed companies in the Philippines stood at $260 billion.
“And I imagine that the mining sector only contributes to a fraction of that,” he said.
In terms of GDP contribution, prominent mining countries such as Australia have mining contributing 6 percent.
“With Australia’s GDP at A$1.37 trillion, this translates to A$82 billion dollars, almost 38 times the value of our mining output. If it is true that our resources are among the best in the world, then the solution is obvious,” Barbers said.
Value-added mining is also a concern as the current state of this sector is yet to be fully integrated, he said, adding that the Philippines exports nickel, iron ore and copper to countries that possess the technology to further refine the products to stainless steel and copper wires, among others.
“We, therefore, sell low value output only to import them back in its final form, putting us in a negative foreign exchange position. To optimize the value of our exports, I would strongly consider capital formation with respect to smelters and refineries so that value is enhanced before it leaves our shores,” Barbers said.