NEWS

In a world undergoing an energy transition, the untapped mineral wealth of the Philippines is becoming increasingly important, especially considering the substantial size of the country’s deposits. According to current estimates, the archipelago has untapped reserves of copper, gold, nickel, zinc, and silver amounting to USD 1 trillion. Only about 5% of these reserves have been explored, and mining contracts cover just 3% of them.

Recent statistics from the Philippine Mines and Geosciences Bureau (MGB) indicate that there are only 56 operating mines, with seven processing plants employing over 220,000 workers. The Philippines ranks fourth in terms of copper reserves, and fifth in terms of cobalt and nickel reserves. According to MGB data, mining production is currently concentrated on nickel, gold, copper, silver and chromite, and distributed across the country’s three macro-regions. The main mining sites are Luzon (gold in Nueva Vizcaya, nickel in Palawan, and copper in Benguet), Visayas (copper in Cebu), Mindanao (nickel and gold in Surigao del Norte, silver in Zamboanga del Norte).

The institutional landscape is regulated by the Department of Environment and Natural Resources (DENR). The mining sector is mostly controlled by local companies, but foreign companies, particularly from Japan, Australia, Canada, and China, also play a significant role. Regulations, some of which are mandated by the Constitution, permit foreign ownership of up to 40% for the majority of mining permits and contracts.

Overall, this industry offers wide development opportunities, but today contributes less than 1% of the national GDP (0.78%). In terms of investment attractiveness, according to a 2023 Fraser Institute survey, the Philippines ranked 72nd out of 86 mining jurisdictions. This result takes into account not just the regulatory limitations, but also the existence of multiple moratoriums on current mining contracts. These moratoriums were put in place to address concerns regarding environmental protection, social responsibility, and to ensure that the government receives a fair share of the profits from mining activities. Despite these challenges, the potential economic benefits of the mining sector, combined with the global demand for essential minerals needed for sustainable energy processes, make the Philippines a country of significant interest. For example, critical minerals play a vital role in the construction of renewable energy facilities (such as solar and wind power plants) and in the manufacturing of lithium-ion batteries for electric vehicles.

The Philippines was the world’s second-largest nickel producer after Indonesia in 2023, with an estimated production of 330,000 metric tonnes, according to the U.S. Geological Survey (USGS). A Philippine entity, Nickel Asia Corporation, jointly owned by local and foreign investors, is responsible for between 50% and 60% of the country’s total nickel production, as per the latest figures published by the MGB.

The MGB also states that annual nickel production by Philippine companies ranges between 55% and 70%, with foreign-invested companies extracting the remaining percentage. These foreign-invested companies are also involved in mining other minerals.

Recognising the importance of critical minerals in the global shift to renewable energy, the Philippine government is in the process of developing policies to encourage responsible extraction. The government emphasises the involvement of local communities in resource areas through free, prior, and informed consent. Additionally, environmental impact assessments and rehabilitation plans are now required for mining sites at the end of their life cycle. Foreign participation in renewable energy has been allowed since 2022.

Historically, mining in the Philippines has been carried out by small-scale companies with little mechanization. However, the industry is now working to develop the sector by allowing the entry of large groups, including foreign ones. These developments are positive signs for potential investors and companies interested in the country’s abundant mineral resources. Given the high demand for critical minerals, these measures have the potential to establish the Philippines as a key market in the long run.

In order to attract investment, the government is not only focusing on the mining sector but also on the later stages of production processes, particularly in the renewable energy, electric vehicle battery production and assembly, and semiconductor sectors. This strategy aligns with the goal of increasing the share of renewable energy in the energy mix from the current 22% to 50% by 2040. It also supports the Department of Energy’s (DOE) long-term action plan (2023-2040), which aims to adopt cleaner technologies in energy production processes.

In the future, there may be opportunities to explore cobalt, manganese, copper, and nickel mineral resources. The government aims to assist the local mining industry in identifying potential mining areas and providing comprehensive data to attract investments with minimal risk. Additionally, efforts are being made to enhance the nickel processing sector by direct investment in at least three processing plants. (Zambales, Palawan and Caraga).

This growing emphasis on the mining industry is yielding positive outcomes.

In 2022, metal production increased by almost 32% compared to the previous year. The total export value for 2020-2022 was USD 18.7 billion, or 8.51% of the country’s total exports.

Source: Ministerio degli Affari Esteri

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