The Philippines: Mining magnet

fr: The Oxford Business

The mining industry in the Philippines seems set for a boom, with earnings advancing and large-scale projects scheduled to come on-line over the next few years. However, lingering concerns over the global economy could dent demand and slow the flow of investment, as could uncertainty over regulations governing the industry.

It is estimated that the Philippines is sitting on some $1trn-worth of mineral wealth, with gold, nickel, copper, silver and zinc the largest reserves. If anything, this estimate is on the conservative side, with many regions of the widespread country yet to be fully surveyed for potential deposits.

It was not until 2005 that the industry really began to take off, after the Supreme Court confirmed the legality of the 1995 Philippine Mining Act, which allowed 100% foreign equity in mining projects. The long-running dispute over the act, with legal suits and court hearings dating back to 1997, had done much to discourage overseas investment in the sector. Combined with government efforts to streamline bureaucratic procedures, including speeding up the approval process for new projects from three to five years to just six months, the final confirmation of the act’s validity did much to boost interest in the industry.

That interest is now paying dividends. A report issued on May 31 by the Mines and Geosciences Bureau (MGB), part of the Department of Environment and Natural Resources, forecast the value of metallic mineral production in the Philippines to soar by 24% this year, with earnings of $3.1bn, up from $2.5bn in 2010. These figures do not take into account non-metallic mining activity, which is estimated to have accounted for $750m last year. Overall, mining contributed 1.7% of GDP in 2010, a figure that could well hit 2% if, as the bureau predicts, metal prices remain strong throughout the year.

“This optimistic outlook can be attributed to the sustained upbeat price of metals in the world market during the year, coupled with the projected growth in the mine output of local mineral producers,” the MGB report said. “Given the current state of the world economy, gold and silver, with their commercial and monetary utility, are expected to remain bullish.”

Though a renewed global economic downturn may prompt greater demand for precious metals such as gold, a return to recession could see other segments of the Philippine mining industry feel a chill, with nickel, sands, gravel and cement production in line for a slowdown if demand cools.

Another concern local and international mining companies have is the differing layers of administration in the country, with regional governments at times enacting regulations that are at odds with national laws governing the industry. One such issue involves Xstrata’s $5.9bn Tampakan Copper-Gold Project in the southern province of South Cotabato, which has faced long delays after the local government imposed a ban on open-cut mining.

While the company is still hopeful it can have the ban overturned by presenting a favourable environmental impact study, and the Department of Justice has advised that the local action is contrary to national legislation, there is no guarantee that the order will be lifted and work allowed to resume. There have been bans on mines in other regions as well, but none involving projects as large as Tampakan. Such uncertainty can make investors uneasy, especially when large sums of money are involved in what is already a risky industry.

If Tampakan, which is still scheduled to begin full production in 2016, does get the final go ahead, it has the potential to become the biggest mine in the Philippines and the fifth-largest copper mine in the world. The project’s supporters claim the mine will add a full 1% to GDP when it comes on-line, and provide much-needed employment in the South Cotabato region.

A proposal by the Department of Environment and Natural Resources to add a 5% royalty fee to the current 2% excise tax and other levies – amounting to some 15% of gross revenues on most mining operations – has also been met coolly by the industry. Some, such as Gavan Collery, the vice-president for corporate affairs at Indophil Resources NL, one of the partners in the Tampakan project, feel that a hike in duties may stifle the industry just at the time it is taking off.

“The mining industry is very young,” he said in an interview with Business World on June 16. “We’d like the government to ease off a little bit and allow the industry to go forward.”

Though some miners remain cautious, government officials have vowed to dig in and overcome any obstacles to future growth in the industry. Speaking in the Australian capital, Canberra, on June 16, where he was attending a joint Philippines-Australia ministerial meeting, the trade undersecretary, Adrian Cristobal Jr, said the government was determined to promote mining.

“There are issues and challenges in mining but that is not unusual in mining for any country,” said Cristobal. “There are policies and laws that will have to be reviewed. We are determined to resolve these issues.”

While the government may be determined, so too are many opponents to large-scale mining, and it may take some time for the concerns of both the industry and lobby groups to be addressed and a balance struck to allow for sustainable development. Once that is achieved, the Philippines will be able to exploit the gold mine it is already sitting on.

*You better believe this!

Gold, Silver Prices Mixed Before Fed Comments

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Gold and silver are waiting for Federal Reserve Chairman Ben Bernanke to speak at the International Monetary Conference in Atlanta, where he is expected to give his outlook for the economy at 3:45 p.m.

If the recent jobs and manufacturing data are causes for concern, speculation will ignite over the possibility of another quantitative easing program, i.e. lots of cheap money in the system, which would be good for gold and silver as inflation hedges. On the other hand, if Bernanke acknowledges the disappointing data but signals the economy is on track, experts will be looking for signs of monetary tightening like a rate hike.

In the meantime, gold has been stealthily zeroing in on its record close of $1,557.10 an ounce. Its record intraday high is $1,577.40, but a new record settle could put the metal back on investors' buy lists especially if fund managers jump back into the market.

Phil Streible, senior market strategist at Lind-Waldock, said gold will resume its uptrend "as long as we stay above $1,515." Streible sees prices between $1,580-$1,620 an ounce once gold sees a two-day close above the $1,550 level.

A weaker dollar should help gold and silver prices. The U.S. dollar index is currently down 0.63% at $73.52 as the European Union, IMF and European Central Bank seem intent on helping Greece out of its fiscal crisis.

