HORACIO C. RAMOSDirectorMines and Geosciences BureauDepartment of Environment and Natural ResourcesRepublic of the Philippines

PROMOTING A RESPONSIBLE AND SUSTAINABLE MINERALS INDUSTRY

Mining ForumFrankfurt, GermanyJune 28, 2007

Some Key Dates in Philippine Mining

1974: Parity Rights expired; “Filipinization” of Philippine mining operations; 70’s considered as the “boom years”

1986/87: People Power; Freedom Constitution; general lack of exploration activities.

1991: Enactment of Local Government Code providing for local autonomy and wealth sharing from mining.

1995: Passage by Congress of the Philippine Mining Act of 1995 (RA7942); initial foreign investors interest; rise in environmental activism.

1996/97: Marcopper incident; challenge to the Constitutionality of the Mining Act; enactment of the Indigenous Peoples Rights Act.

2003: Start of Revitalization Program for the Philippine Minerals Industry; renewed investor interest.

2004/05: Affirmation by the Philippine Supreme Court of the Constitutionality of the Mining Act.

2008: Start of a new mining boom?

Mining Industry Indicators (2006)

3

PhP68.4 billion in 2006; up by 36.25% from 2005

Mining Industry Indicators (2006)

4

Highest in early to mid-70’s; 24.56% in 1973

Gradual growth since 2003; 4.46% for 2006

Mining Industry Indicators (2006)

5

Preliminary figure for 2006 is PhP4.9 billion

1992: The excise tax for metallic minerals was reduced from 5% to 2% of the gross value.

Mining Industry Indicators (2006)

2006: 141,000 directly employed or 0.43% of total

labor force

Mining Industry Indicators (2006)

7

2006: PhP59.7 billion at current prices

8

OPERATING MINESOPERATING MINES

2 Large – scale Mines2 Large – scale Mines::Lepanto’s Victoria Gold MineLepanto’s Victoria Gold Mine

Philex’s Padcal Copper MinePhilex’s Padcal Copper Mine

6 Medium-scale Nickel Mines6 Medium-scale Nickel MinesRio Tuba Nickel Mine Rio Tuba Nickel Mine

Cagdianao Nickel MineCagdianao Nickel Mine

Sigbanog Project, Hinatuan MiningSigbanog Project, Hinatuan Mining

Taganito Nickel MineTaganito Nickel Mine

4 Medium-scale Chromite Mines4 Medium-scale Chromite MinesMasinloc Project of Benguet Corp.,Omasdang Project of Crau MineralsHomonhon Project of Heritage Res.

5 Medium-scale Gold Mines5 Medium-scale Gold MinesCanatuan Project of TVIAcupan Gold Operations of Benguet

Diwalwal Direct State Development Project Banahaw Gold Project, Philsaga Mining Corp.

15 Cement Plants and Quarries15 Cement Plants and Quarries

1 Polymetallic Mine – Rapu rapu mine1 Polymetallic Mine – Rapu rapu mine

2000+ Quarries and small scale mines 2000+ Quarries and small scale mines

1 Nickel Processing Plant in Palawan1 Nickel Processing Plant in Palawan 1 Copper Smelter (PASAR) in Leyte1 Copper Smelter (PASAR) in Leyte

Redondo Project of Krominco, Inc.

Berong Nickel Project of TMMBerong Nickel Project of TMM

Masara Mine, Apex/Crew Minerals

Tagana-an Project, Hinatuan Mining Tagana-an Project, Hinatuan Mining

9

Philippine Mineral Potential

MINERAL ENDOWMENT

• 3rd for gold• 4th for copper• 5th for nickel • 6th for chromite

METALLIC MINERAL RESOURCES/

RESERVES 2005

10

Philippine Mineral Potential

Construction and cement raw materials predominate

NON-METALLIC MINERAL RESOURCES/ RESERVES

2005

11

Philippine Mineral Potential

PHILIPPINESPHILIPPINESPORPHYRY COPPER PORPHYRY COPPER

BELTSBELTS

PORPHYRY COPPER PORPHYRY COPPER BELTSBELTS

Philippine Mineral Potential

Mineral Land Distribution(As % of Total Philippine Land Area)

