Philippine Resources Issue4 2014, Oct.-Dec.

Philippine Resources Mining, Petroleum & Energy Journal Issue 4, 2014

Bangsamoro-Open for Business?

Time to Resurrect the Minerals Action Plan

QED Remains Unfazed, Adjust Sails to Mining Industry Descent

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Headlines in this issue

10

Front cover: One of the 40 drilling rigs QED currently has in the Philippines . See page 32

16

Resources Commentary

34

8 “Ronnie� Penarroyo asks: Is Bangsamoro open for business?

16 Patricia A. O. Bunye says it is time to resurrect the Minerals Action Plan 22 Pacific Strategies asks: Is Metro Manila prepared to face a Super Typhoon?

Economic Commentary

24 Philippines has plenty of Geothermal opportunities 30 Aussie Ambassador on hand for Site Skills launches

Mining

34 QED remains unfazed, adjusts sails to mining industry descent 40

Philippine Mining Briefs

42

Outotec opens new Manila office

45 Sandvik Tamrok Philippines boldly pushes for service contracts

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Philippine Resources Mining, Petroleum & Energy Journal Issue 4 2014 Philippine Resources Journal is published independently for executives in Philippine mining, petroleum and energy and associated business sectors.

Publisher Elizabeth Galura Charismatic (WA) Pty Limited

Plenty of issues to consider in this issue of Philippine Resources

Y

ou could definitely say there is never a dull moment when you are reporting on a dynamic business like the resources industry in the Philippines.

This issue of Philippine Resources has plenty of interesting commentary on the many issues facing the country and the hard-hit resources sector.

Amongst the many highlights in this issue are: •

Regular columnist Fernando “Ronnie” Penarroyo looks at the interesting and complex history of Mindanao and the Bangsamoro. Ronnie points out that studies suggest Mindanao has plenty of resource riches, including some quality oil and gas prospectivity, but asks if the area is ready to take advantage of those natural riches.

•

Another of our regular columnists, Patricia A. O. Bunye, reports on some of the good news to come out of the recent Mining Philippines conference, including Vice President Binay reiterating his belief that “mining can be the catalyst for uplifting the lives of our countrymen by giving them employment and added access to enterprise as well as social opportunities.”

Design/Production Elizabeth Galura

•

Ruth Yu-Owen from PhilCarbon looks at the geothermal potential of the Philippines and what needs to be done to make it a successful option.

Journalists Maria Paula Tolentino Kevin Lewis Steve Hill

•

Philippine Resources reporter Maria Paula Tolentino speaks with industry veteran Alan Blackley from QED, who highlights the difficulties the resources sector is currently facing in a difficult investment market with lowering commodity prices.

•

The resource sector’s difficulties, particularly those facing the mining sector, aren’t being helped by calls from a minority voices like Senator Bam Aquino and his call for a ban on mineral ore exports from the Philippines. The only ones cheering for that idea are the Philippines competitors in the nickel market.

•

On the energy front there are reports that the current petroleum acreage offer has failed to attract any concrete bids. With a fear of Philippine policy changes and China’s actions in the disputed waters off the Philippines coast, the DOE will have to continue to work hard to attract new foreign investors.

•

On the positive side of the investment equation it is great to see international mining service leaders like Outotec and Sandvik continuing to expand their interests in the country.

Consulting Publisher Greg Brimble Editor: Colin Sandell-Hay Sales and Marketing Kevin Lewis kevin@philippine-resources.com & Cecilia Pamular cecille@philippine-resources.com

Contributors Mars Buan Patricia A.O. Bunye Fernando Penarroyo Ruth Yu-Owen ___ Manila publishing office: Lomar Offices Paseo de Roxas Bldg, 3rd Floor 111 Paseo de Roxas Legaspi Village Makati, Metro Manila, Philippines Phone +632 815 8836 or +632 714 0029 Individual contacts: Greg Brimble greg@philippine-resources.com Australia: +614 172 20759 Manila: +63949 338 3664 Philippine Resources Journal is printed in Manila by IPrint.

Digital online edition www.Philippine-Resources.com

IF YOU WOULD LIKE TO RECEIVE OUR HIGHLY INFORMATIVE E-NEWSLETTER, VISIT OUR WEBSITE www.philippine-resourcesnews.com

Resources Commentary

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Bangsamoro: Open for Business?

By Fernando Penarroyo

A

fter years of negotiations, the Philippine Government and the Moro Islamic Liberation Front (“MILF”) signed the Comprehensive Agreement on the Bangsamoro (“CAB”) on 27 March 2014 that seeks to end more than four decades of Muslim secessionist movements and violence in Mindanao.

The CAB includes the Framework Agreement on the Bangsamoro earlier signed on 15 October 2012, the four annexes

(normalization, revenue generation and wealth sharing, transitional arrangement and modalities), and other agreements signed by both parties during the course of the 17-year peace negotiations.

The documents describe and justify the Bangsamoro as an identity, a territory and as a new political entity, which will have its own distinct political, economic and social systems suitable to the life and culture of the Bangsamoro people. It will enjoy political and fiscal autonomy.

Fernando “Ronnie” Penarroyo is the Managing Partner of Puno and Penarroyo Law (fspenarroyo@punopenalaw. com). He specializes in Energy, Resources and Environmental Law, Business Development and Project Finance.

8 Philippine Resources

The Regalian Doctrine and the Bangsamoro Right to Self Determination The concept of jura regalia where the Regalian Doctrine was derived states that private title to land must be traced to some grant, whether express or implied, from the Spanish Crown or its successors, the American Colonial government, and ultimately, the Philippine Republic.

By virtue of the Treaty of Paris of 10 December 1898, Spain ceded to the United States of America all rights, interests, and claims over the national territory of the Philippine islands for a consideration of US$20 million - whose colonial government then pursued the Spanish policy of requiring settlers on public lands to obtain deeds from the government.

When the 1935 Constitution was passed, the issue then was the conservation of the national patrimony for the Filipinos, which impelled the framers of the fundamental law to entrench the Regalian Doctrine wherein the State asserted ownership over lands of the public domain and all natural resources found therein, as further reiterated in the 1973 and 1987 Constitutions.

Professor Miriam Coronel Ferrer, now the Philippine Government Peace Panel Continued on page 10 >

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Resources Commentary

< Continued from page 8 Chair, in her book “Costly Wars, Elusive Peace” premised that while landlessness has fed rural unrest in all parts of the country, the issue of landlessness assumed an ethnic dimension in Mindanao.

The Moro insurgencies are thus sustained by domestic inequities and state failure to provide redistributive measures.

Rather than a war over religion, Moro resistance is basically a Bangsamoro (Moro people/nation) nationalist/national liberation struggle to free Muslims in the Philippines and their claimed homeland from Filipino colonialism and oppression.

In this regard, Muslim resistance organizations have invoked the United Nations-recognized principle of the right to self-determination.

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The Resource Potential of Bangsamoro There have been no extensive mineral exploration or mining activities in Bangsamoro. This can be attributed to the security risks associated with the prolonged civil strife arising from violence between the military and rebel forces.

However, the Center for Energy Sustainability and Economics estimated mineral deposits in Mindanao island at $312 billion. With respect to petroleum potential, the Sulu Sea Basin and Cotabato Basin, where the Liguasan Marsh is located, are within the territorial limits of Bangsamoro.

The Sulu Sea Basin extends to the northeast portion of Sabah where there has been gas discoveries and is part of the prolific circum-Borneo deep-water trend. The Cotabato Basin, on the other hand, is an onshore northwest-trending trough in south central Mindanao cover-

ing an area of 14,000 sq km. It is considered a frontier area in terms of level of exploration maturity.

The Department of Energy (“DOE”) calculated the resource volumes in accordance with the Philippine Petroleum Resource Classification System. For the Sulu Sea Basin, the hypothetical (mapped) resources are estimated at 109 million barrels of oil equivalent (“MBOE”) while the speculative (unmapped) resources are 94 MBOE for a total of 203 MBOE. ExxonMobil, in a consortium with BHP Billiton Petroleum and Malaysian-based Mitra Energy, drilled four wells in the 6,460-sq km Service Contract 56 in the Sulu Sea Basin as part of a $400 million exploration campaign. But while the company hit gas with three of the four holes, ExxonMobil said the quantities were non-commercial.

According to the Petroleum Economist (2011), while ExxonMobil resigned as operator and pulled out of its deep-water block in the Sulu Sea, its campaign had been lauded as a success by some industry observers and had generated significant interest in the potential of the Sulu Sea. In the Cotabato Bain, exploration results have shown that it is mainly an oil-prone area. Based on resource assessment studies made by the DOE, the basin is estimated to contain some 158 MBOE, of which 45% is gas. Any oil or gas discovery made within the Cotabato Basin can be produced economically due to their proximity to residential, industrial and commercial sites.

Bangsamoro Transition Commission and the Bangsamoro Basic Law Since 1996, the Philippine Government and the MILF, which formally broke away from the Mindanao National Liberation Front in 1981, have been engaged in peace talks. On 27 July 2008, their respective peace panels finalised a Memorandum of Agreement on Ancestral Domain

Cotabato Basin.

10 Philippine Resources

Continued on page 12 >

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Resources Commentary

< Continued from page 10 (“MOA-AD”), creating the Bangsamoro Juridical Entity as an independent State or a near-independent State.

However, on 4 August 2008, the Supreme Court issued a temporary restraining order (“TRO”) preventing its signing by both parties.

The TRO was issued pursuant to the Petition for Mandamus and Prohibition filed with the Supreme Court on 23 July 2008, docketed as G.R. No. 183591, by the Province of North Cotabato and its ViceGovernor Emmanuel Piñol, questioning the constitutionality of the MOA-AD. On 14 October 2008, the Supreme Court declared the MOA-AD unconstitutional.

A year later the Parties resumed negotiations and on 15 October 2012, the Philippine Government and the MILF signed the Framework Agreement on the Bangsamoro (“FAB”) at Malacañang.

In December 2012, President Benigno Simeon Aquino issued Executive Order No. 120, which created the Bangsamoro Transition Commission (“BTC”), a body authorized to draft the Bangsamoro Basic Law (“BBL”) for the new Bangsamoro political entity.

The President certified the draft BBL as an urgent bill. In relation to its task to draft the BBL, the BTC is also mandated

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to recommend to Congress or the people amendments to the 1987 Philippine Constitution, if it deems such necessary.

According to the 119-page draft BBL submitted to Congress on 10 September 2014 and filed as House Bill 4994 in the House of Representatives and Senate Bill 2804 in the Senate, the powers of government are vested in the Bangsamoro Parliament, which shall set policies, legislate on matters within its authority and elect a Chief Minister who shall exercise executive authority on its behalf.

The BBL shall be subject to a plebiscite scheduled for first quarter of 2015 to give the people the choice to ratify the BBL. Ratification by the people in a plebiscite shall make the BBL effective and will confirm the BBL as the fundamental law of the Bangsamoro. Provinces, cities, municipalities and barangays wherein the majority of voters have ratified the BBL will form part of the Bangsamoro, which will replace the Autonomous Region of Muslim Mindanao (“ARMM”).

Upon ratification of the BBL, the Bangsamoro Transition Authority (“BTA”) shall perform the functions of an interim Bangsamoro government until the election and assumption of the members of the Bangsamoro Assembly and the formation of the Bangsamoro government in 2016.

The future Bangsamoro will be the only region in the country that will run a government through parliamentary means and have an “asymmetric relationship” with the Central or National Government, “reflective of the recognition of their Bangsamoro identity, and their aspiration for self governance” in accordance with the Constitutional provisions on the creation of autonomous regions.

The Bangsamoro government will be granted authority to govern its financial resources and levy taxes appropriately as prescribed in the BBL. In addition to taxes already being collected by the ARMM, the Bangsamoro may also collect capital gains tax, estate tax, documentary stamp tax and donor’s tax.

All the revenues from these taxes will form part of the Bangsamoro treasury.

From national taxes, fees and charges collected in the Bangsamoro, 75% shall go to the Bangsamoro and 25% to the Central government.

The Bangsamoro shall have the authority to contract loans, credits and other forms of indebtedness with government or private banks and lending institutions except those requiring sovereign guaranty.

The Bangsamoro may also avail of overseas development assistance (“ODA”) for priority development projects. Other sources of revenue include shares of government income derived from Bangsamoro government-owned and controlled corporations, financial institutions, economic zones, and freeports operating within the Bangsamoro territory.

It may receive grants derived from economic agreements entered into or authorized by the Bangsamoro Assembly such as donations, endowments and other forms of aid, subject to the reserved powers of Central government over foreign affairs. Grants and donations may be received directly by the Bangsamoro government to be used solely for the purpose for which they were received.

The DOE has estimated the onshore Cotabato Basin contains some 158 MBOE, of which 45% is gas.

12 Philippine Resources

Continued on page 14 >

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Resources Commentary

< Continued from page 12 Ownership and Management of Natural Resources According to Nasser Marohomsalic in his paper “The Framework Agreement on the Bangsamoro: Towards Hurdling the Constitutional Obstacle to Moro Self-determination”, the FAB unlike the MOA-AD, does not directly vest in the Bangsamoro government the joint jurisdiction with the National Government over natural resources in the territory of the Bangsamoro Government.

Neither does it vest in the Bangsamoro government jurisdiction and control over strategic mineral and other sources of energy including their exploration and exploitation.

However, under the BBL, income from the exploration, development and exploitation of all the natural resources within the Bangsamoro shall be allocated as follows:

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Local Government Code and the Indigenous Peoples Rights Act. As there are legislated sharing agreements in resources development contracts, there is then an urgency to review petroleum and coal services contracts, renewable energy service contracts, and mineral agreements and FTAAs under the Philippine Mining Act of 1995.

