Philippines aiming to join China's resource boom

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30 Oct 2009

The Philippines is aiming to be one of the next nations to cash in on China's insatiable appetite for resources, with the Asian neighbours working to build closer mining ties, officials from both sides say. The Southeast Asian country has vast amounts of gold, nickel, copper and other valuable minerals, but for years its mining industry has underperformed due to bad governance, foreign ownership restrictions and domestic opposition. Now, with the Philippines trying to nearly triple annual investment in the sector to two billion dollars, China is being seen as a crucial buyer and source of funds to develop some of Manila's largest mining prospects. "It's all very fortunate for us because we have the advantage of geography... they can practically buy everything we produce here," the Philippine Mines and Geosciences Bureau chief, Horacio Ramos, told AFP. The economic counsellor of the Chinese embassy in Manila, Wu Zhengping, also told a mining conference here last month that Beijing was looking at a "long-term strategic cooperation" with Manila in the mining sector. "It's a win-win arrangement," Wu said. However, he said the Philippines must address some key Chinese concerns, particularly continued restrictions on foreign ownership and inadequate infrastructure. "The first thing you have to do is improve your investment environment," Wu said, calling for a relaxation on rules limiting foreign ownership of assets. Nevertheless, China has shown it is willing to deal in the current environment. Zijin Mining Group, China's largest gold miner, and another Chinese firm this month signed a memorandum of understanding with the Philippine government that could lead to one billion dollars in mining investments over five years. Chinese Foreign Minister Yang Jiechi on Wednesday also began a two-day trip to Manila, and resources was expected to be on the agenda during talks with President Gloria Arroyo on Thursday. "Mining will be among the issues to be discussed," Ramos said. The government estimates the Philippines has 83 billion tonnes of mineral ore deposits. The country's estimated gold ore reserves of four billion tonnes is the world's third largest, its 7.9 billion tonnes of copper the fourth largest and the 815 million tonnes of nickel ore the fifth biggest in the world, it says. However the Philippines has largely missed out on the economic windfalls the likes of Australia and countries in Africa have seen in recent years as they sold resources to power China's surging economy. "The Chinese are going global, but I just don't see any substantial investments here in the Philippines," the executive vice president of industry association Chamber of Mines of the Philippines, Nelia Halcon, told AFP. "The market is there. We just need to develop our resources... They (China) have a potentially crucial role to play in developing the industry." The Philippines mining industry went into near-hibernation after the collapse of metals prices in the 1970s, then a high-profile tailings spill in the 1990s galvanised environmentalists into a strong anti-mining force. The mining industry began to recover after parliament passed a law in the mid-1990s that lifted foreign ownership restrictions on major discoveries. This drove fresh investments that reached annual levels of about 700 million dollars, before dipping slightly to 650 million dollars last year due to the global financial crisis. The government expects investments worth two billion dollars this year as metals demand improves.

Source: AFP