SURIGAO del Norte Rep. Robert Ace Barbers on Tuesday urged the country’s economic managers to revisit and come up with new sound policies to attract foreign investors in the mining sector and help alleviate the coronavirus disease-19 (COVID19)-impaired economy.
“Mr. Speaker, I think this is a feasible and realistic solution. While we are months or years away to a COVID vaccine, our economy needs immediate vaccination. And mining is the solution,” Barbers said in a privilege speech delivered last Monday.
“With the end goal of increasing our mining output’s contribution to our currently threatened economy, I shall be reviewing our current laws and attempt to aggressively drive it forward to dramatically allow for increased financing, exploration, production and regulation in the mining industry,” Barbers stressed.
Barbers, the 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% GDP (gross domestic product) drop in the 1st quarter of this year. Two of the country’s main sources of dollar revenues, the BPO (business process outsourcing) and OFWs (Overseas Filipino Workers), which 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% decline in these 2 sectors, our net dollar position will suffer by 6 to 12 billion US dollars. Before the economy could spiral down, both in GDP in dollar reserves, Barbers said the government would need to have a concerted effort with the private sector to aggressively advance and finance the mining sector.
“Exploration to production takes time, and we can reap the benefits probably 5, 10 years down the line, depending on the various stages of exploration between our existing mining companies. If we target, say a 5 to 10 percent share in GDP, the mining sector can contribute 18 to 36 billion dollars, 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 US dollars as of June 30. In comparison, the entire value of listed companies in the Philippines stood at 260 billion dollars. “And I imagine that the mining sector only contributes to a fraction of that.”
In terms of GDP contribution, prominent mining countries such as Australia have mining contributing 6%. “With Australia’s GDP at 1.37 trillion dollars, this translates to 82 billion dollars, almost 38 times the value of our mining output. If we indeed believe that our resources are among the best in the world, then the solution is
obvious,” Barbers said.
The lawmaker from Mindanao said value-added mining is also a concern as the current state of this sector is yet to be fully integrated. The Philippines, he said, exports nickel, iron ore and copper to developed countries who 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.