Domestic processing not the right approach for Phl mining — expert

Pursuing domestic processing in the country is not necessarily the right approach that the Philippines should take and the country should learn its lessons from the experience of Indonesia, a mining expert said.

Bill Sullivan, senior foreign counsel from the Christian Teo & Partners in Indonesia, said Indonesia’s experience with compulsory processing is not encouraging for the Philippines.

“Moving down the value chain and requiring full processing of all minerals do not necessarily mean Philippines will derive increased benefit from the local mining industry,” Sullivan said during the Mining Conference Philippines 2017 on Wednesday.

“Domestic processing is something that Indonesia has struggled with for many years. Before pursuing it, the government should study the Indonesian experience and learn from Indonesia’s mistakes in handling compulsory processing,” he added.

Sullivan said risks include imposition of extra costs, no buyers of expensive processing minerals which can be sourced more cheaply from other countries and inadequate infrastructure.

He added there is also negative impact on Philippine export earnings and tax revenues from sale of unprocessed minerals, and trade balance as the country imports capital equipment required for processing.

During the implementation, 18 nickel smelters in Indonesia had closed while others were not in operation and unprofitable and the changes in government policy and regulation created confusion and uncertainty.