Dire consequences

There is now a proposal in Congress to ban raw mineral exports from the Philippines to pave the way for the development of local industries, but the local mining industry is against it.

Senate Bill 2826 or the Enhanced Fiscal Regime for Large-Scale Metallic Mining bill, which has been approved on third and final reading by the Senate on Feb. 3, proposes a ban on exports of locally extracted raw minerals similar to what Indonesia put in place in 2020 when it stopped the exportation of nickel ore and the bauxite in 2022.

The ban will take effect five years after its implementation.

According to Senate president Francis Escudero, what they are looking at is a shift in the country’s policy from merely exporting raw minerals that will be utilized by other countries to produce higher value products to developing the Philippines’ own processing capabilities, resulting in added value for minerals-related exports.

The five-year period, Escudero said, is meant to provide mining operators time to establish processing plants and downstream industries.

The minerals being considered for export ban include gold, copper, nickel and iron.

Escudero noted that the prohibition on exports of critical minerals is a global trend and that according to the Organization for Economic Cooperation and Development, between 2009 and 2020, around 53 countries have instituted export prohibitions on critical minerals.

The Philippines is one of the world’s biggest producers of nickel ore, supplying most of its output to China and Indonesia. Demand for critical minerals such as nickel and copper, Escudero said, has increased over the past decades as a result of the development of green initiatives such as the production of electric vehicles, since nickel and copper are key components in the production of lithium batteries of EVs. Nickel is also a key material in stainless steel.

Both the Chamber of Mines of the Philippines (COMP) and the Philippine Nickel Industry Association has opposed, citing the insufficiency of the power grid and transportation network to handle such fast-paced industrial expansion. They said that a ban that would take effect five years after the law is implemented will likely have considerable unintended consequences and will lead to mine closures and disruption of existing long-term supply contracts.

COMP president and CEO Mike Toledo said that mining companies face key challenges, including high power costs, limited operations, and the need for significant investments in processing plants, which can cost up to $1.6 billion.

The mining industry is proposing instead a grace period of 10 years and that the ban’s implementation remain flexible to allow President Marcos to adjust the timeline based on economic conditions.

The House version of the bill does not contain a grace period and legislators are now seeking to harmonize the two chambers’ versions.

Considering the huge investments needed to develop a local minerals processing industry and the infrastructure and policy limitations, the proposal if implemented immediately or even five years down the line will have disastrous consequences not only in terms of lost export opportunities but also huge employment losses.

What we should be doing instead is develop our local processing industry first, dedicate government resources to it, and lay down the supporting government policies. Imagine the dire consequences of losing the export market for these raw minerals while not having in place a thriving domestic processing industry.

Batangas’ newest pride

Just recently, the President led the inauguration of a P278.3-million grain terminal in Batangas City, which will consolidate the supply of corn and in the process bring down the cost of producing poultry and livestock in the Southern Tagalog region.

The grain terminal is funded by a P100-million loan from the World Bank and counterpart funding from the Department of Agriculture and the Sororo Ibaba Development Cooperative (SIDC). The said project will enhance the existing feed mill of SIDC by integrating silo operations with a capacity of 12,000 metric tons.

Food grain terminals are used by large farm operators as well as farming cooperatives to store their produce after harvest and later redistribute it. They are important considering that a large percentage of food grains are lost due to poor storage conditions that subject such grains to moisture and humidity as well as pest infestation. Modern grain terminals help prevent such losses to a large extent.

According to the Department of Agriculture, nearly a third of the country’s agricultural produce is wasted due to poor logistics system. It said that in post-harvest facilities alone, P93 billion is needed in the next three years to save P10.7 billion annually on wasted rice and corn alone.

Agriculture Secretary Francisco Tiu Laurel Jr. said that this new grain terminal is set to become a central hub for yellow corn used in the production of animal feed and is poised to temper rising costs and ensure stable suppy, benefitting hog and poultry farmers, corn producers and Filipino consumers

Also present during the inauguration were SIDC CEO and former House Rep. Rico Geron, Chronicles Ports, Inc. president Josef Cochien, Wong Chu King Holdings, Inc. managing director Caesar Angelo Wongchuking and WCKHI co-managing director and Nordic Atlantic Logistics Group president Christopher King Chua.

The project, Tiu emphasized, marks a significant step toward improving food security and agricultural sustainability in the country and demonstrates the importance of public-private partnerships in driving growth in the agricultural sector.

The grains terminal is located at the newly constructed port project in Barangay Simlong, Batangas City of Chronicles Ports, a subsidiary of WCKHI which is into the logistics, cold storage and warehousing business through Nordic Atlantic as well as petroleum services and poultry farming.

The port covers 914,959 square meters dedicated for break bulk cargo or cargo that is not containerized specifically grains, cement, among others.

Cochien said that they are also aiming to address the requirements of construction projects in Batangas and are likewise looking at putting up warehouses for dry storage.

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