The Philippines will remain a compelling case for miners at least until the end of President Rodrigo R. Duterte’s term in 2022 despite an increasingly trying regulatory environment, according to Fitch Solution’s Philippines Mining Report.

“Environmental regulations, high taxes and resource nationalism will continue to plague the mining industry of the Philippines,” the report’s executive summary read.

“However, we maintain that the industry is well-positioned for longer-term growth as foreign miners look to take advantage of the country’s sizeable and relatively untapped deposits, and low operating costs.”

But the same summary showed the increase of the mining industry’s production value slowing gradually to two percent by 2022 from an estimated six percent this year.

Among others, copper production growth will slow to 4.6% annual average over 2018-2027 from an actual 18% in 2008-2017, while nickel ore production growth is projected to decelerate even more to 2.7% annually over 2018-2027 from 22% in 2008-2017 “because of the introduction of stringent regulations and depleting ore grades”.

Only gold will likely see better fortunes — turning around to a 5.7% annual average growth over 2018-2027 from an actual 2.6% drop in 2008-2017 — to be driven by “new projects coming on line and higher prices” of the precious metal in the years ahead. Fitch Solutions said it projects world gold prices to increase to $1,525 per ounce (/oz) by 2021 from $1,300/oz last year.

The Philippines’ status as one of the world’s biggest nickel suppliers and as a key producer of copper and gold notwithstanding, miners have been reeling from an unfriendly policy environment since the past administration imposed more than six years ago a moratorium on new mining permits until the government enacts a new revenue-sharing scheme with the industry.

There has been no respite from challenges as Mr. Duterte has signalled his general displeasure at the industry since the start of his administration.

A ban on open-pit mining — a method used by many extractive projects — has remained in force since last year.

Republic Act No. 10963 — or the Tax Reform for Acceleration and Inclusion Act (TRAIN) that came into effect in January — doubled to four percent the rate of excise tax which miners have to pay, while a new proposal that has just secured House of Representatives approval and is now being debated in the Senate increases royalties and introduces a margin-based windfall profit tax besides.

Miners in the country have complained that their sector is the most heavily taxed among peers in Southeast Asia, and 2015 simulations by the Finance department — before TRAIN doubled the industry’s excise tax — estimated that the industry had an average effective tax rate of 62%.

The Mines and Geosciences Bureau (MGB) reported in early September that value of metallic mineral production increased by four percent to P54.568 billion last semester from P52.423 billion a year ago, “brought about by improved metal prices in the world market”, even as volumes dropped.

Production of gold, which accounted for 41% of total metal output value, dropped to 10,703 kilograms (kg) worth P22.352 billion last semester from P11,674 kg worth P22.966 billion.

Mixed nickel-cobalt sulfide output, which accounted for 20.8% of total metal production value, dropped by eight percent in volume terms to 42,622 dry metric tons (DMT) from 46,444 DMT, even as value rose 13% to P11.376 billion from P10.085 billion.

Nickel direct shipping ore production, which contributed 17.96% to total value, dropped 10% in volume terms to 9.432 million DMT from 10.441 million DMT and by one percent to P9.801 billion from P9.908 billion.

Production of copper concentrate, which accounted for 19.05%, slipped by one percent in volume to 137,929 DMT from 138,689 DMT though value climbed 16% to P10.397 billion from P8.958 billion.

Average world prices of gold, copper and nickel went up last semester from a year ago, with nickel posting the biggest increase of 41% to $6.19 per pound (/lb) from $4.39/lb.

“Nickel price was boosted by an increase in demand from stainless steel production, coupled with falling inventories,” the MGB explained in a press release then.

Average world price of gold increased by 6.45% to $1,318.33 per troy ounce (/t oz) from $1,238.46/t oz, while that of copper gained 20.7% to $3.12/lb from $2.58/lb.

Preliminary first-half data from the Bureau of Internal Revenue show that the government raised P1.56 billion in mineral excise taxes, 67.16% more than the P940 million collected in 2017’s first six months.