30% or 9 Million Hectares Approximately 2% currently covered

by permits

High-Potential

Low-Medium Potential

70%

1122

4433

66

7788

9910101212

55

1111

1. Luzon Central Cordillera – Au, Cu, Fe, Mn

2. Northern Sierra Madre – Cr, Ni, Cu

3. Zambales – Cr, Ni, Co, Pt, Cu, Au

4. Vizcaya-Aurora – Cu, Au

5. Bicol – Au, Fe, Cu

6. Southern Tagalog – Cu, Au, Ni, Co

7. Central Visayas – Cu, Au, Mn

8. Samar-Eastern Mindanao – Au, Cu, Fe, Cr, Ni, Co, Pt, Mn

9. North Central Mindanao – Cr, Cu, Au

10. Zamboanga Peninsula – Au, Cu, Cr, Fe

11. Southern Mindanao – Cu, Au

12. Palawan – Cr, Ni, Co, Pt, Au, Rare Earth Elements

Potential Areas and Potential Areas and DepositsDeposits

NEAR-COAST AND OFFSHORE RESOURCES

Manganese

Magnetite

Magnetite

Magnetite

Chromite

Chromite

Chromite

Chromite

Gold

Gold

Philippines offshore area including EEZ is 2.2 million Km2

• Placer minerals including gold, chromite, magnetite, silica

Potential offshore mineral resources:

• Aggregate resources (sand & gravel)

• Decorative stones, manganese nodules/encrustrations with associated copper, gold, zinc, cobalt

• Offshore Palawan also holds resources of manganese

Global exploration expenditures bottomed in 2002 at US$1.9 billion but with better metal prices, improving investment conditions and “awakening’ of junior companies as risen to the current high of US$7.5 billion

Philippine Mineral Potential

Exploration Expenditures (1997 - 2006):

≈ US$200 million

Recent Discoveries:

• Far Southeast Copper Orebody

• Tampakan Copper-Gold Orebody

• Boyongan Gold Orebody

NICKELNICKEL• The Philippine nickel resource is the biggest in Southeast Asia• Improved technology makes low-grade lateritic ore viable

• Improving chromite prices could revive Philippine chromite mines in Zambales, Palawan, Samar, Dinagat and Zamboanga.

CHROMITECHROMITE

IRONIRON• The increasing demand for iron is reviving exploration for the commodity in the Philippines• The spatial relationship of carbonate rocks with younger intrusives in the

Philippines offers the possibility of finding new skarn deposits

LEAD and ZINCLEAD and ZINC• Ophiolitic and Early Tertiary arc terranes in the Philippines holds much

promise for deposits similar to those of Lafayette in Rapu-Rapu island.

Philippine Mineral Potential

PHILIPPINE NATIONAL MINING POLICY FOUNDATIONS

– Enshrined the principles of sustainable mining and concept of planning for mine closure/integrated mine closure planning;

– Strong focus on life of mine environmental and social responsibilities

A. Philippine Mining Act and RIRR

– Exploration Permit (EP)– Mineral Agreement (MA)

Mineral Production Sharing Agreement (MPSA)

Joint Venture Agreement Co-Production Agreement

– Financial or Technical Assistance Agreement (FTAA)

– Mineral Processing Permit (MPP)

Major Types of Mining Tenements Major Types of Mining Tenements

Exploration/Feasibility

Period

STAGE

Development

and Construction

Period

Operating Period Mine

Closure

• PRE-EXPLORATION Certificate of Satisfactory Environmental Management and Community Relations Record (CEMCRR)

• Preparation of Environmental Impact Statement (EIS) as basis for an Environmental Compliance Certificate (ECC)

Environmental Protection and Enhancement Program (EPEP) with Final Mine Rehabilitation and Decommissioning Plan (FMR/DP)

Prepare Social Development and Management Program (SDMP)

Prepare Safety and Health Program (SHP)

Implement Annual SDMP

Implement Annual SHP

Implement Annual EPEP

Establish the Contingent Liability and Rehabilitation Fund (CLRF)

Implement Final Mine Rehabilitation & Decommissioning Plan (FMR/DP)

•Decommissioning

•Rehabilitation

•Social

•Maintenance and Monitoring

POST CLOSURE - Implement Site Management Plan (SMP)

SHES Monitoring and Audit

• Environmental Work Program (EnWP)

• Safety and Health Program (integrated with the EnWP)

• Host Community Devt. (voluntary)

– Indigenous Peoples Rights Act of 1997– Local Government Code of 1991– National Integrated Protected Areas

System– Environmental Laws, Rules and

Regulations– Small Scale Mining Laws

Other Relevant Laws Affecting MiningOther Relevant Laws Affecting Mining

– Based on the policy declaration of H.E. President Arroyo in 2003;

– Product of a 10-month consultation process among the 3 key stakeholders;

– Called for the development of the Mineral Action Plan, the current industry roadmap; and

– Led to the Creation of the Mineral Development Council .