The same is true in the power sector as there is a need to harmonize the provisions of RA 9136 or the Electric Power Industry Reform Act (“EPIRA”), Energy Regulations No. 1-94 or the Rules and Regulations Implementing Section 5 (i) of Department of Energy Act of 1992 (“ER 1-94”) and the Local Government Code on Royalty Tax (or National Wealth Tax) and Government Share. There is also a need to determine with certainty the role of indigenous peoples, the free and prior informed process, and the royalties extended to IPs under the Indigenous Peoples Rights Act.

Law enforcement and maintenance of peace and order shall be the primary function of the police force for the Bangsamoro. It remains to be seen if the Bangsamoro will be able to fully secure its territorial jurisdiction particularly from lawless elements, warlords, local militias, break-away rebel factions and communist insurgents, which have been the scourged of resources developers in Mindanao island.

The BBL provides that the privileges already enjoyed by the local government units (“LGUs”) under existing laws shall not be diminished unless otherwise altered, modified or reformed for the purpose of good governance pursuant to the provisions of a Bangsamoro local government code.

Policy issues encountered with LGUs are expected to be encountered within the Bangsamoro although at a greater and more complicated scale.

Conclusion

a. For non-metallic minerals such as sand, gravel and quarry resources within the Bangsamoro, revenues shall belong to the Bangsamoro and its local government units. b. For metallic minerals within the Bangsamoro, seventy-five percent (75%) shall belong to the Bangsamoro, and twenty-five (25%) shall go to the Central government. c. For fossil fuels such as petroleum, natural gas and coal, and uranium, there shall be equal sharing of income between the Central and Bangsamoro governments.

Understandably, the resource management provisions under the BBL are fraught with legal and fiscal issues and uncertainties that might impede their successful applications.

Foremost of these is the power of veto by the Bangsamoro government over development projects in mining, energy and power entered into or granted by the Philippine government similar to the festering issues experienced under the 14 Philippine Resources

Perhaps the Bangsamoro can start from a clean slate learning from the successes and mistakes in resource management from the National Government.

To begin with, the Bangsamoro can tap ODAs for comprehensive resources potential assessment and the establishment of a centralized data base system for mineral and petroleum resources that will be accessible to resource developers.

Depending on the outcome of the final resource management structure with the Central Government under the BBL, the Bangsamoro government can then implement a transparent mineral tenement, energy service contract, and power contracts management system.

Of course, there are apprehensions that the Bangsamoro during its early stages of existence is incapable of conducting the required administrative and financial know-how in resource management.

There is an urgent need to build its capacity and knowledge in handling public financial resources and improve the quality of governance.

Despite the assurance by the negotiating parties of its constitutionality, the BBL bill is expected to encounter severe scrutiny in Congress.

As soon as the BBL becomes law, its constitutionality or other legally controversial provisions will most likely be challenged before the Supreme Court.

When the dust has settled, the Bangsamoro governance structure will surely pave the way for the region to realize its full economic and development potential utilizing the untapped mineral and energy resources.

Bangsamoro administrators through transparent management must assuage the lingering fear that resource development will not pave the way for environmental degradation or an inequitable distribution of wealth thereby negating the opportunity to improve the well being of their Moro constituents. The resources industry must share in the responsibility to ensure that inclusive growth will be achieved.

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Resources Commentary

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Time to Resurrect the Minerals Action Plan

By Patricia A. O. Bunye

A

t the recent Mining Philippines 2014 conference, Vice President Jejomar Binay, Senator Grace Poe and Senator Alan Cayetano told an audience starved for good news on mining exactly what they wanted to hear.

On Day 1, Senator Poe warmed hearts with the statement that her mother, movie queen Susan Roces, spent her happiest childhood years growing up in the Lepanto mine.

On Day 2, Vice President Binay recalled his comments at a previous Mining Philippines Conference that “mining can be the catalyst for uplifting the lives of our countrymen by giving them employment and added access to enterprise as well as social opportunities.”

Binay bewailed the lack of consistency

between national and local laws, and directly referred to the Tampakan Copper Gold Project, which he described as potentially one of the largest copper mines in the world with tangible economic impact on the region, but which has been stalled due to a provincial ban on openpit mining. The project, he said, is a case in point for working to “supersede local laws that run contrary to what the Mining Law seeks to achieve.” He publicly voiced his hope that the resolution of this issue “will come soon enough.”

More importantly, Binay stressed the need for consistent national policies, stating that “consistency in our policies should transcend political timelines. A sound policy should survive the changing of administrations and remain responsive in the long-term. From a mining perspective, this means 25, 50 years or even longer than that.”

His nemesis, Senator Alan Cayetano, who rarely agrees with him on anything these

days, likewise called for consistency. Said Cayetano, “to achieve national vision, we need consistent national policies.”

However, these themes are nothing new.

If we would only look back to as recent as 10 years ago, a long term road map for mining had already been laid out as the Minerals Action Plan (MAP).

Pursuant to Executive Order No. 270 dated 16 January 2004, otherwise known as the “National Policy Agenda on Revitalizing Mining in the Philippines”, the Department of Environment and Natural Resources (DENR) was directed to take the lead in the preparation of the MAP in consultation with other agencies concerned and stakeholders. Specifically: 1. The DENR was directed to oversee and monitor the operationalization of the MAP, including providing the coordinating and monitoring mechanisms for its implementation, and mobilizing all its bureaus and attached agencies, as may be necessary, to attain this goal.

2. All government departments, agencies and instrumentalities, such as, but not limited to, the Department of Trade and Industry, Department of the Interior and Local Government, Department of Finance, National Economic Development Authority, National Anti-Poverty Commission and National Commission on Indigenous Peoples, were directed to provide priority support in the implementation of the MAP.

The Solar Lolas departing the Mining Philippines 2014 Conference for the airport. They were presented by Diwata at Breakout Session 3 on Trends in Corporate Social Responsibility.

Photo Credit: Anna Varona 16 Philippine Resources

3. The DENR was required to coordinate with the minerals industry, the local government units, civil society and other business sectors concerned in operationalizing the MAP. Stakeholders were enjoined to adopt and implement the guiding principles and strategic directions provided under Executive Order No. 270, as amended.

Continued on page 18 >

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Resources Commentary

< Continued from page 16

ment priorities and capability building for industry manpower).

4. The DENR, in coordination with the Department of Finance, Department of Budget and Management, and the National Economic and Development Authority were required to identify funding sources in implementing and monitoring the MAP.

b. Clear, stable and predictable investment and regulatory policies shall be instituted to facilitate investments in mining, leading to a prosperous minerals industry.

The MAP was so detailed that it consisted of 32 issues, 57 strategies/action agenda, and 126 specific measures with the corresponding timetable and identification of lead and support agencies grouped under the following headings: a. Government recognizes the critical role of investments in the minerals industry for national development and poverty alleviation and shall provide support mechanisms for a sustained mineral exploration program (including the streamlining of procedures of concerned government agencies and instrumentalities relating to the grant of mining tenements, responsive research and develop-

c. Value-adding as a measure of optimizing benefits from minerals shall be pursued through the development of downstream industries to achieve greater productivity and efficiency. d. Small scale mining shall be promoted as formal sector of the mineral industry and as part of the development initiative for both downstream and upstream industries. e. Efficient technologies shall be adopted to ensure the judicious extraction and optimum utilization of non-renewable mineral resources to enhance sustainability. f. Protection of the environment shall

Diwata Update Diwata-Women in Resource Development, Inc. (Diwata), the Philippine Mine Safety & Environment Association (PMSEA) and the Land Rover Club of the Philippines (LRCP) sent off their first batch of solar grandmothers to be trained at the Barefoot College (www.barefootcollege.org) in Rajasthan, India on September 16.

Cita Diaz, Magda Salvador, Sharon Flores and Evelyn Clemente, all illiterate women from Aeta communities in Tarlac and Zambales, are (as of this writing) now in their first month of being trained to install, repair and maintain a simple solar electrification system in their respective communities.

The expenses for their travel, accommodations and training, which will last for 6 months, are being covered by the Indian government. Upon their return to their communities, each pair of “Solar Lolas” will be responsible for the solar electrification of 100 households.

Bunker Roy, founder of the Barefoot College and one of Time Magazine’s top 100 most influential persons in 2010, believes that the program’s success in other countries will be replicated here in the Philippines and will help in strengthening ties in between the two countries.

As Diwata, PMSEA and LRCP await the return of the Solar Lolas, they are now raising funds for the purchase of the equipment which will be installed by the grandmothers in their communities.

18 Philippine Resources

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be of paramount consideration in every stage of a mining operation; mitigation and progressive rehabilitation measures shall be integral components of mining operations. Decommissioning and/or final mine rehabilitation shall be supported by the most appropriate environmental financial surety. g. The ecological environmental sustainability of areas affected by mining operation (including biodiversity resources and small island ecosystem shall be safeguarded in order to protect public welfare, safety and environmental quality).

The rights of affected communities (including the rights of indigenous cultural communities, especially the free and prior informed consent requirement), shall be protected. h. Mining operations shall be pursued within the framework of multiple land use and sustainable utilization of mineralized areas. i. Remediation and rehabilitation of abandoned mines/sites shall be accorded top priority to address the negative impacts of past mining projects. j. The economic and social benefits derived from mining shall be equitably shared by and among various units of government, as well as the affected communities. k. Sustained information, education and communication campaign shall be vigorously pursued, jointly with the industry and stakeholders, about the minerals industry for purposes of enhancing public awareness and respect for the rights of communities, and reaching informed decisions on mining and related projects both at the national and local levels. l. Continuous and meaningful consultation process with the industry and all other stakeholders shall be instituted, to integrate concerns on minerals in resource management policy and planning.

If a number of these headings appear to Continued on page 20 >

Resources Commentary

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City in the Crosshairs: Assessing the Risk of a Super Typhoon in Metro Manila

By Pacific Strategies & Assessments (PSA)

N

atural disasters are a fact of life in the Philippines, and when they strike, they strike hard. In November 2013 Typhoon Haiyan/Yolanda tore through the central Philippines, killing over 6,300 people and displacing millions more.

More than any other type of natural disaster, the Philippines is the most vulnerable to tropical storms. On average, 18 to 20 tropical storms enter Philippine wa-

< Continued from page 18 be almost identical to some of the provisions of the current administration’s Ex-

ters each year, and half of those storms make landfall.

The Northwest Pacific Ocean is the most active basin in the world, accounting for approximately one-third of all tropical cyclone activity. With no major landmass to the east, the Philippines is located directly in the path of these westand northwest-moving storms.

Of the typhoons that emerge from the northwestern basin, approximately 20 enter the Philippine Area of Responsibility each year – and about half of them make landfall. By comparison, China gets ecutive Order No. 79 (“Institutionalizing and Implementing Reforms in the Philippine Mining Sector Providing Policies and Guidelines To Ensure Environmental Protection and Responsible Mining in the Utilization of Mineral Resources”), it makes you wonder why the more comprehensive MAP was junked in the first place.

Further, the MAP was arrived at through consultations with various government agencies, and the minerals industry and civil society/NGOs. Contrast this with the process of the Minerals Industry Coordinating Council in arriving at a draft revenue sharing bill that all but ignored the comments of mining industry representatives.

Patricia A. O. Bunye is a senior partner at Cruz Marcelo & Tenefrancia and head of its mining and energy practice. She is also President of Diwata-Women in Resource Development, Inc. Questions and comments are welcome at po.bunye@cruzmarcelo. com.

20 Philippine Resources

The industry’s cries that the proposed new revenue sharing regime renders it uncompetitive and unattractive to investors continue to fall on deaf ears.

The MAP, though in need of some updating after years of being consigned to the filing cabinet, remains a thorough, measurable and time-bound plan. May the candidates who are now courting our votes have the wisdom to give the MAP a second look.

hit by seven typhoons annually, while Japan and Australia experience four to five.

In the Atlantic, the United States typically experiences just two hurricanes per year.

At the center of the Philippine archipelago is the capital of Manila, one of the most densely populated cities in the world. In recent studies about natural disaster risk, Metro Manila ranks second in terms of the number of people at risk, and is the third most vulnerable metropolitan area on earth.

If a super typhoon were to hit Metro Manila today, PSA research and projections indicate that at least 4,000 people would be killed, 13,000 people injured, and total estimated damages could exceed US$ 3 billion.

Nearly all residential and commercial structures will experience some degree of damage. Power generation systems and primary distribution lines will be downed leaving millions of homes and businesses without electricity. All telecommunication providers will experience extensive outages.

Damage to transportation infrastructure will cause major disruptions affecting recovery and relief operations. A high percentage of Metro Manila’s hospitals will be damaged, understaffed and unable to handle the high volume of patients. The vulnerability of a large portion of Metro Manila’s population, particularly the urban poor, will result in a humanitarian crisis.

Urban planners and disaster management officials maintain that organizations operating in Metro Manila should prepare for a super typhoon scenario. The three primary hazards associated with this scenario are: (1) Destructive winds and wind-blown debris, (2) Torrential rains and flooding, and (3) Storm surge and inundation.

Continued on page 22 >

Resources Commentary

< Continued from page 20 Expert views are mixed over the probability of a super typhoon hitting Metro Manila directly. While Metro Manila has never suffered winds exceeding 241 kph (150 mph) – which would classify the storm as a super typhoon – there is a general consensus among meteorologists that a category 3 typhoon with sustained winds above 178 kph (111 mph) is highly possible.

