* This is my article in Mining Week yesterday.
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The continuing policy instability in the mining industry
has one clear result, the continued decline in mining output, both metallic and
non-metallic.
The National Statistical Coordination Board (NSCB)
released this week the 2nd Quarter 2013 macroeconomic data. The economy’s
gross domestic product (GDP) was able to grow 7.7 percent in 2nd Qtr
2013 compared to its year ago level. The main contributors to such high growth in
the expenditures and demand side were investments or capital formation, public
and private, followed by government consumption, then private household
consumption.
By industrial origin, the main contributors to high GDP growth
were construction and manufacturing, followed by financial intermediation and
real estate. And the sectors that suffered output contraction were agriculture
and mining, with growth rates of -1.1 percent and -2.7 percent respectively, in
2nd Qtr 2013.
The NSCB data also shows sectoral breakdown of output.
For mining, current prices of metallic mining output showed another two-digit
percentage decline. From -16.8 percent in the 1st half of 2011-2012,
to -13.4 percent in the 1st half of 2012-2013. Contraction was prominent
in gold, nickel, other metallic and non-metallic mining.
The main contributors to an increase or decrease of output
are (a) quantity output measured in metric tons, and (b) value of output measured
in pesos, which is partly a result of currency appreciation or depreciation of
the importing country of our raw mining products. Thus. it is possible that
quantity output has remained the same or even slightly increased, but their
peso value once exported has declined due to the peso appreciation compared to
the US$, Japanese Yen, Chinese Yuan, the Euro, and other major global
currencies.
Mining output in constant prices, ie, the effect of
inflation has been removed, still showed output contraction, -2.4 percent in
the 1st half 2013 compared to their year ago output. The high output
growth of chromium and copper mining was negated by high output contraction by
other metallic and non-metallic mining.
Mining is a huge job creator in the provinces and rural
barangays. And aside from direct job creation, taxes and fees paid to the
national and local governments, large-scale mining also provides various direct
social and economic services to the employees and residents of the mining
permit areas.
The continuing policy instability in the mining sector are
in the form of (a) proposed higher taxation, (b) occasional mining moratorium, and (c) reversal
by some local governments of a mining permit given by the EMB-DENR.
Such policy instability if not outright contradictions are not good. They contribute
to more business uncertainty and hence, discourages both existing and potential
players, especially from big and responsible mining companies from the west.
Government should focus on promulgating the rule of law. Of
ensuring that mining, environmental and taxation laws and regulations are
strictly implemented and followed by both large and small-scale mining, by both
local and multinational companies. Enforcing the laws strictly only to large
scale mining while allowing small scale mining to get away with certain
violations of mining, environmental and taxation laws is both wrong and unfair.
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See also:
Mining 28: Markets, Government and Rule of Law, July 31, 2013
Mining 29: On Open Pit Extraction, Tampakan and SDMP, August 06, 2013
Mining 30: Some Conceptual Considerations in Mining Tax, August 15, 2013
Mining 31: Prof. Winnie Monsod's Faulty Tax Proposal, August 22, 2013
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