The National Policy Agenda on Revitalizing Mining in the Philippines

B. Executive Order No. 270

SOCIAL

GOVERNANCE

ENVIRONMENT

ECONOMIC

Fair and equitable sharing of benefits among the company, government and the mining communities

Adequate protection of the environment, not only before and during mining operations but even long after mining has ceased

Recognition of the rights and participation of the communities and indigenous peoples in mining operations

Competitive investment climate and adequate protection of the rights and privileges of mining investors

Objectives of EO No. 270

23 Mining Development Projects23 Mining Development Projects(Original – 2004)(Original – 2004)

11 Copper Projects11 Copper ProjectsTampakan Copper ProjectFar Southeast Copper ProjectBoyongan Copper ProjectCarmen Copper ProjectBatong Buhay Copper ProjectSan Antonio Copper Project

Amacan Copper ProjectRapu-Rapu Polymetallic Didipio Cu-Au ProjectKingking Cu-Au ProjectPadcal Expansion Project

6 Gold Projects6 Gold ProjectsItogon Gold ProjectMasbate Gold ProjectTeresa Gold Project

Diwalwal Gold ProjectSiana Gold ProjectCanatuan Au-Cu Project

5 Nickel Projects5 Nickel ProjectsMindoro Nickel ProjectPalawan HPAL Project Nonoc Nickel Project

ACT Nickel ProjectPujada Nickel Project

1 Cement Project1 Cement ProjectAkle Cement, Project

12 Copper/Copper-Gold Projects12 Copper/Copper-Gold ProjectsAmpucao Proj.(Benguet)Paco Proj.(Surigao Norte)Tabuk Proj. (Kalinga)Gambang Proj.(Benguet)

Sogod Proj. (S. Leyte)Tagpura Proj. (Compostela)Hixbar Proj. (Rapu-Rapu Is)Manat Proj. (Compostela)

Colet Proj.(Negros Occ.)Claveria Proj.(Cagayan)Papaya Proj.(N. Vizcaya)Conner Proj. (Apayao)

24 Gold Projects24 Gold ProjectsKingking Proj. (Davao Or.)Panag Proj. (Compostela)Del Gallego Proj. (Quezon)Negros Proj. (Negros Or.)Alicia Proj. (Zamboanga Sur)Kalaya-an Proj. (Surigao N.)Pana-on Proj. (Leyte)Tongonan Proj. (Leyte)Surigao Proj. (Surigao N.)Pao Proj. (Nueva Vizcaya)Road 5 M Proj. (Davao Or.)Camp 3 Proj. (Benguet)

Pantuyan Proj. (Leyte) Batoto Proj.(Compostela)Mabuhay Proj. (Surigao Norte)Kematu Proj. (South Cotabato)Archangel Proj. (Batangas)Hinonangan Proj. (S. Leyte)Labo Proj. (Camarines Norte)Nalesbitan Proj.(Camarines Norte)Cordon Proj. (Isabela)Pantingan Proj. (Bataan)Agata Proj. (Agusan del Norte)TMC Proj. (Antique-Iloilo)

3 Nickel (-PGE) Projects3 Nickel (-PGE) ProjectsAcoje Proj. (Zambales)Sta. Cruz Proj. (Zambales)Berong Proj. (Palawan)

1 Bauxite Project1 Bauxite ProjectSamar Bauxite Project, (Samar)

1 Sulfur Project1 Sulfur ProjectPamplona, Negros Oriental

41 Exploration Projects 41 Exploration Projects (Original-2004)(Original-2004)

• US $ 6.5 B - Foreign direct investments

• US $ 3.4 B - Annual sales/foreign

exchange

• US $ 61.4 M - Annual excise tax on

minerals

• US $ 432 M - Annual corporate income

tax

• 200,000 - Additional direct and

indirect

employment

Economic Potential Economic Potential

UPDATES ON THE PRIORITY MINING

PROJECTS

Mining Projects For DevelopmentMining Projects For Development

9 Copper Projects9 Copper ProjectsTampakan Copper ProjectFar Southeast Copper ProjectBoyongan Copper ProjectCarmen Copper ProjectBatong Buhay Copper Project

Amacan Copper ProjectDidipio Cu-Au ProjectKingking Cu-Au ProjectColet Copper Project