Some meteorologists say that the mountainous topography of neighbouring provinces serves as a windbreak. Typhoons Angela/Rosing and Fengshen/ Frank, which were classified as super typhoons before making landfall, lost intensity as they approached Metro Manila.

Similarly, the wind speed of Typhoon Rammasun/Glenda dropped by the time the storm system reached the capital.

the Visayas before moving to Luzon and Metro Manila. Fengshen flooded large sections of the city, destroyed homes and businesses, and crippled power lines and communication towers. The storm killed over 600 people and left US$480 million in damages.

Metro Manila is a prime example of a sprawling mega-city in the Asia-Pacific region. As the country’s commercial center, Metro Manila generates roughly 40 percent of the total gross domestic product of the Philippines. Manila is also the seat of the Philippine national government and serves as the country’s primary transportation gateway.

Metro Manila has one of the highest population densities of any city in the world.

Official government figures indicate that Metro Manila has approximately 12 mil-

Forecasters acknowledge these historic realities and geographic factors, but stress that growing unpredictability and recurrence intervals of super typhoons increase the chances that category 5 winds could be sustained by the time a storm reaches Metro Manila.

In terms of wind speed and overall strength, the most destructive typhoon that directly tracked Metro Manila was Typhoon Angela/Rosing in October 1995 which devastated Southern Luzon and Metro Manila. The typhoon resulted in US$315 million in damages and 936 deaths – the highest recorded typhoon death toll at that time – topping typhoon Joan/Sening in October 1970 that left 768 people dead.

In June 2008, Fengshen/Frank, a category 2 storm, affected large parts of 22 Philippine Resources

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lion inhabitants. The daytime population surges to approximately 14 million as residents commute from nearby provinces. Recent studies suggest that the actual number of people living in Metro Manila is closer to 16 million.

About four million people – or 35 percent of the population in Metro Manila – live in poverty. According to a 2014 survey 37 percent of families in Metro Manila consider themselves poor. With land in Metro Manila scarce and expensive, the poor are forced to build

in flood prone and high risk areas. The Metro Manila Development Authority (MMDA) estimates that there are more than 500,000 families living in slum areas in Metro Manila.

Most of Metro Manila’s vulnerabilities can be traced to the absence of a comprehensive and coherent urban plan. The city’s landscape is a jumble of high rise buildings, sprawling shopping malls, exclusive subdivisions, and slum dwellings virtually situated side-by-side.

Metro Manila also suffers from insufficient drainage, inadequate waterways, and poorly planned roads and highways.

The development of bridges, railways, and elevated highways, has not been coordinated across local governments. The lack of coordination and planning exacerbates urban issues.

Awareness about the overall risks associate with typhoons and the need for better urban planning, accurate forecasting, and disaster preparedness increased significantly since Typhoon Haiyan/Yolanda pummelled the Visayas region in 2013. Generally considered the most powerful storm ever to make landfall anywhere in the world, the category 5 storm carried wind speeds of 335 kph before reaching land.

In Tacloban City more than 2,500 people were killed by storm surge – a five-meter high wall of charging water mixed with hazardous debris. Other less-populated, but equally impoverished and vulnerable coastal areas in Samar and Leyte were similarly inundated.

Continued on page 24 >

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Economic Commentary

< Continued from page 22

that amount will depend on loans, foreign assistance, and the ability to raise Disaster preparedness and management additional revenue. is an area that has justifiably received a lot of government attention. While the Ten months after Haiyan/Yolanda, the governmentâ&#x20AC;&#x2122;s lead weather forecast- recovery effort is beginning to look like ing agency PAGASA remains under- many other disappointing ones around resourced, the Aquino administration is the globe. The United Nations Office of pursuing other proactive and innovative the Coordinator for Humanitarian Afdisaster mitigation programs such as the fairs (OCHA) admits that the current hazard mapping initiative Project NOAH response needs are enormous. Inter(Nationwide Operational Assessment of national donor fatigue is setting in. The Hazards) within the Department of Sci- UNâ&#x20AC;&#x2122;s Strategic Response Plan has reence and Technology. ceived only slightly more than half the total funding requirement.

Much of the national disaster budget is earmarked for post-Haiyan/Yolanda reAccording to aid workers, evacuahabilitation, which is currently estimated tion shelters are so dilapidated that at US$2.08 billion and expected to in- they cannot protect against another crease significantly. However, much of typhoon. Only a quarter of house-

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holds have durable roofing and reports of shoddy construction persist. Reports from Tacloban and other areas of the Visayas indicate that affected families with nowhere else to turn are rebuilding in the same dangerous areas â&#x20AC;&#x201C; even those identified as no build zones.

Meanwhile, in Metro Manila, construction and settlement continues in high risk areas including coastlines and riverbanks. If a super typhoon were to strike, PSA research and projections indicate the number of fatalities in these areas will be among the highest.

For Metro Manila, or any city caught in the crosshairs of a super typhoon, the absence of effective and coordinated preparedness, mitigation and response means the burdens will be ultimately be born directly by residents and businesses themselves.

PSA conducts specialized industry research and generates customized reports covering a broad range of client interests. PSA also conducts focused security, socio-political, economic, as well as operational and business risk assessments across the AsiaPacific. For more information, contact PSA at info.services@psagroup.com

24 Philippine Resources

Economic Commentary

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The Philippines has plenty of Geothermal Opportunities

T

he Philippines has come a long way from the passage of the Geothermal Law in 1967. Originally eyed as a measure to address the energy crisis of the 1970s, geothermal power is now a sustainable and reliable source of power in the country.

The Philippines is currently the second largest producer of geothermal power next to the United States with an installed capacity of 1,868 megawatts.

The country has 43 geothermal renewable energy service contracts/geothermal service contract of which SEVEN are producing fields with an installed capacity of 1,868 MW, while the remaining are under pre development/exploration stage.

Among the major islands, Visayas has the highest installed capacity with 915 MW. Luzon has 844 MW while Mindanao has 108 MW of geothermal energy.

As of 2012, geothermal power accounts of 14 percent of the country’s power generation mix, next to natural gas, 27 percent and coal, 39 percent.

But apart from providing a substantial amount of electricity, geothermal resources help the country save huge amounts of foreign exchange through the displacement of a large fraction of imported fuels.

The latest geothermal power project that came online was the 20 MW Maibarara geothermal power project in February 8, 2014.

Geothermal potential The Philippines is estimated to have a resource potential of as much as 4,000 MW. Of the estimated additional geothermal capacity addition from 2012 to 2030 totalling 1,425 MW, bulk (865 MW) is expected to come from Luzon.

26 Philippine Resources

Mindanao is also rich in geothermal resource with an additional potential of 350 MW and Visayas with 210 MW. The Philippines has succeeded in generating more investor interest in the geothermal power sector partly due to the passage of the Renewable Energy Law in 2008.

The R.E. Law sought to accelerate the exploration and development of renewable energy sources geothermal, biomass, solar, wind, hydro and ocean energy.

To date, there are around 32 geothermal projects on pre-development stage.

Among the geothermal areas under development stage are Mainit-Sadaga in the Mt. Province, Kalinga in Kalinga Province, Baguias-Tinoc in Benguet, Montelago in Oriental Mindoro, Camarines Sur, Cabalian in Southern Leyte, among many others.

Encouraging investments The R.E. Law provided for substantial fiscal and non-fiscal incentives for geothermal developers.

Utilization of Geothermal Resources in the Philippines 2013-2030 which aims to increase the installed geothermal capacity by 75 percent in 2030.

The Philippines targets the installation of an additional 170 MW from 2013 to 2015 coming from new areas (70 MW) and expansion of existing areas (100 MW) with investments of P19.736 billion.

The Roadmap targets to install additional 1,090 MW of geothermal capacity from 2015 to 2020 of which 1,040 MW will come from new areas and 50 MW from expansion of existing areas. The additional capacity will entail P105 billion worth of investment.

From 2020 to 2030, there is projected additional installation of 205 MW with investments of about P17 billion.

Way Forward The Philippines’ goal under the geothermal roadmap carries its own barriers and challenges.

The Department of Energy has identified several concerns that may affect the government’s geothermal targets such as developing technology that can tap acidic or young geothermal systems, lack of permeability in prospective areas, optimization of geothermal resource through cascade use and development of low enthalpy systems and enhanced geothermal systems.

The fiscal incentives included 7-year income tax holiday, duty-free importation, VAT-free importation, special realty tax rate, net operating loss carryover, 10 percent corporate tax rate after ITH, accelerated depreciation, zero percent VAT on RE sales and purchases, cash incentives, tax exemption on carbon Other concerns includes utilization of credits, tax credit on domestic capital geothermal resources located inside protected areas, social acceptability equipment and services. (indigenous peoples consent and LGU Non-fiscal incentives includes the feed- concerns), issuance of a policy or feed in tariff scheme, renewable portfolio in tariff for emerging technology on standard, net metering and green energy geothermal energy and approval of the renewable portfolio standards. option.

These incentives supported the Roadmap for the Exploration, Development and

Continued on page 28 >

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Economic Commentary

Issue 4 2014

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Aussie Ambassador on hand for Site Skills launches

T

he Australian Ambassador to the Philippines, the Hon. Bill Tweddell helped Site Skills Training launch two new initiatives for the Philippines and regional mining industries.

The first was a partnership with OceanGold Corporation to build an Underground Mining Training Centre complete with simulated underground mine and also a partnership with Immersive Technologies and Monark-Cat to build a Heavy Equipment Operator Training School at Site Skills Trainingâ&#x20AC;&#x2122;s Clark Campus, Central Luzon.

Mr Tweddell announced these at a function at the Mandarin Oriental Makati, which was supported by a tour of the

< Continued from page 26 To address this, the government has proposed continuing capacity building and enhancement of geothermal technical

Clark Campus the following day.

The cocktail event launch had a large attendance which was held on the same day as Typhoon Glenda hit, demonstrating the interest in training by the Philippines mining industry.

Attendance from mining executives from the Philippines, Australia, Indonesia and the Middle East showed skills development is a regional concern and an issue demanding attention.

Formalities of the evening included speeches about the announcements from various stakeholders, but the highlight of the night was Orion Site Medlinkâ&#x20AC;&#x2122;s Operations Manager, Mr Mon Asir, who spoke about a recent program where expertise, inventory of geothermal resources, development and utilization of low-enthalpy geothermal especially in offgrid and missionary areas and integration of climate change mitigation to energy policies, plans and programs.

Among the other proposals includes formulation of guidelines for the direct use of small-scale geothermal energy, continued resource inventory and continued improvement of geothermal renewable energy database, capacity building and information and education campaigns, establishment of Geothermal Training Center in coordination with stakeholders and ongoing study on exploration, development and market of low enthalpy, acidic reservoir and enhance geothermal system.

Ruth Yu-Owen is the President and CEO of PhilCarbon, a leading renewable energy project developer and a keen observer of regional developments in energy.

28 Philippine Resources

Meantime, there are opportunities for new players. They may partner with companies that have existing Geothermal Service Contracts with the Department of Energy that may be lacking in financial resources to fulfil their commitments under the work program.

Australian Ambassador to the Philippines, the Hon. Bill Tweddell.

120 PNG young adults were trained by Site Skills Training in the Philippines and have returned back to PNG to work in the mining industry in Diesel Fitting, Fabrication and Welding and Camp Services with close to 100% employment of graduates.

Mr Asir, spoke about the challenges for young people in Enga province (where the students came from), high unemployment and limited opportunities, limited training resources, and how this program changed their lives and benefitted local mines who now had access to well trained local staff.

The focus on soft (employability) skills was almost as important as the trade skills and this has allowed a smooth transition into the workforce for the graduates.

Site Skills Training is a specialist vocational training provider with a world class Continued on page 30 >

Economic Commentary

< Continued from page 28 campus located at Clark Freeport Zone, 60 kilometers north of Manila.

The 300,000m2 campus services the mining, energy and construction industries delivering internationally recognized training solutions in a livein environment.

With the growth outlook for mining in the Philippines and regionally, Site Skills Training is making major investments to service current and future needs.

OceanaGold’s Didipio mine will start underground mining operations in 2015 and have chosen Site Skills Training as its training partner. OceanaGold CEO & Managing Director Mr Mick Wilkes said, “OceanaGold’s Didipio underground mine will open in 2015 and we will need workers skilled in mining underground.

Our partnership with Site Skills Training will allow us to meet this need and create something for other underground miners in the Asia Pacific region to use. Working with the leading mining training company in the Philippines will ensure graduates meet our exacting requirements in terms of HSE, trade and soft skills.”

The facility will include a simulated underground mine, drills, underground mining equipment such as jumbos and

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vehicles and classrooms for delivery of training. The simulated mine will have teaching spaces where classes can be conducted- for example first aid training will be delivered in a space resembling the environment where first aid will be delivered.

The Centre will provide easy access to all Filipino mines for international quality training and place the Philippines as the training destination of choice. The Underground Mining Training Centre is due to open early 2015.

Ambassador Tweddell also announced a partnership to build a heavy equipment operator training school and train 3,000 new heavy equipment operators in the next 3 years, with Site Skills Training, Immersive Technologies, an Australian company that will supply state-of-the-art heavy equipment simulators and MonarkCat to supply the heavy equipment for the training.

The facility will train new operators, but as importantly provide refresher training to existing operators to ensure operators are most effectively and efficiently operators their machines.

Mr Vern Wills, Site Group International’s CEO and Managing Director said, ”This facility will bring students from all over South East Asia and the Pacific to be

trained as heavy equipment operators.

