Boosted by soaring ore prices, cheap capital and a more investor-friendly regime, mining companies are rushing in and snapping up tenements in the Philippines seeking to profit from the developing world’s industrial boom, experts say.

From majors like BHP Billiton, Anglo-American and Xstrata to bare-bones exploration outfits, they are betting hundreds of millions of dollars that these investments, which could take up to 10 years, would hit paydirt before the unprecedented global metals demand flames out, they said.

The government expects fresh capital inflows of $348 million into the sector, on top of $694 million already sunk into the ground since the Supreme Court ruled two and a half years ago that the 1995 Mining Act, which opened the sector to foreign investors, did not contradict a constitutional provision on equity ownership limits.

“We seek out places with a good foreign investment climate, where the competition is limited but with a high density of mineral deposits and good hopes for both new discoveries and the political support to develop mines,” said David Lowell, an American prospector credited with many of the world’s largest copper discoveries.

“The Philippines has become such a place,” he said. His Lowell Mineral Exploration LLC outfit plans to “acquire one or more late-stage exploration project in copper, gold or any other commodity. We will also consider going into good exploration targets.”

BHP Billiton has briefed President Arroyo of the world’s largest mining firm’s intention to invest up to $1 billion in a nickel project on the southern island of Mindanao, Chamber of Mines of the Philippines president Benjamin Philip Romualdez said.

Anglo-American Plc is ramping up its exploration in the country to about $36.16 million this year, mainly for pre-feasibility studies on its significant Boyongan and Kalayaan copper-gold discoveries on Mindanao, country manager Patrick Waters said.

Charlie Sartain, head of the copper division of Xstrata Plc, said the Swiss-based firm is mulling a 43 percent increase in investment, to $2 billion, into its Tampakan project on Mindanao that it acquired last year.

“The Tampakan deposit represents one of the largest undeveloped copper-gold deposits in the region,” with resource estimates of almost two billion tons, he said.

After metal prices collapsed in the 1970s and a major copper mine tailings dam spill in the mid-1990s, the Philippines mining industry hit the doldrums. By 1997, with the Asian crisis and amid legal challenges to the mining act, capital dried up and most of the smaller mining firms pulled up stakes.

Despite the renewed interest, only 14 medium and large-scale mines are in the production stage — five nickel, four gold, three chromite, one copper and one nickel, said Mines and Geosciences Bureau chief Horacio Ramos.

The volcanic Southeast Asian archipelago is “well-mineralized in copper, gold and nickel, and we are located next door to the voracious metal markets of China, (South) Korea, Japan, and increasingly India,” said Tony Climie, president and chief executive of Canada-listed Mindoro Resources Ltd.

The government hopes interest would be sustained over the next five years when cumulative investments are seen to reach $6.5 billion and the share of mineral ore to total exports reach nine percent. Mining now contributes just 1.2 percent to the gross domestic product.

“With more mining projects either expanding or going on stream in the next months, we could see the industry growing in terms of production and the prospects of a mining boom next year is becoming more apparent,” Environment Secretary Angelo Reyes said.

Reyes this week approved 11 more mineral production-sharing agreements and exploration permits, including three offshore projects to a local unit of an Australian firm involved with marine diamond exploration.

Lowell, the copper expert, said the presence of a “well-trained” corps of mining engineers and skilled work force makes the Philippines an “even more attractive target.”

Not all the news is good however. Romualdez, the local mining chamber head, is wary of long-term attempts by leftist legislators to overturn the mining law.

A number of local governments, backed by powerful environmental groups and some influential Roman Catholic bishops, have banned mining activities in their jurisdictions.

Waters of Anglo-American said “there are still issues on accessing land in the Philippines which have not really gone away.”

He described his company’s “tortuous process” of securing the backing of local officials, a requirement in the mining law, for its Manmanoc tenement in the northern Philippines, where the first exploration drillings will only take place later this year.

It took five years to sort out ancestral domain claims of local tribes and to secure permits to an area previously classified as a restricted forest.

A separate permit application for another copper-gold prospect in the area, called Nugget Hill, has been pending for seven years.

“You get your policies and procedures right and you get a lot of investment,” he added.

Agence France Presse

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