New Indonesian law restricting mining investments to benefit RP

Published by rudy Date posted on February 9, 2009

The Philippine mining sector stands to benefit from a new Indonesian law imposing stricter requirements on investments in the Indonesian mining sector, Mines and Geosciences Bureau director Horacio Ramos said.

He pointed out the new Indonesian law will restrict mining explorations, impose additional mining permits and require all investors to engage in downstream processing of minerals, thus strengthening Indonesia’s control over its mineral resources.

Mining industry analysts believe the new Indonesian law would scare away investors because it would increase their operating costs in that country.

The Philippines, on the other hand, would  benefit from the Indonesian move since the Philippines, while encouraging more downstream processing, still allows operations up to concentrates only, Ramos said.

Under the new law, mining investors would have to make investments up to smelting and refining which would involve a lot more capital.

This early in the year, Japanese investors have already expressed keen interest in the Philippine mining sector, Ramos said. Except for Sumitomo, there are only few big Japanese investors in the country’s mining industry.

However, interest is picking up as Japanese investors are eagerly exploring the Philippines’ investment and mining policies.

“They know we have the minerals and that our mining environment is now receptive,” Ramos said.

“Many are now looking at the Philippines because we are not restrictive,” he added.

However, he admitted that the Philippines is not likely to grant more fiscal or tax incentives to potential investors.

“No more tax breaks,” he said.

But, he pointed out that “during this slump, it is the best time for mining companies to restructure their operations to cut unnecessary cost and implement a more efficient mining operation that maximizes their resources.”

The MGB official said there are plenty of mining projects available to interested investors.

“It is time for groups to buy in on bargain mining projects which are below their commercial value,” Ramos said.–Marianne V. Go, Philippine Star

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