Well trained operators significantly reduce the costs for operations of machines including fuel, wear and tear and maintenance, and our training programs will ensure graduates meet the needs of industry. ROI for companies to send their staff to Clark for refresher training is less than a month.

Training new operators will take more time, but as part of a CSR program, the return to the company and communities surrounding the mine will be very compelling. We are very experienced in training unemployed and disadvantaged candidates from over Asia and have a fantastic track record of transitioning them into long term employment.

This is through a focus on trade, safety and extremely importantly employability skills.

And our program will give companies the ability to hire local personnel and we all know the benefit of employing locally.” The Heavy Equipment Operator Training School is due to open late 2014.

The following day Site Skills Training Clark Campus hosted a tour and luncheon showcasing its world class training centres.

The tour included the Malampaya HSSE Training Centre where close to 10,000 enrollees have been trained in Malampaya HSSE courses, the AWS welding and fabrication facility, culinary skills kitchens and the heavy diesel mechanics workshops, with the highlights the new Heavy Equipment Operator Training School and the Simulated Underground Mine where tour guests gained an understanding how training would be delivered and the benefits of the simulated underground environment.

Of particular interest to the guests were the recreational and accommodation facilities with a twin cinema, karaoke, pool hall, gymnasium and numerous sports areas. The tour rounded off with lunch at Site’s own training restaurant.

OceanaGold’s Didipio mine mill.

30 Philippine Resources

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Mining News

Issue 4 2014

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QED Remains Unfazed, Adjusts Sails to Mining Industry Descent

By Maria Paula Tolentino

E

XPLORATION IS NOT MINING. A message QED Managing Director and CEO Alan Blackley is getting out particularly to an administration that has reduced the chances of mining companies and its counterparts to do business in the Philippines.

Philippine Resources discusses with QED how they are coping with the industry downturn, what measures they have taken to adapt to change, and where the

industry is headed in the coming years – all to put in better perspective what everyone in the industry has been trying to sidestep: the inevitable decline of Philippine mining.

“The Pessimist complains about the wind; the Optimist expects it to change; the Realist adjusts the sails.” -William Arthur Ward With 2014’s Mining Philippines looking a bit leaner compared to last year’s event, more and more multi-national mining companies and their service providers are starting to feel the pinch of the limitations imposed by the Philippine ad-

ministration and its governing bodies on resource development activities particularly on exploration and drilling. On the forefront of the mining industry and the realities that go along with it, the Philippine’s leading drilling services provider QED is adjusting its sails.

“We have always been conservative and are debt adverse. We are coping in the downturn of the industry by reshaping the business through downsizing and preserving our cash flow to survive” says QED Managing Director and CEO, Alan Blackley.

With an Ortigas office no longer in operation, survival is the name of the game.

“However, we are still trying to keep a healthy level of optimism. Currently, we are retiring our older gear and equipment and eyeing a more robust sales forecast for 2015. We are performing a juggling act just now but we are determined to survive this downturn,” says Blackley.

Realistic and direct, Blackley discusses more with the Journal: PRJ: How long have you been in the industry?

AB: Too long! I’ve been in the business for 47 years now, 45 of those years have been outside Australia.

We were asked to come to the Philippines in 1995 to work on the Tampakan project for Western Mining and that came about from a relationship with a contractor based here in the Philippines.

They knew us from work we had performed together in PNG and asked us to come to the Philippines to work side by side on the project. During that particular time, the business was owned by Orica explosives. In the year 2000 Orica

QED Managing Director and CEO, Alan Blackley.

32 Philippine Resources

Continued on page 34 >

Mining News

< Continued from page 32 exited the drilling business and I and several other investors bought the drilling operations that became the independent and privately owned QED. PRJ: What is QED’s most productive areas in terms of exploration?

AB: Well, I would have to say Mindanao as the most “prospective area”. As to whether a mine is ever developed there or not, that’s a different story. Take Tampakan for instance. It’s been 18 years since we started drilling in Tampakan. It is recognised as the largest undeveloped copper and gold deposits in Asia, but remains in limbo.

The Compostela Valley is also very rich in gold but again social issues, particularly security and the NPA, prohibit people from going there.

Further up North there is the Silangan deposit which is a very significant resource where Philex are certainly working diligently towards creating some value.

PRJ: What countries are productive in terms of amount of work done?

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AB: In the short history of QED, I’d have to say the Philippines. This is because QED has been established here longer than anywhere else in our sphere of operations.

managing geothermal drilling. The potential for a “blow out” must always be considered and we would need to be 100% confident of our ability before entering into this market.

In Papua New Guinea we did not get established until 2008 and although we certainly have been busy there, we have drilled more metres in the Philippines to date. That equation will change over time unless we see a renewed interest in greenfields exploration in the Philippines.

On the other hand; Energy (the lack of electricity) here in the Philippines is becoming a major issue so one would think that this market will expand over time. Is this a business that we are interested in?

PRJ: How many rigs are found in the Philippines, and how many are operational?

AB: Right now, we have about 40 rigs in the Philippines and only 14 of those are operational. I would add that the drilling services industry on a world-wide basis is certainly in recession and our rig utilization levels are commiserate with our peers.

PRJ: Are there any opportunities for geothermal drilling in the Philippines?

AB: Yes there are, but are they for QED? This is something we might consider at some stage but it must be understood there are complexities in properly

QED is always interested in expanding our service offering with the proviso that if we can’t do it right the first time then we will not do it all.

PRJ: Has QED invested in any new equipment lately?

AB: Yes we have. It’s a very strange situation. Even though we have very low rig utilization levels, we have had to purchase new equipment to perform these new tasks. A drilling rig is built for a very specific purpose and you can’t just take it out and make it perform another task.

So, yes, we have been buying some new gear.

For instance grade control drilling is basically a new activity for us and is becoming part of our baseline business with good long term and predictable contracts in two successful mines in the Philippines.

This has required investment in several purpose designed Schramm drills.

We are also very interested in drill and blast and are seeking opportunities in this area. Coming from Orica I have a particular fondness for drill and blast. I enjoyed the challenges of precision blasting in confined spaces. I like the design and management of well-constructed quarries and large scale pattern blasting on mine sites is equally rewarding when done correctly. There is something about planning and achieving the precise heave and fragmentation required by the Client. It’s not ambiguous in any way; the results are there to see once the fume and dust has cleared! We certainly have the drilling knowledge to participate in this arena and we are gifted in having both

QED has a stable of state-of-the-art drilling rigs.

34 Philippine Resources

Continued on page 36 >

Mining News

< Continued from page 34 in-house, and access to very experienced and competent blast engineers, who have worked with us in the past.

PRJ: You mentioned QED downsized recently. With the Ortigas office closing, how many employees does QED currently have?

AB: The numbers vary. It’s probably around 230, something like that. And the casual numbers vary as well, depending on what contracts we have at the time.

Because you hire people locally for a specific contract and then once you pack up, you release them from their employment.

PRJ: You mentioned the high costs of overheads. One department being safety.

Do you think it is essential?

AB: We work for multinational clients who have a specific standard that contractors must adhere to. If you do not comply and have your systems in place (safety, training, assessment, risk analysis, the list goes on and on), you don’t get to play. You just don’t get to work for these companies unless you are compliant. We

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also work for other companies who at times may not see the value of safety or appreciate the costs involved. And there are definitely costs! All of our people have to work to a specific standard regardless of the circumstances. It’s impossible to say to an employee that you have to work to a standard on this site but not on another. So even though we have a client who may say “We don’t need you to cost in safety management, etc.”,

ticipate is in the support area. By that I mean the drilling of large diameter water bores to supply the needs of the oil drills.

QED can’t operate in that manner and occasionally this will be to our detriment in terms of pricing. On each site, we have an appointed safety officer who is trained in all aspects of safety management, training of unskilled labour, first aid, and reporting. There are costs involved in safety if it is taken seriously but we have a duty of care that is paramount. So, yes, the Safety role is absolutely imperative.

PRJ: It’s a good thing that QED is diversifying

PRJ: Veering away from mining and getting into petroleum?

Another possibility would be the drilling of stratigraphic core holes (relatively shallow in a petroleum sense - say to a maximum 2000 metres depending on access) to assist the geologists with the interpretation of their seismic data, in regions of complex folding.

AB: If we had not of diversified our offering we would have been out of business a long time ago.

If you look around the world, the whole mining sector is struggling, particularly in the exploration sector. These past 12 months in particular, have been very, very tough.

PRJ: Why is this?

AB: I can respond to this question with several answers.

In the Petroleum sector the drilling of holes is a very specialised and high cost activity. Where QED may be able to par-

AB: There has been a huge lack of work, particularly in the greenfield mineral exploration space.

From 2012, our turnover this year would be less than 50% of that year. Obviously, less income but you still have certain business structures to maintain(safety department, IT department, HR, etc.), even when cash is very tight. Your overhead as a percentage of income becomes higher. So this last year has been quite a struggle for us: margins have been reduced, what work that is available is now being bid at more competitive rates whilst costs can’t be reduced equally. It just makes it difficult.

PRJ: Your thoughts on the Philippine government releasing permits.

AB: Do you want the real story or do you want what everybody puts out?

We are pessimistic. We are pessimistic because I see no real desire on the part of the government to support mining. The proposed no go zones and the new fiscal regime, is frankly ridiculous in

The QED team.

36 Philippine Resources

Continued on page 38 >

Mining News

< Continued from page 36 a world where countries have to compete for investment dollars. Why would anyone invest in something that does not make economic sense? The move to the so-called on shore processing, just completes a picture that says to the world “We don’t want you”. “We don’t want a mining industry” Take Indonesia for instance. That country has a more vibrant mining industry than the Philippines but is now struggling for new investment because of the requirement for on shore processing.

What hope for the Philippines with a much smaller industry? In that sense, we are pessimistic. At some stage, hopefully, there will be a Philippine administration that understands that mining, indeed, can play a vital role in the economy and the Philippines can benefit from the untapped resources that remain undiscovered or dormant.

It’s an interesting thing. With exploration, particularly longer term projects, we employ large numbers of people and you can see the benefits: In the Barangays, they are getting cement roads, instead of the bahay kubo, they are putting up brick/cement houses. Television sets are appearing. People are having motorbikes, 38 Philippine Resources

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etc. People are able to participate in the economy. In many cases it is the first time for people in these remote areas to have a guaranteed income. On that level, exploration makes an extraordinary difference.

vices are scarce), whose community is lucky enough to attract a company willing to spend money on an unknown.

Exploration in itself does not necessarily mean that there will ever be a mine developed. In fact, in my 47 year career, (I don’t know how many hundreds of projects we’ve drilled on over the years), only 3 have turned into a mine in my lifetime.

AB: Am I pessimistic about the Philippine mining industry? Yes as it currently stands and for good reason.

But am I pessimistic about the future of QED in the Philippines?

And those 3 are not here in the Philippines, they are in PNG. Now here in the Philippines, we’ve worked on Tampakan and Silangan but they’re not mines yet, and they will not be a mine unless someone builds them. This requires a partnership of two parties; the development company and the state.

So the message that I want to get out to this country is that EXPLORATION IS NOT MINING. Exploration is just finding out what’s there. Exploration in itself is an industry and can provide significant benefits to the government revenue base but more importantly to the rural people (and by definition, these people are found in remote locations where government ser-

PRJ: Calling a spade a spade...

No I am not, because we have diversified into different areas and we are also spread across the Asia Pacific region. In that sense, I am happy to be based here in the Philippines. This is my home and I intend to stay here for the rest of my life.

With an industry that has proven itself time and again as the catalyst for economic development, has the current administration inadvertently caused more harm than good by putting in effect no-go zone maps and a new fiscal regime? Only the next 25 years of Philippine mining can tell.

Maria Paula Tolentino is a freelance journalist representing a number of respected publications. The views of the author are her own and do not reflect the publication or entity she represents

Mining News

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Bam Aquino files bill to ban PH mineral ore exports

A

Philippine senator has filed a bill urging a halt to exports of unprocessed mineral ores, similar to a ban introduced by Indonesia that led to a sharp spike in nickel prices and cut exports of other ores, Reuters has reported.

The Philippines, which has vast but largely untapped mineral resources, has been looking at ways to raise the contribution of mining to its economy.

The bill, filed in late August by Senator Paolo Benigno Aquino, a first cousin of President Benigno Aquino, would require domestic processing of all minerals extracted in the country prior to export if passed into law.

This may require nickel miners, for example, to build more smelters to process the ore before shipment.

Some ores are shipped directly to China and Japan for processing.

The Philippines currently has two processing plants for nickel, both owned by the country’s top producer Nickel Asia Corp, two for gold, and one for copper, according to the Mines and Geosciences Bureau.

Paolo Benigno Aquino is one of 24 members of the upper house Senate, which is dominated by allies of the president.

“This measure seeks to generate more domestic income, attract more investments, and lead to more jobs and livelihood for the Filipino people,” the bill said in its explanatory note.

Mining contributed less than 1 percent of the Philippines’ gross domestic product from 2003 to 2012, the note said.

But the mining industry believes investments in mineral processing plants will only come once the government addresses issues of high power costs, poor infrastructure and security threats from communist rebels in the countryside.

“It will be like the Indonesian situation where thousands lost their jobs because of the mine shutdown due to the ban. We are not ready for that,” Ronald Recidoro, Chamber of Mines of the Philippines’ spokesman and vice president for legal and policy.

“If we want to attract quality investments, the government must first address those issues. Rather than make it mandatory, they should instead offer incentives, tax incentives,” he said.

In January, Indonesia, the world’s biggest nickel ore exporter, imposed a ban on outbound shipments of unprocessed mineral ores as it sought to extract more value from its mineral resource.

