ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronEye IconIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailMenu BurgerPositive ArrowIcon PrintIcon SearchSite TitleTitle ChevronIcon Twitter
Economy

Philippine mining stocks drop as Duterte signals mineral export ban

Following Indonesian example, new policy could push up metal prices

 (placeholder image)
Nickel ore is piled up at Santa Cruz, a port in Zambales in the northern Philippines.   © Reuters

MANILA -- Shares in Philippine mining companies fell on Tuesday after President Rodrigo Duterte said he was considering a ban on mineral exports to promote development of related downstream industries.

The mining and oil sub-index on the Philippine Stock Exchange dipped 0.61% on the news, and selling of major nickel exporter stocks was more pronounced. Nickel Asia, the country's largest nickel ore producer, fell 8.11%; Global Ferronickel Holdings was down 3.10%, and DMCI Holdings 1.89%. Manila's benchmark index meanwhile gained 0.11%.

During a speech to a joint session of parliament on Monday, Duterte warned companies that he is fine with mining activities that benefit the poor and observe environmental safeguards -- "or I will tax you to death."

"I call on our industrialists, investors [and] commercial barons to put up factories and manufacturing establishments right here in the Philippines to process our raw materials into finished products," Duterte said.

"At this point in my administration, if possible, we shall put a stop to the extraction and exportation of our mineral resources to foreign nations for processing abroad and importing them back to the Philippines in the form of consumer goods at prices twice or thrice the value," said Duterte, drawing applause from lawmakers.

The Philippines is a leading global producer of nickel and other minerals, but has no domestic processing industries. Last year, it exported 30 million tons of nickel ore to China, which consumes around 30% of global production, according to IHS Markit, a London-based financial services company.

The Chamber of Mines of the Philippines has expressed support for Duterte's plan to develop downstream industries, but is resistant to the idea of a mineral export ban.

"The government must attract investors to invest in processing plants," said Ronald Recidoro, the chamber's vice president for policy. "If processing is not feasible as a business due to high costs of inputs, then an ore export ban will not accomplish the purpose."

Duterte's policy signal follows Indonesia's move in 2014 to halt ore exports and develop domestic downstream processing. Indonesia relaxed the ban early this year after missing revenue targets.

"Any disruption to nickel exports to China can result in volatility in world nickel prices, as occurred during the first half of 2014 when Indonesia introduced tougher mineral processing rules," said Rajiv Biswas, Asia-Pacific chief economist for IHS Markit.

Duterte had been critical of the mining industry long before he entered office on June 30 last year. He initially appointed Regina Lopez, an anti-mining activist, as environment minister, and she ordered a number of mine closures and suspensions. Her nomination was rejected by congress in May, however, and Duterte appointed Roy Cimatu, a retired army general, to replace her.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Get Unlimited access

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends January 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to the Nikkei Asian Review has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media