MANILA President Rodrigo Duterte of the Philippines has said he is considering a ban on mineral exports to promote development of related downstream industries, rattling investors anew.
At the opening of the 17th Congress on July 24, Duterte said that he is fine with mining activities that benefit the poor but warned miners to observe environmental laws. He told them to comply 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 told a joint session of the House of Representatives and the Senate.
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 supports Duterte's plan to develop downstream industries, but opposes 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.
BML Price at posting:
0.1¢ Sentiment: None Disclosure: Held