Uncertain future The proposed legislation comes at a time when the Philippine mining industry faces an uncertain future as the government aims for new tax legislation to boost its share of mining revenues.

Conflicting regulations, such as whether or not to ban open-pit mining, and a strong anti-mining lobby led by the leadership of the local Roman Catholic Church have also deterred investment and hampered projects, such as Glencore Plc’s $5.9 billion Tampakan copper-gold mine in southern Philippines.

The new bill would lead to more nickel smelters being built in the country.

40 Philippine Resources

A similar bill was filed in July in the House of Representatives by Congressman Erlpe John Amante, a copy of which was seen by Reuters.

Continued on page 42 >

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MVP: PH mines too small to warrant new processing plant, mineral export ban

T

he Philippine mining industry is too small to require operators to build their own smelting plants, according to Philex Mining Corp. chairman Manuel V. Pangilinan.

“You have to encourage more, larger mines before you can justify an investment in a smelting plant. If we are not supporting the mining industry, there would be no investor investing in smelting plant.

“To build a smelting facility takes a lot of money. There’s not enough concentrates in this country because the mines are not large enough to support a new smelter operation or smelting plant in this country,” Pangilinan told reporters on the sidelines of the ASEAN Business Awards Philippines.

“We need to have a clear policy on mining,” Pangilinan said, referring to the Aquino administration’s mining reforms, including a controversial proposal to rework the revenue sharing scheme between government and the private sector.

Pangilinan’s statement come on the heels of a bill filed by Senator Paolo Benigno “Bam” Aquino, President Aquino’s cousin, in late August seeking to ban the export of unprocessed mineral ore. It is similar to the policy in Indonesia that is meant to promote local investments and job generation by compelling mining firms to invest in their own processing plants.

The controversial Bill was filed by Senator Paolo Benigno “Bam” Aquino, President Aquino’s cousin.

“I think the intention is good, but first, what is processed ore?

In the case of Philex, we don’t export the rocks, the ore itself, we process it into concentrates.

We need to understand what do you mean by ‘processed,’”

Pangilinan said. “We need to have a mine much bigger than Philex... But for now we can’t justify (building a smelting plant) based on the Padcal production alone.”

Philex closed 2013 with production of 99,802 ounces of gold, a 40 percent increase from the previous year. Production of copper reached 32.49 million pounds, up by 46 percent from the previous year.

Pangilinan said the cost of smelting is cheaper in Japan and Korea, adding that “smelters cost a lot of money because they require a lot of power.”

According to the Mines and Geosciences Bureau (MGB) there are only three processing plants in the country -- one for copper and two for nickel.

Data from MGB show that total gross production value in mining reached P157.1 billion last year from P144.6 billion in 2012.

The economic contribution of mining stood at 0.7 percent or P77.8 billion last year from P79.5 billion in 2012. Contribution to total employment last year stood at 250,000, whereas taxes, fees and royalties from mining amounted to P21.48 billion last year from P19.94 billion in 2012.

< Continued from page 40

The timing of any potential ban on exports was unclear.

Mines and Geosciences Bureau head Leo Jasareno told Reuters the state agency had not been consulted prior to the filing of the Senate bill, and it was premature to say whether it would recommend that the government support the bill.

The Senate bill proposes six- to 12-year imprisonment plus a fine equivalent to twice the value of seized mineral ores for those found guilty of exporting mineral ores. The existing law does not have limits on mineral ore exports.

The office of Senator Aquino said the bill was filed without any consultation with the government. The Senator hoped state agencies will support the measure once it is discussed by the Senate environment committee.

The bill also seeks to amend certain provisions in the Philippine Mining Act of 1995, which allow 100 percent foreign ownership of mining.

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Mining News

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Binay: Mining is a catalyst for employment, social development

D

espite facing intense political pressure in recent months, Vice President Jejomar Binay has hailed the Philippine mining industry as a “strategic economic pillar” that could launch the country into developed nation status.

As the keynote speaker at the Mining Philippines 2014 conference and exhibition last September, Binay said: “Our homeland is supposed to be the 5th most mineralized country in the world. But we have yet to harness the full potential of these resources, which

at current market prices is estimated to be worth around P73.47 trillion.”

“If this unprecedented budget is computed to deliver sweeping change across the country, imagine what social and economic revolutions can be unleashed by our riches that await extraction?”

Binay said that despite the challenges facing the Philippine mining industry, a “viable roadmap” can still be found that would address the concerns of all stakeholders.

The Vice President came down solidly on the side of the local mining industry when he declared that national laws “should supersede local laws that run contrary to what the Mining Law seeks to achieve.”

He also declared the country’s present Mining Law as “one of the most sophisticated and well-crafted pieces of legislation worldwide,” further citing that the law ensures the protection of the environment as well as requires mining companies to institute social development programs and guarantee the rehabilitation of a mine site after its operations have concluded.

Binay cited the case of the Tampakan Copper and Gold project in Mindanao.

“What could have been one of the largest copper mines in the world, with tangible economic impact on the region is still on hold, awaiting a resolution on local permits.

“We do not know when this legal instrument will be obtained, but we pray that it will come soon enough.”

Binay also batted for consistency in government policies concerning the mining industry. “A sound policy should survive the changing of administrations and remain responsive in the long-term.

From a mining perspective, this means 25, 50 years or even longer than that.”

Regarding higher taxes for the Philippine mining industry, the Vice President asked for further studies in the matter.

Binay fears that imposing higher taxes on mining could make the industry uncompetitive.

Vice President Binay is surrounded by a media scrum at Mining Philippines.

44 Philippine Resources

Binay further urged the players in the Philippine mining industry to “stay the course and continue to invest in bringing development directly to the people who did not think development to be possible in their lifetime.”

Mining Briefs

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Senators Cayetano, Poe speak out Sen. Cayetano bids miners: take the lead on national development Miners in the Philippines should stop waiting for the government to lead and instead take it upon themselves to persuade Filipinos “to embrace mining as a route to national development,” Senator Alan Peter Cayetano said.

Speaking to delegates at the Mining Philippines 2014 conference, Cayetano explained that the mining industry can no longer afford to look inward. “If you want change, do the planning yourself and lobby for it,” he said.

Cayetano said there needs to be a consistent national policy with coordinated regional strategies and a clear roadmap in order for the local mining industry to rise to its potential: “You need a national vision -- but planning should be done at a regional level.”

The senator also advised the mining industry to rebrand itself, saying the latest generation of Filipinos were weaned on the image of mining as a destructive activity. He said that it was time to take the offensive and let people know what benefits that can be reaped from responsible mining.

Cayetano said the local mining industry could reach out to the youth and engage them in activities that will change attitudes. He also told the delegates that if they were doing good, there was no need to be bashful about it.

that will benefit future generations.

In her speech during the Mining Philippines 2014 Conference and Exhibition, Poe said that the Chamber of Mines of the Philippines (COMP) should continue its efforts to improve and enhance the quality of life of the people through “inclusive growth.”

“As good corporate citizens, you in the mining sector have a moral obligation to ensure that your extractive activities do as little damage to the environment as possible. The general idea is: when your mine runs out, your company must be able to say that they left the people and the community better than they were when they first began working together,” Poe said.

The senator noted that the Philippine mining industry has the potential to become one of the key proponents of economic growth over the next 25 years, citing the “staggering” amount of mineral wealth in the country.

According to Poe, the country has more than $1.4 trillion worth of recoverable mineral resources and has the second largest gold deposits in the world after South Africa. It also has massive deposits of silver, copper, chromite and zinc.

“And this $1.4 trillion valuation does not even include possible resources in Benham Rise off the eastern seaboard of Luzon Island,” she added.

Grace Poe bats for responsible, transparent mining

But the fact that these minerals have remained underground indicates there must be something wrong with the system, she said.

SENATOR Grace Poe-Llamanzares has urged the country’s mining lobby to continue pushing for environmentally and socially responsible mineral development and to ensure that gains from finite resources translate into sustainable wealth

“For one, the Philippine mining sector suffers from a public perception problem. To some extent, all forms of extractive businesses are not exactly popular anywhere in the world. But in the Philippines, people’s perception of mining is

46 Philippine Resources

colored through the prism of post-colonialism rhetoric, environmental disasters, and a lack of transparency in the mining industry,” she said.

To address people’s negative perceptions, Poe said large-scale mining companies should foster greater transparency and openness in the mining industry as the Philippine legislature fast-tracks efforts to design a new revenue-sharing scheme that will deliver a more equitable distribution of benefits from mining.

Poe said that more than $12 billion in possible mining investments are on hold as the legislature debates the new mining revenue scheme, a delay the Philippines can ill afford.

The senator also believes that many of the current problems of the mineral sector can be solved once the Freedom of Information (FOI) bill is passed by Congress as it would foster an open environment wherein transparency and accountability are the norm.

“I am also fully supportive of the Philippine Extractive Industries Transparency Initiative [PH-IETI] because it promotes greater transparency in the mining sector,” she said.

Aside from full disclosure of contracts, Poe also encouraged the mining industry to “publish what you pay.”

At present, 40 of the 51 mining firms operating in the Philippines have already allowed the Bureau of Internal Revenue (BIR) to inspect their financial records.

“I think it is to your interest to inform the people how much exactly you are returning to the people in terms of taxes, jobs generated, livelihood, CSR [corporate social responsibility] projects, etc.,” she said.

Continued on opposite page >

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< Continued from opposite page “Moreover, since most mines only have a 30-year lifespan, you must also provide the people of your community with livelihood alternatives and skills training programs to prepare them for the day when your mines cease operations,” she added.

Benjamin Philip Romualdez, COMP president, expressed full support for Poe’s thrust for transparency in the mining industry.

“The industry views with optimism the many moves to change the policy regime.

We trust that the House of Representatives and the Senate will put the best interests of nation-building and economic development in their hearts,” Romualdez said in his speech to open the conference.

“It is our prayer that Congress and the Senate write the best laws to enhance

the business of mining, alleviate the economic condition of the people who rely on it, while protecting the environment—to sustain other human activities after the mining firms have optimized the development of minerals,” Romualdez added.

This year is a crucial year for the Philippine mining industry as the Mining Industry Coordinating Council (MICC), a Cabinet committee tasked by the president to oversee the activities of the mining industry, has just submitted to Congress a draft bill to amend Republic Act 7942, better known as “The Mining Act of 1995.”

Despite some reservations about certain amendments in the proposed bill, the Philippine mining industry is confident that the government will develop a policy environment that will take advantage of the momentum created by the development programs anchored on

the principles of transparency and good government.

Negative perception of mining still a major obstacle, says Finance official The public’s negative perception of mining operations in the Philippines is the one major obstacle the industry has to overcome in the country, according to a ranking Department of Finance (DOF) official.

“It has been said that the public discourse on mining in the Philippines is dominated by those against the industry,” Ma. Teresa S. Habitan, DOF Assistant Secretary, said in a report by Ronnel Domingo in the Philippine Daily Inquirer.

“I have seen the many good things [mining companies] do like building an excepContinued on following page >

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Philippine Resources 47

Mining Briefs

< Continued from previous page tional school in Rio Tuba. You must tell the world about these things because, by not being able to do so, the industry is assuming the role of a villain,” Habitan explained at the Mining Philippines 2014 Conference.

Rio Tuba is a nickel producing area in Palawan where a subsidiary of Nickel Asia Corp. operates. The economic activities spurred by mining at Rio Tuba since 1968 has helped the town it belongs to, Bataraza, become a first-class municipality.

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Development Corp., AAM-PHIL Natural Resources Exploration and Development Corp., The Philodrill Corp., Oriental Petroleum & Minerals Corp., Alcorn Gold Resources Corp., Trans Asia Oil & Energy Development Corp., Forum Energy Philippines Corp., Forum Pacific Inc., and Semirara Mining Corp.

Freedom of Information bill

Critics from the mining sector have expressed their concern about the bill, saying it would negatively affect the flow of investments to the country.

Habitan is the country’s point person in the Extractive Industries Transparency Initiative (EITI), an international body that promotes openness in all mine dealings, particularly revenues, taxes, royalties, signature bonuses and other payments.

Based on a list kept by the Philippine unit of EITI (PH-EITI), 40 of 51 companies engaged in mining, petroleum and coal have so far issued waivers to allow the BIR to access tax information.

According to the PH-EITI data, the 11 companies that have so far failed to issue waivers are Citinickel Mines & Development Corp., Pacific Nickel Philippines Inc., Mt. Sinai Mining Exploration and

48 Philippine Resources

This is on top of national and local taxes, including real property tax, value-added tax, capital gains tax, stock transaction tax, documentary stamp tax, and withholding tax on passive income, as well as regulatory fees and charges.

“The Philippine mining industry needs to move forward,” Poe said last week. “We need to fast-track approval of the new revenue-sharing formula because, as I speak, $12 billion worth of mining projects are on hold pending [such approval].”

Mining companies could also take steps to help make the industry more transparent, Habitan added, in particular by signing a waiver to allow the Bureau of Internal Revenue (BIR) access to their tax information.

The Philippines is one of 16 countries trying to comply with the standards set by the Norway-based EITI.

ing Industry Coordinating Council that would ensure government a 10-percent share in the mining industry’s gross sale, or 55 percent of the adjusted net mining revenue plus a share in windfall profit, whichever is higher.

To resolve the problems, the Chamber of Mines of the Philippines (COMP) has hunkered down to draw up a roadmap for the industry.

For her part, Senator Grace Poe said that once the Freedom of Information bill becomes law, the government would be obligated to disclose all mining contracts to the general public.

