Editor’s note: On May 4, Regina Lopez was ousted from her position as Department of Environment and Natural Resources secretary. She had held the role for 10 months, but had not been confirmed. The country’s Chamber of Mines has said it will try to undo the measures she put in place once a new person has taken on the role.
The Philippines is the world’s top producer of nickel, but that could change if the country continues to place restrictions on mining companies.
The country’s mining sector has been in turmoil since February, when Regina Lopez, acting Department of Environment and Natural Resources secretary, announced plans to close the operations of over half the 41 mining companies in the country. Lopez, a former environmental activist, also suspended work at several mines, and soon after canceled 75 contracts to develop new mines.
Last week, Lopez again made waves, this time by promising to issue an order banning open-pit mines. She said it would take effect immediately, but noted that it would not apply to existing mines. Currently there are 14 open-pit mines in the country, 10 of which are abandoned.
“Each open pit is a financial liability for government for life,” Reuters quotes Lopez as saying in a media briefing. “It kills the economic potential of the place.” Lopez has cited records showing that most of the tailings spills in the country have occurred at open-pit mines.
Lopez has said she wants to halve nickel production in the Philippines by 50 percent — that would equate to an 8- to 10-percent drop in global supply.
News of the open-pit ban comes after the country’s largest nickel producer, Nickel Asia, announced a 47-percent year-on-year increase in the value of its shipments during the first quarter of 2017. The company says the increase came on the back of higher nickel ore prices and a weaker exchange rate.
Nickel Asia has two mines, Rio Tuba and Taganito, which produce two types of nickel ore, saprolite and limonite. The company sells its nickel ore to Australia, Japan and China. Nickel Asia was one of the companies whose operations were suspended in February; along with eight other companies it was allowed to ship out stockpiled ore in March.
Companies focused on nickel are not the only ones that have been affected by Lopez’s actions. Reuters notes that the open-pit ban would stop the development of Sagittarius Mines’ $5.9-billion Tampakan copper–gold project. It would also force Philex Mining (OTCMKTS:PXMFF), the country’s largest gold producer, to suspend its $1.2-billion Silangan project, and could lead to a coal shortage, analysts say.
The country is a top consumer of the commodity, and its infrastructure spending has boosted demand for nickel to make stainless steel in recent months. Last week, however, China released data showing that it imported 43,382 tons of nickel from January to March of this year — that’s 60 percent less than it imported during the same period last year.
If Lopez’s open-pit ban goes through, it’s possible that nickel prices could rise again. That said, there are doubts about whether that will happen. The Chamber of Mines of the Philippines has called her latest move “absurd,” and the mining industry opposes her permanent appointment as secretary of the environment.
Lawmakers will resume hearings to determine whether Lopez will take on her position permanently or not on May 3. As mentioned, she is currently the acting secretary of the environment — government appointees in the Philippines can run departments before being confirmed, but have to step down if not approved by Congress.
Many companies that have been impacted by February’s restrictions are continuing with their operations while they fight in court through an appeals process that can only be decided by the country’s president.
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Securities Disclosure: I, Melissa Shaw, hold no direct investment interest in any company mentioned in this article.