Philippine President Ferdinand Marcos Jr. is poised to breathe new life into the country’s mining sector, with a particular focus on its nickel industry, through proposed reforms to the Philippine Mining Act of 1995. The envisioned legislation seeks to overhaul taxation structures, integrate environmental considerations, and enhance stakeholder engagement. These initiatives have the potential to position the Philippines as a frontrunner in the global nickel market.
Revamping Mining Laws to Boost Nickel Industry
The reform bill introduces a four-tier, margin-based royalty system, ranging from 1.5% to 5%, contingent on the mine’s location. Furthermore, environmental factors will play a pivotal role in the approval process for new mining operations. This approach marks a departure from the current system, which hinges on specific mining agreements and applies royalties solely to mines within designated mineral reservations.
Moreover, the proposed reforms will encompass crucial elements of project approvals that were previously absent, as noted by S&P Global analyst Paul Manalo. These include considerations such as local community and local government involvement, as well as biodiversity conservation. While the bill awaits Senate approval, it has garnered strong support from government officials and industry stakeholders. Michael Toledo, chairman of the Chamber of Mines of the Philippines, expressed optimism, stating, “The president himself mentioned to me that he is fully aware of mining’s significance to our country’s socioeconomic progress and the challenges inhibiting the industry’s full potential.”
Sustainability and Innovation at the Core of New Policies
President Marcos has been a vocal proponent of responsible and sustainable mining practices since assuming office in mid-2022. At the 2023 Presidential Mineral Industry Environmental Award ceremony, he underscored the importance of clean and efficient extraction processes that facilitate land restoration. Marcos emphasized the need to drive innovation through research into novel mineral processing methods aimed at reducing waste and energy consumption.
The Philippines, as depicted in the 2023 production chart, stands as the second-largest producer of mined nickel. It maintained this position last year, boasting 13.4 million metric tons of reserves and resources. The country produced 387,000 metric tons of nickel in the previous year, trailing only Indonesia, according to data from S&P Global Market Intelligence. However, both the government and industry leaders are eager to ramp up production and broaden the value chain by processing nickel domestically.
Toledo highlighted the imperative of collaborating with international partners such as South Korea, Japan, and the European Union to access alternative smelting technologies. He further emphasized that mineral extraction and processing form the bedrock of the clean energy supply chain. Presently, there exists an insufficient supply of ore to meet the demands of facilities still under development.
Digital Transformation in Mining Permits
The Philippine government is taking strides to enhance regulatory processes within the nickel and other metals sector. In October 2024, a digital application system for mining permits was launched in three regions, with plans for nationwide expansion. This initiative aims to slash permitting timelines to two years, a significant improvement over the current processing period.
Additionally, the Department of Environment and Natural Resources (DENR) is crafting an executive order to clarify conflicting interpretations of existing mining royalty laws. In the first quarter of 2024, the Philippines greenlit 785 mining-related permits, encompassing mineral production sharing agreements, financial or technical assistance agreements, and exploration permits. Despite these approvals, 1,509 applications are still under review.
Prices and Prospects for the Nickel Market
Globally, nickel prices underwent substantial volatility in late 2024, driven by macroeconomic and political shifts following Donald Trump’s U.S. presidential election victory. The LME three-month nickel price plummeted to a four-year low, influenced by various concerns, including Trump’s economic policies and escalating LME inventories. Investor sentiment was further swayed by China’s fiscal stimulus package, which fell short of expectations.
Although nickel prices briefly surged post-Trump’s victory, they swiftly plummeted amidst apprehensions over heightened tariffs on Chinese imports and prolonged high interest rates. By late November, nickel prices rebounded owing to Indonesia’s stricter mining policies and a 50-fold surge in nickel ore imports. Amidst these fluctuations, a rising player in the nickel arena is Alaska Energy Metals Corporation (AEMC), making significant strides in the United States. The company is advancing U.S. nickel independence, with its flagship Nikolai project in Alaska boasting substantial reserves of nickel, copper, cobalt, and platinum group metals crucial for renewable energy and electric vehicles (EVs).
The Canadian nickel junior prioritizes sustainability and critical mineral supply, aiming to reduce U.S. reliance on imports. While the market’s sensitivity to global economic and geopolitical events is evident through price fluctuations, the Philippine Chamber of Mines remains optimistic about nickel’s long-term prospects. Projections indicate global nickel production is set to surpass 4 million metric tonnes by 2030, driven by the global energy transition, with robust demand anticipated for the metal, a key component in EV batteries and renewable energy storage.
One element of uncertainty lies in the geopolitical repercussions of U.S. President Donald Trump’s return to office. Trump’s threats to disrupt existing trade relationships could potentially impact global metals trade flows. In response, Toledo noted that while Trump’s re-election may impede progress towards net zero emissions, it is unlikely to halt it entirely.
With abundant nickel reserves and forthcoming strategic reforms, the Philippines stands poised to fortify its position in the global mining landscape. The proposed legislation’s emphasis on sustainability, innovation, and efficiency holds the potential to unlock fresh opportunities, attract international investments, and elevate the country’s stature as a key supplier in the clean energy transition. Should the bill come to fruition, the nickel mining industry could emerge as a cornerstone of the Philippines’ economic growth in the years ahead.
