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Raissa Robles

Manila's recent mining forum, which reaffirmed pledges for US$2.95 billion worth of  industry-related projects, has put the Philippines back on the foreign investor map.

Whether it stays there depends on the government's political will, fiscal and political stability, capacity to harness popular support for mining and  curb corrupt practices, as well as protect investors from internal threats, participants say.

With such sizeable pledges, the cash-starved government of President Gloria Macapagal-Arroyo has gone into overdrive to make mining the keystone for solving its fiscal crisis and  lifting 57 million of its 82 million people  out of poverty.

However, turning mining into the nation's engine of growth  will take much  effort and its monetary benefits might be felt only near the end of Mrs Arroyo's six-year term, risk consultant Peter Wallace said.

'We'll see tens of millions of dollars coming in, maybe even a few hundred million,' he said.

'But the real billions that people talk about, that will come but that's five years down the road.'

It takes time to explore and develop a mine. Ask John Hills, managing director of Pelican Resources, a Canadian firm listed on the Toronto and Frankfurt stock exchanges.

A geologist  for more than 30 years, he has spent eight years and at least US$2.5 million looking for gold in Batangas, south of Manila, and in the southern province of Surigao.

He plans to  spend another US$2.5 million in the next 18 months.

With the Archangel Gold Project in Batangas, 'we hope to be approaching a development decision within two or three years', he said. 'We're regarded as a much more favourable area for investment now because of the Supreme Court decision allowing 100 per cent foreign participation. Also, the resource market has recovered, so it's much easier for a small company such as ours to invest.'

The Archangel  project is among the 37 exploration schemes being nursed by the Arroyo government.

She has made a separate list of her 'flagship projects' - 23 ventures by local mining firms scouting for foreign partners. She will assign 'account officers' to each of them.

Chinese mining executives have expressed interest in some of these ventures.

Chen Hao-ran, chairman of the China Chamber of Commerce of Metals, Minerals and Chemicals Importers and Exporters signed a co-operation agreement with Philip Romualdez, Chamber of Mines president, on sharing information and expertise, and settling trade disputes.

Mr Romualdez said the Chinese were keen on investing in at least US$1.3 billion worth of mining-related projects.

The state-owned China Metallurgical Construction (Group) Corp (MCC)  wanted to invest US$100 million, and another firm in non-ferrous metals, US$200 million, he said.

Interestingly, all the Chinese mining executives told the South China Morning Post they preferred  a local partner  to  100 per cent ownership.

MCC vice-president Wang Yong-guang explained: 'If it's abroad, we must have a sense of controlling the risk. We must find some local partners familiar with local government and policy, the local culture and others.'

Last month, MCC signed a memorandum of understanding with the government and the Chamber of Mines for the purpose of 'identifying possible projects'.

Mr Wang said they were looking at 'maybe copper, nickel, gold' extraction.

Another firm on the prowl for local partners is Gold Mountains (HK) International Mining, a fully owned Hong Kong-listed subsidiary of Zujin Mining Group.

Its managing director, Kevin Li, said he could not say how much or what they might be acquiring since all the information he had gathered during the forum was still 'subject to review'. He admitted that security was part of the review.  Coinciding with the forum, Communist Party of the Philippines spokesman Gregorio Rosal  released a statement saying they would 'punish' foreign mining firms 'who plunder and ravage the environment and our mineral resources'.

Its leadership believes China has veered away from true communism.

The centerpiece of Chinese investment could well be the rehabilitation of the Philnico refinery on Nonoc island in southern Philippines which was shuttered in 1986 due to technical problems.

The country's lone nickel refinery would be retrofitted to use the high-pressure acid leach  system, a more environment-friendly process costing US$1 billion.

In November last year, even before the court had fully opened up mining to foreigners, Jinchuan Nonferrous Metals Corp, China's largest mining and refining firm for nickel, copper and platinum, and top steelmaker Shanghai Baosteel Group Corp, had conducted due diligence on Nonoc.

Negotiations with Jinchuan were at 'an advanced stage' and other investors had shown interest, Philnico chairman Evaristo Narvaez Jr said.



Philippines hopes to strike gold with foreign partners