“As you all know, there is a new revenuesharing scheme in the works, [and] our government needs the transparency report to help it compute the right formula for what constitutes as ‘fair and equitable share’ for everyone involved,” said Poe, one of the sponsors of the bill.

The senator was referring to the bill being pushed by the interagency Min-

COMP president Benjamin Philip G. Romualdez already asked various experts, many from the academe, to help in preparing an industry strategy that would be presented to Malacañang for discussion.

Philex mulls giving up stake in Indophil, Tampakan The country’s largest mining company may sell out of Australia’s Indophil Resources NL, whose key asset is a stake in the stalled Tampakan cooper-gold project.

“I think they are looking at it, so no decision but if I were to guess, they’re likely Continued on page 50 >

Mining Briefs

< Continued from page 48 to sell into the offer,” Philex Mining Corp. chairman Manuel V. Pangilinan told reporters recently.

“It’s a very big project and the gestation [period] is X year. Tulog ang pera mo (Your money is sleeping),” Pangilinan said, referring to the Tampakan mine.

Philex owns a 1.3 percent stake in Indophil, which last month announced it received a takeover offer from Mindanao-based Alsons Group. Alsons Prime Investments Corp (APIC) offered to acquire all shares in the Australian mining company for A$0.30 in cash. The offer values Indophil at A$361 million.

Controlled by the Alcantara family, the Alsons Group already owns 19.99 percent of Indophil, making it the Australian firm’s biggest shareholder with two board seats.

Indophil’s main asset is a 37.5 percent stake in the Tampakan copper-gold project, which is the biggest to date in the Philippines. The project has been put on hold since South Cotabato barred openpit mining in mid-2010.

Brisbane-based Glencore Queensland Ltd, which holds another 13.3 percent of Indophil, expressed its willingness to support the buyout. Glencore Queensland is a subsidiary of Glencore Xtsrata plc, also a key owner of the Tampakan contract.

Philex is evaluating its work plan for the Padcal copper-gold mine in Benguet to squeeze more revenue until its end-oflife. The company’s existing long-term plan is no longer workable since an accidental waste spill two years ago.

Philex Mining to explore three new Padcal sites in 2015 Philex Mining Corp. will explore three more target sites within its Padcal mine area in Benguet by next year, company president Eulalio B. Austin Jr. told reporters on the sidelines of the Mining Philippines 2014 conference in Pasay City.

50 Philippine Resources

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According to Austin, the exploration program is part of the miner’s five-year plan, which is set to begin by next year after the Mines and Geosciences Bureau (MGB) lifted the suspension on the operations of the Padcal mine.

“There is no need for approvals. The guiding principle is that there is a Mineral Production Sharing Agreement that would last for 25 years,” he said.

The three target sites are adjacent to the mining area, Austin said, noting that the company already started exploration even during the suspension of the mine’s operations since the exploration permits are still valid.

“The Padcal tenement is 14,000 hectares.

We’re just mining 5% of the total tenement so there are still unexplored areas in the tenement,” Austin said.

Just like the existing mine, copper and gold are the target minerals at the new sites. “There are indications of copper and gold mineralization. We still don’t know if it is high grade,” he added.

Austin said that funding for the project is not yet finalized as it will depend on the results of the drilling in the area.

“We hope next year we will get some approval from the board to increase the (exploration) budget.”

The Padcal mine could also extend beyond 2020 if the price of gold hits $2,500 an ounce, compared to the current price of $1,230.

As for the company’s Silangan mine in Surigao del Norte, the Philex president said the pre-feasibility study showed that the project is viable and the definitive study is expected to conclude by the middle of 2015.

“We want to de-risk the project. We are finding out the realistic value of the project and what we get in return,” he said.

Villar firm Prime increases stake in Mindoro Resources

Mindoro Resources has announced that Prime Resources Holdings, Inc. (PRHI) has acquired almost 36 million additional shares, representing approximately 12.09% of Mindoro’s issued and outstanding common shares through a secondary trade in the market. Following completion of this acquisition, PRHI owns approximately 25.42% of Mindoro’s shares.

In addition to its direct investment in Mindoro, PRHI, a company owned by the family of former Senate President Manny Villar, holds a 68.42% interest in TVI Resource Development (Phils.) Inc. (TVIRD), which has options to earn 60% in Mindoro’s Agata and Pan de Azucar Projects.

Mindoro’s CEO Tony Climie says: “We believe this additional investment in Mindoro, combined with PRHI’s majority ownership of TVIRD, solidifies their position as a strategic partner and sends a strong message of PRHI’s belief in the value to be realized from its Mindoro investment and support for our projects.”

The securities were acquired in a single trade through the facilities of the TSX Venture Exchange at a price of Can$0.021 per share.

In a statement PRHI said it had acquired the shares for investment purposes and may acquire further shares of Mindoro or dispose of its holdings of shares, both as investment conditions warrant.

PRHI is a wholly-owned subsidiary of Prime Asset Ventures, Inc, a holding corporation of utilities engaged in various industries which include water distribution infrastructure, energy and power generation as well as retail distribution, cable and antennae television, and telecommunications.

Mindoro has a 75% interest and an option to acquire the remaining 25% in the Agata Nickel Project, Mindanao, and the Pan de Azucar Sulphur-Copper-Gold Project, Iloilo. TVIRD has the option to earn up to a 60% interest in these projects by meeting earn-in requirements.

Issue 4 2014

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Energy Briefs

PH courts oil, gas exploration players PH courting ExxonMobil, Turkish firm to invest in upstream oil, gas exploration The Department of Energy (DOE) is courting major oil players in the United States and Turkey to invest in the Philippines’ upstream oil and gas industry.

In a statement, DOE said it held exploratory talks with ExxonMobil Corp. and the Turkish Petroleum International Co. (TPIC).

US-based ExxonMobil is the world’s largest publicly traded international oil and gas company, while TPIC is a subsidiary of Turkish Petroleum Corp, Turkey’s national oil company.

ExxonMobil previously held a stake in a petroleum block in the Sulu Sea but withdrew from the contract in 2011 after it deemed resources in the area of “non-commercial quantities.”

The DOE touched base with the oil firms during two of its recently concluded international roadshows to promote the upcoming Philippine Energy Contracting Round 5 (PECR 5).

PECR 5 is the government’s public bidding round for oil and gas exploration and development projects.

The DOE is offering 11 petroleum blocks to interested investors with the largest located east of Palawan Island covering 576,000 hectares.

The roadshows for PECR 5 were held in the Resource Information Unit’s Good Oil Conference in Perth, Australia and the Association of American Petroleum Geologists’ International Conference and Exhibition in Istanbul, Turkey.

“This is an opportunity for the country to present to the international community its potentials in energy development and exploration… hopefully through exhibitions we can find prospective developers that can be our partner in achieving energy security in the nation and essentially convert interests to bids,” Energy Undersecretary Zenaida Y. Monsada said.

Continued on following page >

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Energy Briefs

< Continued from previous page Government to increase share of natural gas in PH energy mix The Philippines is increasing the share of natural gas in its energy mix to up to a third over the next 16 years, more than double an earlier target, by boosting investment promotion activities in building and operating strategic natural gas infrastructure, officials of the Department of Energy (DOE) said.

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mentioned about 30 to 35 percent,” Monsada said.

Monsada said the government was looking earlier at a 15 percent share in the fuel mix for natural gas and more than 60 percent for coal.

The Philippines is set to start using electricity from power plants fired by imported gas in 2015 when Australia-listed Energy World Corp Ltd opens its LNG

Numerous power players have already expressed interest in developing LNG terminals around the country. Pilipinas Shell Petroleum Corp., for instance, wants to build an LNG regasification terminal beside its refinery in Batangas with an estimated cost of $1 billion.

LNG is natural gas that has been converted into liquid for ease of storage or transport. Energy Secretary Carlos Jericho Petilla recently said his department has already drafted a fuel policy mix that incorporates the use of LNG and will be used to guide investors in natural gas facilities.

Lopez-led First Gen Corp., meanwhile, is developing up to 1,300 megawatts of power generation capacity fuelled by natural gas from its facility in Batangas.

Higher purchases from the Philippines would be welcome news for major LNG producers such as Chevron, ExxonMobil and Total, which are facing uncertainty about longer-term demand from the two top buyers of the fuel, Japan and South Korea.

Monsada said state-owned Philippine National Oil Company has signed an agreement with Brunei National Petroleum to undertake a feasibility study for a floating storage and regasification facility in southern Philippines.

The plan, if approved, may also mean lower coal imports for the Philippines, which buys mainly from Indonesia to fuel some of its power plants. hub in Pagbilao, Quezon.

“The Secretary of Energy (Petilla) has

52 Philippine Resources

She said the Philippine government must partner with the private sector in building infrastructure such as natural gas pipelines.

“Considering the huge investment required, we need partners in the development and exploration of our natural resources and infusion of the required capital investments,” Ayson said.

Energy Undersecretary Loreta Ayson, in a recent meeting on energy trade and investments focusing on liquefied natural gas (LNG) during the 11th APEC Ministerial Meeting in China, said the Philippines is continuously working to develop its own LNG industry.

“Because of our commitment to low carbon (emissions), natural gas will increase to more than 30 percent (of the mix),” Energy Undersecretary Zenaida Monsada told an industry forum.

and increasing the share of natural gas in the energy mix through intensified investment promotion activities in the construction and operation of strategic natural gas infrastructure projects such as pipelines and LNG terminals.”

For her part, Ayson said: “We are focusing our efforts in expanding green energy sources in the total energy supply of the country, one of which includes the establishment of an expanded natural gas use in different parts of the Philippines

Shell’s Philippine unit operates the country’s sole natural gas field, in Malampaya in the South China Sea, supplying three gas-fired power plants, including two owned by First Gen. The government expects the Malampaya field to run dry by 2023.

“The DOE considers LNG as a realistic option to support our power generaContinued on page 64 >

Energy Briefs

< Continued from page 62 tion,” Monsada said. “But it is clear we need some critical infrastructure, such as import terminals, power plants and pipelines.”

APEC declaration In the meeting Ayson attended, Asia Pacific Economic Cooperation (APEC) member countries highlighted the Beijing Declaration under the theme “Joining Hands Toward Sustainable Energy Development in the Asia-Pacific Region.”

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subscribing to the aspirational goal of “doubling the share of renewables in the APEC energy mix, including on the power generation, from 2010 levels by 2030,” she added.

San Miguel seeks profitable overseas energy deals to boost revenue

“It would also provide some diversification, and at least the focus would be on cash flow-generating companies,” LeeTan added.

The Philippines’ most diversified conglomerate, San Miguel Corp., wants to buy into profitable foreign energy firms to boost its revenue growth and further expand its portfolio, its president said.

San Miguel is the most indebted listed Philippine company, with total liabilities of 787.7 billion pesos ($17.8 billion) as of end-June against total assets of 1.2 trillion pesos.

The conglomerate, which started as a brewery in the late 1800s, has also been aggressively expanding away from its core food and drink business since 2008, and so far has spent $11.6 billion on acquisitions, Reuters data shows.

The Declaration emphasized the importance of cooperation among member economies of APEC in responding to the twin challenges of energy security and sustainable development. Underlying these challenges are the use of clean energy, facilitation of energy investment and trade and the promotion of energy efficiency, the DOE said.

San Miguel’s energy assets include stakes in the Philippines’ biggest utility, SMC Global Power Holdings Corp., and the country’s largest oil refining and marketing firm, Petron Corp.

APEC member countries agreed to strengthen mechanisms to improve interconnectivity arrangements in the region by promoting infrastructure development that include trans-border oil and gas networks, power grids, LNG terminals, smart grids and distributed energy systems.

“Acknowledging the emergence of LNG in the global and regional fuel mix, the ministers instructed the Energy Working Group to launch the APEC LNG Trade Facilitation Initiative which will encourage dialogue, develop public-private partnerships and support LNG market-based pricing mechanisms to boost the creation of robust APEC natural gas markets,” the DOE added.

Ayson said member economies reaffirmed the importance of deploying and applying highly efficient technologies in coal-fired power plants and the pursuit of scientific solutions to mitigate environmental impacts of non-conventional oil and gas development.

The use of clean energy remains a priority among APEC member economies 54 Philippine Resources

cure its own profit growth and alleviate investors’ concerns about its debt, said April Lee-Tan, vice President at COL Financial Group Inc. in Manila.

In 2011, Petron acquired Esso Malaysia and its subsidiaries for $610 million. This investment, along with packing assets across Southeast Asia and Hong Kong-based San Miguel Brewing International, comprise the group’s overseas portfolio.

The 124-year-old conglomerate is also interested in buying into a US or Japanese airline, San Miguel President and Chief Operating Officer Ramon Ang said, a few days after the company sold its stake in national carrier Philippine Airlines.

“Oil and gas is our priority,” Ang told reporters. “A good investment is a company with stable cash flow and consistent profit.”

He declined to give further details.

Acquiring established companies overseas -- especially energy firms with stable cash returns -- will help San Miguel se-

Funding any further foreign acquisitions may require San Miguel to sell some of its assets to generate cash, as taking on more debt would be costly, said Jose Vistan, research director at AB Capital Securities Inc. in Manila.

Asked about financing, Ang said San Miguel had “extra funds here and there” for acquisitions.

Its cash and cash equivalents stood at 199.8 billion pesos as of end-June, according to its latest financial statement, up 4.3 percent from 191.6 billion pesos at end-2013. The company has also sold to tycoon Lucio Tan its stake in Philippine Airlines, which, along with the group’s advances, was valued at $1.3 billion.

