Business Monitor International


Philippines Mining Report

Published 29 April 2014

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Philippines Mining Report

BMI View : The looming exit of Glencore Xstrata's stake in the US$5.9bn Tampakan copper-gold project reinforces our conviction that mining investment in the Philippines will become less attractive amidst the downturn in commodity prices over the coming years. Despite rice mineral deposits in the country , resource nationalism will remain an issue a s the Philippine government looks to implement more onerous regulatory reforms in the mining s pace.

We believe the retreat of commodity prices and fading attraction of frontier mining will continue to dampen capital flows into the Philippines' mining space over the coming years. As spotlighted by the pending exit of Glencore Xstrata from the USD5.9bn Tampakan project in South Cotabato, the country is unlikely to experience a mining boom anytime soon. In January 2014, Glencore Xstrata announced its decision to sell its stake in the mine in a bid to prune its portfolio and focus on the development of brownfield projects. The Tampakan project, with an estimated 15mn tonnes (mnt) of copper and 18mn ounces (moz) of gold, would be the single largest foreign direct investment in the country. To be sure, investment in exploration and mining projects in the Philippines between 2004 and 2012 reached US$5.8bn, according to the Mines and Geosciences Bureau.

Table: Philippines - Number Of Operating Metallic Mines
2009 2010 2011 * 2012
Copper 4 4 4 5
Gold 8 8 5 6
Metallurgical Chromite 1 1 2 3
Nickel 10 15 18 22
Iron 0 0 1 2
Total Operating Metallic Mines 23 28 30 38
Source: Mines and Geosciences Bureau. Note: *Based on preliminary data.

Brownfield Prevails

In our view, rich mineral deposits in the Philippines will fail to attract significant mining investment over our forecast period to 2018. In a continuation of the trend seen in 2013, mining companies will struggle to maintain a deep...

Table of Contents

BMI Industry View
7
Table: Philippines - Number Of Operating Metallic Mines
7
SWOT
12
Industry Forecast
13
Copper: Sharp Slowdown From Boom Years
13
Table: Philippines - Copper Mine Production
15
Gold: Losing Sparkle With Falling Prices
15
Table: Philippines - Gold Mining Projects
17
Table: Philippines - Gold Production Forecast
18
Nickel: Nickel Asia To Drive Growth
19
Table: Philippines - Nickel Production Forecasts
21
Industry Risk Reward Ratings
22
Asia - Q3 2014
22
Table: Asia - Mining Risk/Reward Index
26
Risk/Reward Ratings
26
Rewards
27
Industry Rewards
27
Country Rewards
27
Risks
28
Industry Risks
28
Country Risks
28
Table: Philippines - Mining Industry Value & Production Forecasts
29
Regulatory Development
30
Table: Asia - Mining Regulatory Scorecard
31
Table: Philippines Political Overview
32
Commodities Forecast
34
Commodity Strategy
34
Iron Ore: Fading Iron Will
34
Steel: Global Glut To Weigh On Prices
36
Aluminium: Fundamentals To Remain Weak
37
Copper: All Eyes On China
38
Lead: Outperforming Its Troubled Peers
39
Nickel: Monthly Outperformer
41
Tin: Outperforming A Weak Field
42
Zinc: Further Consolidation Likely
43
Table: Select Commodities - Performance & BMI Forecasts
45
Competitive Landscape
46
Table: Philippines - Largest Listed Mining Companies
46
Company Profile
48
Nickel Asia
48
Table: Nickel Asia - Key Financial Data
50
Philex Mining Corporation
52
Table: Philex Mining - Key Financial Data
54
Semirara Mining Corporation (SMC)
56
Table: Semimara Mining - Key Financial Data
58
Regional Overview
60
Asia - Q3 2014
60
Challenges
60
Opportunities
63
Global Industry Overview
68
Challenges
68
Table: Mining - Select M&A Deals
72
Cause For Optimism
75
Methodology
82
Industry Forecast Methodology
82
Sources
83
Risk/Reward Rating Methodology
84
Table: Mining Risk/Reward Ratings Indicators
86
Table: Weighting Of Indicators
87

The Philippines Mining Report has been researched at source and features Business Monitor International (BMI)'s mining and commodity forecasts for metals, minerals and gems, covering all major indicators including reserves, production, exports and values. The report also analyses trends and prospects, national and multinational companies and changes in the regulatory environment.

BMI's Philippines Mining Report provides industry strategists, service companies, company analysts and consultants, government departments, trade associations and regulatory bodies with BMI's independent forecasts and competitive intelligence on the mining industry in Philippines.

Key Benefits

  • Use BMI's independent industry forecasts on Philippines to test other views - a key input for successful budgeting and planning in this mining market.
  • Target business opportunities and risks in Philippines's mining sector through our reviews of latest mining industry trends, regulatory changes and major deals, projects and investments in Philippines.
  • Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. KPIs and latest activity), Key Projects Tables and Competitive Landscape Tables.

Coverage

BMI Industry View

Summary of BMI's key forecasts and industry analysis, covering mining reserves, supply, demand and prices, plus analysis of landmark company developments and key changes in the regulatory environment.

Business Environment Rankings

BMI's Mining Business Environment Rankings provide a country-comparative Risk-Reward Rankings index aimed at investors (mining companies and support service providers) in the regional mining market. The rankings methodology makes sophisticated use of over 40 industry, economic and demographic data points and is part of BMI's integrated Country Risk-Industry rankings products.

Key Projects

Details and analysis of all current and planned developments (new ventures, capacity expansion and other investments) across the sector broken down by metal/ore.

BMI Industry Forecasts

Historic data series (2009-2012) and forecasts to end-2018 for all key industry and economic indicators (see list below), supported by explicit assumptions, plus analysis of key downside risks to the main forecast. Indicators include:

  • Mining Industry: Industry size (US$mn), real growth (%), % of GDP, employment ('000), workforce as % of total workforce, average wage (US$).
  • Output:Production volumes ('000 tonnes, carats etc.) for all major metals, minerals, ores and gems mined in each state, including bauxite, copper, gold, coal, lead, silver, tin, titanium, uranium, zinc etc.
  • Exports: Value of exports (US$mn) for all major metals, minerals, ores and gems mined in each state .
  • Commodity Markets: Global demand, supply, stocks and benchmark prices (US$) for aluminium, copper, lead, nickel, tin, zinc, gold and steel.

BMI Macroeconomic Forecasts

BMI forecasts to end-2018 for all headline macroeconomic indicators, including real GDP growth (%), inflation (%), fiscal balance (% of GDP), trade balance (US$bn), current account (US$bn) and external debt (US$bn).

Competitive Landscape Tables & Analysis

Comparative company analyses and tables detailing by US$ sales, % share of total sales, number of employees, year established, market cap/NAV, ownership structure, production and % market share.

Company Profiles

Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI's industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.

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Testimonials

'An essential, multi-faceted research tool. BMI’s thorough understanding of the major market players enables an informed – and informative – review of the sector’s actual performance, together with useful insights into current industry issues, which are topped-off with detailed and invaluable forecasts of industry and macroeconomic trends.’

Senior Research Analyst, ABC International Bank plc