April 15th, 2021
Salceda on new EO allowing mining agreements: Welcome news for PH bid for renewables, economic recovery; House tax chair wants fiscal regime, ground rules for mining established
House Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) says that the establishment of new mining agreements will pave the way for the country’s bid for competitiveness in the electric vehicle and renewable energy battery sector, as well as the country’s long-term economic recovery.
“We are currently in a mineral boom, and metallic resources that we have in abundance, like gold and silver, are at elevated prices. Because there has been much monetary expansion all over the world, investors want to hedge their bets on some store of value. Gold has been the first choice for that, historically,” Salceda said, citing the fact that the Philippines has some of the world’s largest deposits of the precious metal.
“We also have Asia’s 2nd largest reserve of nickel in Asia, and we have large reserves of copper. These minerals are crucial to the global push for electric vehicles, as they are critical inputs to the batteries that power these vehicles. Nickel has also seen historic highs this year,” Salceda added.
“So, it can only mean well for our economic recovery, especially if we can set up the ground rules and the tax regime for mining well.”
PH as top supplier for EVs, renewables
Salceda says that the Philippines should now develop a plan to aggressively play a role in developing inputs to electric vehicles using its mineral resources.
“In the past, renewable energy was not always relied upon because of fluctuations in supply. When there’s no wind, there is little wind-powered energy supply. Solar energy requires consistent sunlight, and so on,” he added.
With powerful battery technology, driven by nickel and cobalt—another Philippine product—renewable energy can be stored better, so that fluctuations are managed, the lawmaker said.
“In other words, we now have the power and the prospects to create millions of jobs in renewable energy, battery manufacturing, sustainable mining, and related sectors. This will be a key driver of economic recovery post-Covid, but we have to be very wise with our policies,” Salceda said.
Over the next 10 years, the House leader added, some 1.3 million jobs await the country in nickel-related industries.
“The world appears to see that this is the future. Top nickel buyer and electric vehicle manufacturer Tesla is already larger in market cap than all other major car manufacturers combined. Chinese electric vehicle manufacturers are also rising. Nickel will be very big, and as one of the world’s largest producers of nickel, we will be very important, if we will be wise,” he said.
Salceda also adds that the country “can become a global power in renewable energy and in the electric vehicle supply chain, but only if it makes the right policy moves.”
“The Philippines remains among the world’s largest producers of nickel. Despite taking a small production dip between 2017 and 2018, when nickel production fell from 366,000 MT to 340,000 MT, the nation increased its output to 420,000 MT in 2019. That is very strategic, when you account for the potential growth in prices of nickel.”
New policies needed to protect environment, maximize revenues and value-added
Meanwhile, the House tax chief recommended five key policies that Congress and the executive have to work together on to ensure that the benefits of the industry are maximized.
First, Salceda says, the fiscal regime on mining has to be enacted so that tax uncertainty can be removed. Salceda is a principal author of the existing proposal in the House on the matter (HB 6135)
“Second, we have to establish a counter-cyclical mining trust fund that will accumulate revenues during commodity booms, and distribute aid to mining communities during commodity busts. It will help smoothen the impact of global prices on the communities that depend on mining for its economic survival.”
“Third, we must secure our energy supply.
Mining has very high energy requirements. We may need to integrate mines with the downstream natural gas sector as the cleanest source of cheap power among the non-renewables.”
“Fourth, we need to encourage value-added. To maximize the benefits of its extractive industry, the Philippines should promote domestic value-added. The launching of the Leyte Ecological Industrial Zone (LEIZ) roadmap, accompanied by the Copper Industry Development Roadmap, is a welcome development in this direction. The country should make a push to occupy significant portions of the electric vehicle and battery manufacturing space.”
“Fifth, we need to keep investing in research and development to find new ways to create value in mining. I strongly believe that R&D in mining should be part of the Strategic Investment Priorities Plan (SIPP) under CREATE, and should get the highest tier of benefits,” Salceda added.
Salceda to confer with DOF on way forward
“My committee will continue to exercise oversight over the fiscal aspects of this new development. There are matters that need to be settled as to how the revenues will be shared with communities and the national government. Remember this is national patrimony.” Salceda said.
“I will confer with the Secretary of Finance to see what we can do. The EO says the DOF and the DENR will have to harmonize the existing revenue sharing agreements, but they have very limited power to do that without legislation,” Salceda added.