Energy Briefs

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RLB Philippines marks 25th Anniversary

R

ider Levett Bucknall Philippines, Inc., the biggest consultancy practice of Quantity Surveying in the country, celebrated its 25th anniversary in the construction industry. The big event was held at The Acropolis Clubhouse in Bagumbayan, Quezon City and was attended by more than 200 staff and guests.

The event started with the processional of RLB’s managers and directors followed by a welcoming remark from Senior Vice President, Isaganis D. Samonte.

RLB’s Chairman and President, Corazon C. Ballard stunned the crowd with her rendition of the song “The Journey” and heartfelt anniversary message.

“Believe it or not, I received an offer last week (from an international engineering group), three times bigger than my cur-

rent salary. And I sat back and thought about it. Why am I not getting this money? When I came out of the general office, I said, OK, this is not worth it. I will stay with all of you guys because you are there and I think and hope you need me in this company.”

Mrs. Ballard also mentioned the company’s plans for the Cebu and Davao offices and how a “total change for the future” is going to affect the organization. “RLB Manila is now embarking for a total change for the future. Once we are ready to position ourselves, we’ll let you (staff) all know our next move.

Succession planning for RLB is in place,” she added. The Chairman and President also thanked all the staff for their unending support and contributions to the company.

The event ended with the giving of

awards and recognition to selected employees, dance and song numbers, and a closing remark from Business Development Director, Silvano Halago.

RLB’s Chairman and President, Corazon Ballard.

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Company News

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Outotec opens Manila office to strengthen presence in PH

L

eading global technology and services firm Outotec is bullish of its operations in the Philippines as it plans to tap the emerging sectors of energy and water and expand its reach in the mining sector.

also support the drive for Outotec’s expansion into Asia Pacific.

region, in the presence of customers, ministries and industry associations.

The local subsidiary of a Finish company , Outotec believes the minerals, metals, energy and water industries were key components of the country’s industrial sector and the development of these “We foresee a large potential in the sectors was part of the government’s Philippines especially because of the economic growth plan and presents a shortage of energy which is quite long-term opportunity for the group. costly,” Outotec country manager Rudi Rautenbach told reporters during the “Outotec is also well placed with opening of the company’s Manila office sustainable technology to support the on September 16 at the Bonifacio Global emerging sectors in the Philippines City in Taguig City. especially in the industrial water treatment and biomass energy,” the company said in Located at the Eco Tower at the corner of a statement.

9th Avenue and 32nd Street at the Global City, Outotec’s Manila office will help The office is also part of the company’s the company better serve its customers expansion in the Asia Pacific (APAC) and support its business in the growing region, and was inaugurated by Stuart resources industry. The new office will Sneyd, President of Outotec’s APAC

The Philippines is ranked as the fifth most mineralized country in the world and has some of the world’s largest resources of gold, copper and nickel, Outotec said.

Approximately 30 percent of the country’s total land area is believed to contain important metallic mineral deposits.

“Outotec is committed to helping the Philippines develop its world-class resource industry in a sustainable way. The new office in Manila will focus on serving Outotec’s customers, driving sales in the growing market, and supporting project implementation in the Philippines,” Sneyd said.

Outotec has sold technologies for copper smelting and concentrating in the Philippines since the 1960s, particularly to the Philippine Associated Smelting and Refining Corporation (PASAR), which runs the country’s only copper processing plant in Leyte.

“Through our industry-leading technologies we want to make a strong contribution to sustainable development of the Philippines mining and metallurgical industry.

“Apart from the mining and metals sector, this market also offers attractive growth opportunities for Outotec in industrial water treatment and renewable energy sectors,” Sneyd added.

Excited about the opening of the new Outotec office on Manila are: L-R: Kalle Harrki- EVP- President of Minerals Processing; Stuart Sneyd-Executive Vice President, APAC; Jason King- Market Area Head, South East Asia Pacific; Rudolf Rautenbach- Country Manager, Philippines; and Peter CunninghamHead of Country, Philippines.

56 Philippine Resources

“With the opening of our Manila office, we will take our capability to deliver sustainable technology solutions and local customer support services to a whole new level in the Philippines.”

Issue 4 2014

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Company News

Sandvik Tamrock Philippines Boldly Pushes For Service Contracts

By Maria Paula Tolentino

S

andvik wants its customers to stick to their core competency -- mining. We want them to outsource their equipment maintenance to us, because, who else would know how to properly maintain a Sandvik machine better than a Sandvik Technician? George Yap III, Sandvik Tamrock Philippines Territory Manager.

Founded in Sweden 152 years ago on an innovation in mass-producing steel, Sandvik has come a long way, developing from a small company into a hightech leader, with presence in over 130 countries.

In 1997, Sandvik diversified into manufacturing specialized equipment for the mining and construction industries: drill jumbos, underground loaders and trucks, surface drills, and crushing equipment, to name a few.

Today, responding to the evolving demands of mining customers for outsourced maintenance expertise to keep their Sandvik equipment running, Sandvik Philippines offers its customers various forms of service contracts customized according to their needs.

From a simple Service Technician Visit Agreement to a full-blown Equipment Reliability Contract with Mechanical Availability Guarantees, Sandvik provides the full spectrum of support services for

George Yap III, Sandvik Tamrock Philippines Territory Manager. its customers. Philippine Resources Journal discusses more with Sandvik Tamrock Philippines Territory Manager, George Yap III: PRJ: How long has Sandvik been in the business of resource development?

Continued on following page >

Philippine Resources 57

Company News

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< Continued from previous page

sales, and business development functions.

adapting to this?

GY: Sandvik is a company that has been in the Philippines for 16 years now. The present structure and Philippine office consists of three divisions, namely: Sandvik Mining, Sandvik Construction and Sandvik Coromant. Globally, Sandvik is organized into five Business Areas: Sandvik Mining, Sandvik Machining Solutions, Sandvik Materials Technology, Sandvik Construction, and Sandvik Venture.

PRJ: Was Sandvik able to participate in Mining Philippines 2014? What did you think of the recent exhibit?

GY: Because of the uncertainty in Philippine mining policy, mining companies are hesitant to invest in equipment. Companies, naturally, will adapt by repairing their old equipment and investing more in operating expenses.

Sandvik has adapted by addressing that need and focusing on after market parts and service.

GY: I was there but Sandvik was not an exhibitor. With regard to the recent Mining Philippines, the exhibit gets smaller and smaller every year, unfortunately.

PRJ: In relation, do you think the industry has a potential ‘Champion’?

Sandvik has been in existence for 150 years globally. The local subsidiary, Sandvik Tamrock Philippines, has been supplying mining equipment such as underground loaders, trucks, and drills to mining companies for more than 14 years.

GY: Ask any politician and he or she would say what everybody wants to hear.

Personally, I don’t see anyone in this country who can be that ‘Champion’.

PRJ: Can you tell us more about your role?

I don’t think I need to emphasize any further what our colleagues in the industry are already saying: mining creates jobs in the most remote and poorest areas.

GY: I run the Philippine subsidiary of Sandvik. We have 60 people in the mining business area. Our office staff, including myself, account for eleven. However, the majority of our personnel is located in our dedicated service contract sites, of which we have three: Masbate, APEX (Compostela Valley), and Didipio (OceanaGold). As the Territory Manager, I wear many hats. I have administrative,

If the government is creating policy that stifles the industry, then it is depriving people the opportunity for employment and livelihood. Also, with the multiplier effect that mining generates, so much more than just direct employment numbers is lost.

PRJ: With that said, how is Sandvik

This strategy has significantly increased our aftermarket sales and has also grown our service business from nearly nonexistent in 2012 to about 500% growth, all because of our service contracts.

Whether we like it or not, globally, the industry is down. During the boom years, the company profited more on equipment. But for now, the majority of our business comes from parts and service. With margins becoming tight, mining companies are trying to minimize cost. So instead of selling or disposing of their equipment, they would rather have them maintained. This is where Sandvik comes in.

I’d rather not dwell on the present mining climate, but over-all, business has been good for Sandvik Philippines. Existing mining projects are still operating while some projects are even increasing their capacity. It is not as good as we want it to be, but it is not as bad as it is being experienced globally.

PRJ: Please tell us more about these service contracts GY: When we sell a piece of equipment, the customer has the option of either (1) maintaining the equipment themselves or (2) outsourcing the maintenance to Sandvik, either in part or in full. If a customer opts for the second option, we can provide them with Technical Support to augment their existing maintenance workforce or completely run their Equipment Maintenance Program for them. In other words, we can be very flexible with our service contracts offering.

A Sandvik rig in action at Masbate.

58 Philippine Resources

Continued on page 60 >

Company News

< Continued from page 58 In one mine site for example, we have 13 people including 1 expat Project Manager maintaining four Sandvik DP1500i Surface Drills. We manage and provide all the maintenance parts and labor for the Sandvik drills; the customer just pays Sandvik a fixed monthly management fee that covers the salaries of our on-site staff, plus a variable cost per hour rate which pays for the spare parts that go into the machine.

There is no need to issue individual purchase orders for each spare part or component we supply; the customer simply pays a monthly invoice. The savings and convenience on the customer’s part in terms of procurement and administration is an added bonus. By taking care of their maintenance for them, we let the customer focus on their core business – mining!

PRJ: Isn’t the training of the end-user included in the contract?

GY: Yes. We deploy Sandvik accredited operator trainers before we hand over the equipment to the customer. The

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training comes free with the purchase of the machine. If we have to charge the customer for additional training, it won’t come cheap since we lack the skill locally for expert drillers. Our operator trainers have to come from either Australia or Indonesia.

DD422i. I won’t bore you with the specs but if you wish to know more about these products, visit our website www.mining. sandvik.com

PRJ: Based from Sandvik’s experience in resource development, what countries have been profitable? What parts of the Philippines has Sandvik served?

GY: For Sandvik, 2012 was our record year where we sold around 800M. During 2013, however, we felt a slight dip but it was relatively mild in comparison to other sales areas, globally.

GY: For abroad, we have South Africa and Australia. Locally though, and based from our roster of clients, Philex being the biggest – Padcal, Benguet. We also have OceanaGold’s Didipio project, Surigao for the Silangan project (which is an exploration project as of now), Apex in Compostela Valley, Filminera in Masbate, and Carmen Copper in Cebu.

PRJ: What new equipment is now available from Sandvik?

GY: We have a new surface drill, the Pantera which was launched in 2013. We also have forthcoming launches of our 63-ton underground truck, the TH663, and the next-generation face drill, the

PRJ: How is Sandvik’s sales performance recently?

PRJ: Can you tell us more about the safety culture of Sandvik GY: Globally, Sandvik takes pride in its safety culture. Every company presentation begins with a slide on safety.

Whenever we have first-time guests in the office, we orient them on fire safety and emergency exits before we talk business. On our service contract sites, we are very particular about job hazard analysis, safe work procedures, and mandatory use of Personal Protective Equipment. As an example, if you see our bit grinder operator in Masbate he looks as if he works in a haz-mat facility: fully clothed in over-alls with a hood, dust mask, ear muffs, gloves, goggles. There’s even an eyewash area two steps away.

Whenever we have our monthly webinar, the first topic of discussion is our safety performance.

PRJ: You mentioned Fair Play and Passion to Win as core values.

GY: Sandvik has zero tolerance for corruption and bribery. Everyone in the company is required to undertake an e-learning webinar which culminates in a written exam that everyone is required to pass, which eventually leads to certification indicating that you have gone through the program, and are held accountable for your actions, if you break policy. We have no qualms about losing business if it means we have to play dirty.

We are also very passionate about what we do. We are passionate about serving our customers. Anywhere you go, if there

Sandvik’s highly skilled Masbate team.

60 Philippine Resources

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Monte Cristo integrated resort < Continued from opposite page is an event, you will see that people from Sandvik are proud to wear their uniforms and the colors they represent. On site, you can immediately spot team members from Sandvik in their unmistakable orange hi-visibility uniforms.

PRJ: Is this the strength of Sandvik?

GY: You can say that. Sandvik was founded on a breakthrough and innovation in manufacturing high-strength steel 152 years ago. Innovation is in our DNA to this day as one of our four core values, the other three being: Customer Focus, Fair Play, and Passion to Win. The company strives to live out these core values in all that we do, in order to attain our vision and rallying cry: “We set the Industry Standard.”

PRJ: In what sense is Sandvik globally competitive compared to other brands?

GY: Our R&D and innovation gives us immense advantage.

Remember: Sandvik was founded on mass-producing speciality steel. We make sure that the products we put out in the market are reliable, and are engineered all throughout since these are specialized equipment. So the tolerances and precision that goes into engineering and manufacturing, the type of specialized production processes we employ, those are Sandvik’s strength.

Our drills, for example, they operate 24/7 in the harshest conditions, and they do the job. They are built tough and stand out, especially in underground mining. Even more so, if you take care of the equipment, they will serve you well for many years.

PRJ: If the products speak for themselves, why push for service contracts?

GY: Sandvik wants its customers to focus on their core competency, -- mining. We want them to outsource their equipment maintenance to us, because, who else would know how to properly maintain a Sandvik machine better than a Sandvik technician?

It is so hard for our customers to setup their maintenance organization especially for the drills. For open pit mining, the drill is one of the most neglected pieces of equipment, but it shouldn’t be. The drill is the first production unit. Without it, you can’t dig, load and haul.

We want our customers to give us the job of maintaining their Sandvik equipment because we know how to do it. And we take pride in developing our own people, since we send them to attend highly specialized training here and abroad.

