Mining gold in the Philippines can be difficult. The country’s mining sector remains largely untapped, and much of that has to do with political turmoil and controversy.
As a result, the Philippines is far from the heaviest player in the gold space — read about the top gold-producing countries here — but it’s clear that the country does play a role in producing gold. The Philippines was ranked 21st in terms of global gold production in 2016, producing 40.2 tonnes with an additional 196.34 tonnes in reserve.
Here’s a look at some of the challenges of mining in the country, as well as an overview of the publicly traded companies that are currently mining and exploring for gold there.
Gold mining in the Philippines: Political challenges
As mentioned, mining for gold in the Philippines is not an easy endeavor. While vast mineral reserves and potential exist, the country holds to strict mining laws, citing environmental impact and worker welfare as key reasons for these rules.
This emphasis on environmental impact has been championed by current president Rodrigo Duterte. Duterte has said that mining companies must “shape up” as they are causing harm to the country’s land and water systems. In March, the president even accused Canada-based mining companies of a destabilization plot.
Support for environmental goals was seen in the appointment of Regina Lopez as secretary of the Department of Environment and Natural Resources (DENR) in 2016. Lopez is an aggressive activist, and proposed severe mining bans and stricter regulations.
The mining community, including the Philippines’ Chamber of Mines, said the closures and permit denials would cause harm to 1.2 million workers in the industry. Miners also said that they were being treated unfairly because of a lack of due process in these bans.
The situation took a drastic turn when Lopez was rejected by the Filipino congress. In May, Duterte instead appointed Roy Cimatu, formerly of the armed forces. Miners were surprised by the decision, but are more hopeful as Cimatu is expected to take a more balanced approach between the environment and mining industry. Speaking during a radio interview, Cimatu said he believes “we can allow mining [as long as] it’s responsible, it does not destroy our environment, as long as it is properly handled.”
Gold mining in the Philippines: Economics
According to the DENR, mining made up 0.6 percent of the Philippines’ GDP and 4.4 percent of total exports in 2016. The country currently hosts eight operating gold mines, and gold made up 51 percent of total metal production in the first quarter of 2017. While mining does not make up a large portion of the Philippines’ economy, the effects and benefits are felt strongly in certain parts of the country. Regions like Mimaropa and Caraga disproportionately rely on the value and opportunities produced by mining.
When considering why mining hasn’t yet taken a strong hold in the Philippines, Forbes explains that access to the sector has been “mired since the 1980s in klutzy laws, environmental battles and land rights issues.” The Wall Street Journal corroborates that statement, noting that most indigenous people in the country are not in favor of mining, and have special rights that make gaining their approval essential for potential miners.
Anti-mining sentiment has only grown stronger with Duterte in power. The president used his recent state-of-the-nation address to reinforce warnings to the country’s mining industry saying, “[y]ou have to come up with a substitute, either spend to restore the virginity of the resource or I will tax you to death.”
All that said, Lopez’s order are currently under review by the new DENR secretary. Whether Cimatu will overturn suspensions and closures is currently uncertain.
Gold mining in the Philippines: Companies
While the political climate of the Philippines has drawn back the confidence of the mining industry, there are still many gold mining operations investors should know about. Read on to learn more about them.
Apex Mining (PSE:APX)
Apex Mining’s main project is the Maco mine (formerly known as Masara), located on the island of Mindanao. Apex has been operating for 40 years and recently reported that its mining income quadrupled in 2016 over 2015. The company attributes its recent success to improved operations at Maco — it produced 54,681 ounces of gold in 2016, a 27-percent increase from the previous year.
Established in 1903, Benguet is the first and oldest mining company in the Philippines. Its extensive gold and nickel operations include the Acupan gold project, which began operating in 1927. Acupan consists of 223 mineral claims in the province of Benguet. As of 1992, it had produced 5.54 million ounces of gold. The project has a remaining resource potential of 113 million tonnes averaging 2.41 g/t gold.
Benguet is currently appealing an order of cancelation that was delivered by DENR in February citing a tailings leak. The company claims that the leak occurred in its out-of-operation Antamok mine, a project unrelated to Acupan.
Blue Bird Merchant Ventures (LSE:BMV)
Blue Bird Merchant Ventures is the 100 percent owner of the Batangas project in the Philippines which was previously owned by Red Mountain Mining (ASX:RMX). The project is expected to generate AU$46 million in free cash flow in its first seven years. It contains the Lobo and Archangel prospects, as well as the El Paso, Calo and Biga prospects.
Medusa Mining (ASX:MML)
Medusa Mining operates in the Philippines through its subsidiary Philsaga Mining. The company’s Co-O project is situated on the southern island of Mindanao and produced 108,578 ounces of gold in the 2016 Australian fiscal year. Medusa notes that martial law has been declared on Mindanao island but has not affected operations.
Metals Exploration (LSE:MTL)
Metals Exploration’s main asset is the Runruno gold-moly project on the island of Luzon. The company acquired the project in 2005, and has since increased its ownership to 100 percent. Runruno has a defined mineral resource of 1.39 million ounces of gold and 25.6 million pounds of moly; 1,050,000 ounces of gold are designated as measured and indicated, while 900,000 ounces of gold are listed as proven and probable reserves. In its Q1 report, the company notes that operations have ramped up slower than expected due to long periods of rainfall.
OceanaGold owns and operates the high-grade gold-copper Didipio mine, also located on Luzon. The company achieved commercial production at Didipio in 2013, and over its 16-year life the mine’s nominal production should be 100,000 ounces of gold and 14,000 tonnes of copper. OceanaGold is currently disputing a suspension order against Didipio that was delivered earlier this year by Lopez. The mine is set to continue operating during the appeals process.
Philex Mining (PSE:PX)
Philex Mining was incorporated in the Philippines in 1955, and its subsidiaries fall under either Philex Mining (metals) or Philex Petroleum (energy). Philex Mining operates the Padcal mine, which is its largest revenue source. Padcal has been operating since 1958 and is expected to end its life in 2020.
Philex also owns the Silangan copper-gold mine, which encompasses the feasibility-stage Boyongan and Bayugo deposits. The company produced a total of 103,300 ounces of gold in 2016.
St. Augustine Gold & Copper (TSX:SAU)
St. Augustine is currently developing the King-king project, which it bills as one of the largest undeveloped copper-gold deposits in the world. Mineral reserves at King-king come to 617.9 million tonnes at 0.3 percent total copper and 0.395 g/t gold. The project is expected to put out 3.16 billion pounds of copper and 5.43 million troy ounces of gold over a 25-year mine life, but may face issues as it is currently on a list of recommended cancelations put forward in February.
RTG Mining (ASX:RTG)
RTG Mining is an Australian mining and exploration company that is focusing on gold in the Philippines. The company’s key project is Mabilo gold-copper site, which has an indicated mineral resource of 227,000 tonnes of copper and 762,400 ounces of gold.
This is an updated version of an article first published by the Investing News Network in 2015.
Did we miss a publicly traded company that’s mining or exploring for gold in the Philippines? Let us know in the comments. All companies included had market caps above $10 million as of August 10, 2017.
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Securities Disclosure: I, Sivansh Padhy, hold no direct investment interest in any company mentioned in this article.