6 Gold Projects6 Gold ProjectsItogon Gold ProjectMasbate Gold ProjectMasara Gold Project

Diwalwal Gold ProjectSiana Gold ProjectCanatuan Expansion Proj

5 Nickel Projects5 Nickel ProjectsMindoro Nickel ProjectPalawan HPP Expansion Nonoc Nickel Project

ACT Nickel ProjectHallmark Nickel Project

1 Cement Project1 Cement ProjectAkle Cement, Project

STATUS PROJECT 2006 2007 2008 2009 2010 2011 REMARKS

OPERATING / EXPANSION

Palawan HPP

Rapu-Rapu Cu-Au-Zn

Canatuan Ag-Au

Teresa Gold

Sto. Tomas II Cu

Berong Nickel

Operating/Expansion

Operating

Operating/Expansion

Operating

Operating

Operating

CONSTRUCTION & DEVELOPMENT

ACT Nickel

Didipio Cu-Au

For test shipment

Pre-development

FEASIBILITY / FINANCING

Masbate Gold

Carmen Copper

King King Cu-Au

Far Southeast Cu

Itogon Gold

Tampakan Copper

Colet Copper

Siana Gold

Nonoc Nickel

Akle Cement

Final feasibility

Rehabilitation

FinancingTechReview/financing

Mine rehab/financing

Final Feasibility

Final Feasibility

Pre-Feasibility

Under negotiation

Plant site preparation

EXPLORATION Boyongan Copper

Mindoro Nickel

Hallmark Nickel

Drilling

Social Prep’n/Drilling

Drilling

FOR BIDDING Diwalwal Gold

Amacan Copper

BatongBuhay Cu-Au

Tech review/Bidding

Tech review/Bidding

Tech review/Bidding

Q4- 2007

By 2009

By 2010

By 2011

Q2 -. 2008

By 2010

Q2 -. 2008Q4 - 2008

By 2009By 2009

By 2009

By 2009

By 2009

By 2010

By 2009

By 2009

By 2010

By 2010

THE MINING INDUSTRY TO 2011

31

REPORTED AND PROJECTED INVESTMENTS (2004-2010)

139

447

108348

1,559 1,602

2,762

-

500

1,000

1,500

2,000

2,500

3,000

2004 2005 2006 2007 2008 2009 2010Year

Inve

stm

ents

(U

S$

Mil

lio

n)

Reported

32

REPORTED AND PROJECTED NEW JOBS (2004-2010)

2,0003,041 3,250

11,854

4,800

1,540

14,047

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

2004 2005 2006 2007 2008 2009 2010

Year

Ne

w J

ob

s

Reported

33

ACTUAL AND PROJECTED COPPER, GOLD AND SILVER SALES ACTUAL AND PROJECTED COPPER, GOLD AND SILVER SALES VOLUME FROM EXISTING AND NEW PROJECTS (2007-2011)VOLUME FROM EXISTING AND NEW PROJECTS (2007-2011)

ACTUAL AND PROJECTED VOLUME OF SALES OF GOLD AND SILVER (2004-2011)

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

2004 2005 2006 2007 2008 2009 2010 2011

YEAR

VOLU

ME

OF

SALE

S (T

ROY

OUN

CES)

Gold

Silver

Actual

ACTUAL AND PROJECTED VOLUME OF SALES OF COPPER (2004-2011)

-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

2004 2005 2006 2007 2008 2009 2010 2011

YEAR

VOLU

ME

OF

SALE

S (D

MT)

Actual

34

ACTUAL AND PROJECTED CHROMITE, ZINC AND NICKEL SALES ACTUAL AND PROJECTED CHROMITE, ZINC AND NICKEL SALES VOLUME FROM EXISTING AND NEW PROJECTS (2007-2011)VOLUME FROM EXISTING AND NEW PROJECTS (2007-2011)

ACTUAL AND PROJECTED VOLUME OF SALES OF CHROMITE, ZINC AND NICKEL (2004-2011)

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

2004 2005 2006 2007 2008 2009 2010 2011

YEAR

VO

LU

ME

OF

SA

LE

S (D

MT

)

Chromite

Zinc

Nickel

ACTUAL AND PROJECTED VOLUME OF SALES OF NICKEL ORE (2004-2011)

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

2004 2005 2006 2007 2008 2009 2010 2011

YEAR

VOLU

ME

OF

SALE

S (D

MT)

Actual

– Revisiting of the 24 Priority Mining Projects to include new projects that have potentials of contributing to the goals of the program.

– Review of the Mineral Action Plan to track down accomplishments and to review and identify gaps/concerns that need attention.

– Preparation of an Industrialization Plan for the development of upstream and downstream industries.

Policy Reforms Policy Reforms

– Full activation of the Minerals Development Council (MDC); establishment of regional MDCs;

– Conduct of legal study by MDC on the mining moratoriums;

– Touching base with civil society groups (e.g. Bishops-Businessmen’s Conference) for stakeholder dialogues.

– Further amendments to DAO 96-40 (e.g. Increase in SDMP Allocation and Simplification of Procedures) and FTAA Fiscal Regime.

– Addressing investor’s concern on exploration/mining area availability and non-performing mining tenements.

Policy Reforms Policy Reforms

Combined with positive developments in the local scene and the so-called period of prosperity for the global minerals industry that resulted in increased exploration spending and higher demands and prices for metals, the Philippines is both bullish and cautious.

Bullish about prospects for an industry take off next year and cautious of the challenges that comes with increasing mining activities.

But in the bottom-line, the Philippines believes that, for as long as done responsibly, mining can be pro-people and pro-environment in creating wealth and improving the quality of life of the Filipinos consistent with the principles of...

Concluding Statement

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