Our products, as good, reliable and sturdy as they are, perform better if you let us professionals and specialists take care of them for you. Focus on mining and processing, and leave the maintenance of Sandvik equipment in our capable hands.

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Philippine Resources 61

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Sustainability a key plank for Camotes development

S

ustainability, Going Green, LEED and all the rest are the buzzwords in developments and construction today. In this Issue of Philippine Resources we take a look at the sustainability plan of Monte Cristo to see why some believe it is one of the best.

Monte Cristoâ&#x20AC;&#x2122;s Integrated Resort on Camotes has received great reviews and is planning to go after green awards. How is it different from other resorts and developers?

The first thing is we are very serious about it. We will be a standard for others to follow and we will only engage in sustainable practices in all areas.

Can you give specific examples?

Sure, take water for example. Drinking water, rain water, sewage water and all the rest we have to have answers for.

They all must be collected, treated and used properly.

On our resort in Camotes Island, Philippines we are putting the first waste water treatment facility. The other resorts used septic tanks which can leak and the sludge must be processed

at some point. It allows us to use the grey water for non consumable use thus limiting the amount of water we need.

Another area is trees. We either relocate or plant the same number of trees we had to remove. Water, trees and pollution are the first 3 areas we look at. Our plan involves economic development, environmental protection, human capital and community involvement.

Okay but waste water treatments and planting trees in not really anything new. Why is your plan the best?

It is not because of any specific thing we do. It is because we take a holistic approach to sustainability and environmental protection. It is at the core of everything we build. I think for most developers costs are the core. In our case that really is not it.

We have an environment manager to oversea our plan and is part of the resort team once in operation. They give training to staff and the community on sustainability. I donâ&#x20AC;&#x2122;t think most resorts or hotels do that especially with the local community.

So community involvement is a part of your sustainability plan?

Absolutely and it makes good business sense. It is not just about being good neighbors but helping to empower the local community to be part of our success. This includes local farmers and fishers who can sell their products to us. We work with the local high schools and colleges with an internship program for 4th year students. We have many community outreach programs.

How about environment?

protecting

the

Our building is based on LEED-ND (Lead in Energy and Environmental Design for Neighborhood Development) by the USGBC for a start. We then incorporated a variety of other improvements based on several green recommendations. We do an environmental impact study and all efforts are made and continue to be managed to prevent the pollution of air, land and other nature resources. It is about managing relationships that exist within and between natural systems and human systems.

Your company claims to have the best parking lots and they are the most sustainable on the planet.

Why is this?

I think others said that (smiles) but this actually gets into why we are different.

I mean a parking lot is a parking lot right? We do not think so. The design of the parking lot must be to increase the pedestrian orientation and minimize the adverse environmental effects. I can tell you that a tremendous amount of research goes into this on our part.

The Monte Cristo development at Camotes aims to fit in with its beautiful surroundings.

62 Philippine Resources

We use a variety of green construction initiatives on this like pervious concrete which allows rainwater to pass through. So Continued on opposite page >

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Phil Resources onboard for ANMSEC

P

hilippine Resources has again signed up to be a media partner for the Annual National Mine Safety and Environment Conference (ANMSEC) scheduled from November 11 to 14 at Camp John Hay in Baguio City.

Now on its 61st year, the ANMSEC is organized by the Philippine Mine Safety and Environment Association (PMSEA), an organization of mining companies, < Continued from opposite page

in every single detail from trees to parking lots we need to be sustainable and ask how we can do it better. This is our secret.

What about alternative energy like solar energy?

This has been a real challenge for us because at first we thought solar lighting, wind power and all the rest would be easy to incorporate in our plan. It is not.

The challenge is finding the right products and systems that actually work over the long term. We use solar and alternative energy but want to use more if we can find the right ones.

quarries, cement plants, suppliers, service contractors, professional organizations and government agencies.

PMSEA advocates a national campaign against occupational safety, health and environmental hazards of mining and its related operations.

Signing the memorandum of agreement for the media partnership were PMSEA President Louie Sarmiento and Philippine Why is human capital or your employee’s part of the sustainability plan?

Human capital is a core ethic of sustainability. We work to create a culture that people fill empowered to work in.

I am not just talking about jobs here.

We work to nourish, sustain and develop our people. We do this through proper training, providing resources and education opportunities and this has a direct impact on the community and society as a whole.

We train them not just for a specific job but in sustainability and environmental protection. When they see we take it

Resource Journal sales and marketing executive Cecilia Pamular.

In last year’s ANMSEC, 150 companies participated as exhibitors, consisting of mining companies, suppliers and distributors, service contractors and PMSEA partners. Over 1,200 visitors also came to the Mining Exhibit during the conference.

Continued on following page > serious they do too.

In the hospitality industry a resort or hotel maybe the only real contact visitors have with the location so our people become not just representative of our resorts but ambassadors of the community and their country.

Where did the ideas come from for your companies plan?

Over two years of research and more research, talking with consultants, looking at what everyone else was doing or not doing, who had the best sustainability and why and how we could do better and at the end of the day having a holistic plan that works.

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Cutting Edge Mining Technology Forum Opens at Enderun College

By Maria Paula Tolentino

O

n September 12, 2014, the first mining services technologies forum called the Cutting Edge Series opened at Enderun College Tent, 110 Campus Avenue, Mckinley Hill, Fort Bonifacio, Taguig City.

The Cutting Edge Series featured the latest in technological innovation in the mining and mining services industry, from not only the Philippines, but the whole of South East Asia.

Spearheaded by the Explorers & Investors Philippine Consultancy Inc., among the attendees were CEO’s, COO’s and CFO’s from the mining industry, together with their Mine Managers, Engineers, Geologists, Logistic Managers, Production Managers, HSE Managers, Heavy Equipment Suppliers, Service Industry Suppliers and Training Coordinators.

The international presenters in the Cutting Edge Series were SAFEmine, Vermeer, Thoroughtec Simulation and Leica Geosystems.

With diverse technological backgrounds, complemented with top of the line products and services to the mining industry, the Cutting Edge Series was the perfect opportunity to present new mining technologies and learn how to best apply these innovations in the field of mining.

The event was also open to individuals and companies interested to know how to best gauge the mining industry in terms of optimizing production, safety and returns.

This year’s Cutting Edge Series was supported by the Philippine Mining Luncheon and endorsed by Chamber of Mines of the Philippines, PMEA, PMSEA, Pusong Minero. A second event is expected to run in the 1st quarter of 2015.

< Continued from previous page Also expected to be held in conjunction with the ANMSEC is the National Community Relations Officers’ Conference and the National Mine Safety and Environment Awards Night and Testimonial Dinner, which is attended by more than 1,000 personalities.

The Conference last year also featured a Sustainable Livelihood Program Exhibit that showcased the products of the livelihood programs of the Sustainable Development Management Plan (SDMP) of nine mining companies.

Also, one of PMSEA’s projects is the Safety Networking Action Program (SNAP), launched in September 2003. The program provides an integral approach to prevention, preparedness and emergency response to natural and man-made emergencies in support to the national government’s disaster and coordination program.

David Stewart of Safe Mine speaking at the Cutting Edge Series 2014.

64 Philippine Resources

The project has been put into action several times during recent emergencies such as landslides and typhoons.

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PCIEERD spearheads 1st Mining and Minerals Forum, introduces robust programs

By Engr. Katrina Batang-Landicho, Senior Science Research Specialist Mining Sector, Philippine Council for Industry, Energy and Emerging Technology Research and Development (PCIEERD).

P

CIEERD (Philippine Council for Industry, Energy and Emerging Technology Research and Development), the sectoral planning council of the DOST (Department of Science and Technology), together with Academes from various institutions initiated the 1st Mining Forum with

the theme “Mining and Minerals: What’s Next?” on October 3, 2014 at the Audio-Visual room of the National Engineering Center (NEC), University of the Philippines, Diliman Quezon City.

DOST Secretary, Mario G. Montejo, opened the forum by discussing the approach towards technology reliance based on the mining and minerals roadmap.

The Secretary stressed his points in establishing the linkages from the research to the end user. He suggested the private sector and the government

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should act as the catalyst by providing support to achieve a self-reliant technology.

PCIEERD Executive Director, Dr. Rowena Cristina L. Guevara, presented the PCIEERD Mining and Minerals R&D Roadmap (2012-2016) and the five programs that emerged from the roadmap.

The roadmap which was based on the Philippine Development Plan (PDP) 2011-2016, Executive Order 79 and DOST Outcome, focused on the Continued on page 66 >

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The programs that emerged from this roadmap are:

following: (1) Geological Assessment of Untapped Minerals; (2) Value-Adding of Metallic Minerals (Gold, Copper, Nickel, Iron and Chromite); (3) Capability Building for Researchers and Research Institutions; (4) Assistance to Small-scale Miners; (5) Environmental Conservation, Protection and Rehabilitation; and (6) Policy Recommendations.

(1) S&T Program for Responsible Mining in Mindanao; (2) Mineral Extraction with Responsibility for Sustainability (MINERS); (3) Program for Rehabilitation and Restoration of Mined-Out Areas through Phyotechnologies; (4) Chemical Sensor for Mine Site Monitoring and (5) Trace and Rare Earth Elements Geochemistry of Selected PorphyryEpithermal Cu-Au Deposits in the Philippines. All the programs/projects

are currently funded by the DOST and PCIEERD and are expected to be completed in 2015 and 2016.

Dr. Guevara also emphasized the need to continuously support these programs.

The DOST is prioritizing its research on value-adding of minerals such as gold, copper, iron, nickel and chromite.

Short term training To support this priority, the PCIEERD is willing to send researchers for shortterm training on extraction, beneficiation and value-adding of minerals abroad through its program titled “Bridging the Human Resource Competency Gaps in Support of the National R&D Agenda”.

The Implementing Agencies such as the University of the Philippines, Diliman (UPD), Ateneo de Manila University (AdMU), Caraga State University (CarSU) and Mindanao State University (MUST) presented the programs and projects during the forum while a short visit at the UPD-DMMME Gold-Copper Processing Pilot Plant concluded the event.

Notable attendees Among the notable attendees of the Forum were Chamber of Mines Philippines (COMP) Chairman Artemio Disini, Philippine Mining & Exploration Association (PMEA) President Joey N.R. Ayson, representatives from Philex Mining Corporation, Philippine Mine Safety and Environment Association (PMSEA) and Small-Scale Miners (SSM).

For more information about the this story and PCIEERD’s ongoing programs, get in touch with them at pcieerd@ dost.gov.ph, or visit their Facebook [facebook.com/DOST.PCIEERD] and Twitter account [@DOST_PCIEERD].

Philippine Resources was on hand to cover the 1st Mining Forum at t University of the Philippines, Diliman Quezon City.

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Event News

Mining Conference Gives Overview of Current Industry

By Maria Paula Tolentino

M

ining Philippines 2014, the latest staging of one of the key annual resource events in the Philippines, organised by the Chamber of Mines of the Philippines (COMP) in association with the ASEAN Federation of Mining Associations (AFMA), was recently held at Sofitel Philippine Plaza.

The conference welcomed political personalities such as His Excellency, Vice President of the Philippines Jejomar Binay, Senators Grace Poe and Allan Peter Cayetano together with DENR Secretary Ramon J.P. Paje.

With the theme, “Philippine Mining: The Next 25 years” , the Conference presentations focused on: (1) the fiscal regime, (2) the challenges of globalisation and (3) regional integration in relation to the minerals sector, industry forecast, and (4) trends in social development.

Senator Grace Poe and Philip Romualdez, president of the Chamber of Mines of the Philippines, on stage at Mining Philippines.

The Philippines is the world’s 5th most mineralized country with the thirdlargest deposit of gold, fourth-largest of copper, fifth of nickel and sixth of chromite(1). The estimated value of the nation’smineral resources is estimated to be around one trillion US dollars, but this source of wealth remains largely untapped.

At the end of 2013, only three per cent

Senator Allan Cayetano speaks at the recent Minining Philippines conference.

of the Philippines, around 958 thousand hectares of land, were covered by 712 mining tenements (2) . There are approximately 39 mines operating in the Philippines and at least 20 companies involved in exploration and construction projects (Source: MGB).

The primary mineral exports are nickel sulphides and nickel ore (43 per cent), gold (33 per cent) and copper (21 per cent). Silver, zinc and chromite account for three per cent of exports (3).

Despite the recent natural disasters, the Philippine economy grew by 7.2% in 2013, the second fastest growing economy in Asia after China. During the first quarter of 2014, the economy registered a 5.7% growth and a 6.3% growth is projected for the Philippines for the calendar year 2014. This growth is fuelled by robust domestic consumption, an improvement in exports, acceleration in private investment, and government spending.

Also, the Philippines has been accepted recently as a candidate member to the Extractive Industries Transparency Initiativ e (EITI) and is likely to be a fullContinued on page 68 > Philippine Resources 67

Philippine Resources part of the community

Issue 4 2014

www.philippine-resources.com

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SMEC 17 Surtech 57 Weir Minerals 68 Philippine Resources

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Philippine Resources was a very popular read for attendees of Mining Philippines. Above, Consulting Publisher Greg Brimble shares some of the magazineâ&#x20AC;&#x2122;s insightful information. < Continued from previous page

Sources:

fledged EITI member by 2015.

(1)Philippines Department of the Environment and Natural Resources

Attended by executives and managers from the mining industry, the conference also showcased an exhibition presenting mining equipment and technologies that was attended by mining companies, suppliers and distributors of mining equipment, technologies and services in the market.

(2) Mines and Geosciences Bureau (MGB), November 2013 (3) Manila Standard, 31 December 2013 (4) Austrade.gov.au