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Philippines hopes for foreign investment in mining

Wed Sep 15, 2010 11:03am GMT

* Govt, industry see foreigners investing in mining sector

* Chinese firm says in talks on investment

* Local laws and Church opposition could block investments

By Erik dela Cruz

MANILA, Sept 15 (Reuters) - The Philippine government and mining industry expect foreign firms to invest in the industry over the next few years, despite an uncertain investment environment and opposition from the powerful Catholic Church.

The Philippines has mineral deposits estimated to be worth $1 trillion, and the new government of President Benigno Aquino sees attracting foreign investment to sectors such as mining as essential to developing local industry and creating jobs.

But foreign miners have found it difficult to operate in the Philippines. Key concerns are corruption, governance and security risks from two long-running insurgencies.

"Investors from China, India, and the Middle East are lining up to invest in the Philippines as their infrastructure growth will inevitably need new sources for their demand for base metals," Philip Romualdez, president of Chamber of Mines of the Philippines, told a mining conference in Manila on Wednesday.

Romualdez said the China Mining Association had inspected 11 mining projects worth $600 million and there had been interest from Chinese firms, but did not provide further details.

China's top nickel producer, Jinchuan Group Ltd [JCGRP.UL], was in talks to invest in the Philippines, company vice president Bao Guo Zhong told reporters at the conference.

"We have agreed with our partners not to disclose anything at the moment," he said. Last week, the company president was quoted saying that Philippines was among the countries where the company was looking to invest in copper projects. [ID:nTOE68701Y]

OBSTACLES

Cristino Panlilio, an undersecretary at the Department of Trade and Industry, said potential investment in the industry could reach as much as $13.5 billion in the next two years, although that included some projects already announced.

He cited several projects in the pipeline including the $5.2 billion Tampakan gold-copper prospect of Xstrata Plc (XTA.L: Quote) in South Cotabato, which has been put at risk by a provincial ban on open pit mining. [nSGE66C06M]

Aquino has said he wants to find a compromise solution to that dispute. [ID:nSGE66C06M]

In July, the influential Catholic Bishops' Conference of the Philippines called on the government to scrap a law that allowed foreign investors to fully own local mining ventures, saying natural resources should be used for Filipinos. [ID:nSGE66F04H]

Asked about the government's position on the Church's stance, Environment Secretary Ramon Paje Jr said the administration would not interfere with any moves in Congress to amend the Mining Act.

Romualdez said the mining industry saw no need to amend the law.

http://af.reuters.com/article/metalsNews/idAFSGE68E0BD20100915?sp=true