There are also increased expectations that the ECB at its meeting Thursday could signal an interest rate hike of 25 basis points in July. The key phrase will be "strong vigilance," which has been the signal of a rate hike in the past. Inflation was reportedly 2.7% in May above the central bank's 2% target rate. A rate hike would give more confidence to the euro and pressure the dollar.

Streible points out that gold has been moving with the dollar recently, disrupting their typical inverse correlation, but a weaker dollar makes gold cheaper in other currencies, which will only add to its appeal. Streible isn't scared off by high prices and urges investors who aren't exposed to gold or silver to dollar cost average each month, or buy a set amount of the metals regardless of price.

*The US Financial position is going to get worse.

Buffett Says Federal Debt Poses Risks to Economy

By Shamim Adam

Aug. 19 (Bloomberg) -- The U.S. must address the massive amounts of “monetary medicine” that have been pumped into the financial system and now pose threats to the world’s largest economy and its currency, billionaire Warren Buffett said.

The “gusher of federal money” has rescued the financial system and the U.S. economy is now on a slow path to recovery, Buffett wrote in a New York Times commentary yesterday. While he applauds measures adopted by the Federal Reserve and officials from the Bush and Obama administrations, Buffett says the U.S. is fiscally in “uncharted territory.”

The government is trying to spark business and consumer spending through a $787 billion stimulus plan spanning tax cuts and infrastructure projects, while the Treasury and the Fed have spent billions more on separate programs to rescue financial institutions and resuscitate the banking system. The U.S. budget deficit is forecast to reach a record $1.841 trillion in the year that ends Sept. 30.

“Enormous dosages of monetary medicine continue to be administered and, before long, we will need to deal with their side effects,” Buffett, 78, said. “For now, most of those effects are invisible and could indeed remain latent for a long time. Still, their threat may be as ominous as that posed by the financial crisis itself.”

The “greenback emissions” will swell the deficit to 13 percent of gross domestic product this fiscal year, while net debt will increase to 56 percent of GDP, Buffett said.

Warren Buffet is an authority on this and we should listen to what he is saying.

A recent newletter

I subscribe to a lot of newsletters from various credible precious metals sites and one of the introductions to a newsletter which caught my fancy was the following which i received from the site goldsilver.com. It looked something like this:

President Obama recently forewarned about "unsustainable" deficit spending and skyrocketing interest rates:

“We can’t keep on just borrowing from China,” Obama said at a town-hall meeting in Rio Rancho, New Mexico, outside Albuquerque. “We have to pay interest on that debt, and that means we are mortgaging our children’s future with more and more debt.”

- Bloomberg

Meanwhile John Williams of Shadowstats.com recently stated

"We will see inflation levels not seen in our lifetime by as early as the end of this year.".

And, from the press:

"U.S. producer prices rose faster than expected in April, government data showed on Thursday, driven by a surge in food costs. "

-WASHINGTON (Reuters)

Remember - the Federal Reserve has expanded our monetary supply by trillions upon trillions of Dollars. This will eventually lead to a run up in prices and daily living expenses. The masses won’t take action until their everyday pocketbook begins to take a hit.

Remember what $5 gasoline did for the demand of hybrid automobiles?
Imagine what $10 gallon milk will do to the price of Gold and Silver.


There is a cause for alarm and yet most of the so-called investors are trying to evoke a sense of normalcy or a bouncing back of the markets. That temporary relief in the markets is caused by the increase in the monetary supply which by economic sense is only temporary in nature. A hyperinflation is coming very soon to an economy near you.

A new way to own GOLD and Silver in the Philippines

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The papers and other press releases tell that there are signs of recovery for the later part of 2009, this would be a very subjective claim to make since there is a hyperinflation coming our way due to the irresponsibility of the US Federal Government to print more dollars to supposedly 'save' their economy. The lagging of the great economic recession that is coming our way leaves us ample time to gather our logic, our wallets and precious metals to be part of our portfolio. The way I see it, you have nothing to lose since if you buy it cheap and then the experts are wrong then you can always convert the metal into something valuable. If the experts are right then you will become a very wise investor and wealthy at that.

The best is still to come. I will keep you posted in this new investment vehicle on precious metals.

G20 leaders get OECD warning that global trade is in freefall

World leaders gathering for Thursday's G20 summit in London were warned today by the Organisation for Economic Co-operation and Development that the world economy was shrinking much faster than previously thought and that global trade was in freefall.

The Paris-based thinktank also told the British prime minister, Gordon Brown, there was no room for the type of fiscal stimulus that the prime minister had been touting around the world.

"The world economy is in the midst of its deepest and most synchronised recession in our lifetime caused by a global financial crisis and deepened by a collapse in world trade," the OECD said in its latest twice-yearly economic forecasts.

It predicted that in spite of big cuts in interest rates around the world, fiscal stimuli and banking system bailouts, recovery would not come until 2010 at the earliest.

The organisation had warned on Monday that unemployment among its 30 rich nation members was likely to rise by 25m in the current crisis.

Japan and Germany announced big rises in joblessness today: in Germany it rose to 3.5m, its highest since February 2008 and giving a jobless rate of 8.1%, while Japan's rate reached a three-year high of 4.4%. Japan announced a new fiscal stimulus package as it seeks to pull its economy - a big exporter punished by the slump in world trade - out of a deep recession.

Brown said G20 leaders should aim to save or create 20m jobs and must act together to increase the potential impact of their actions.

"Leaders meeting in London must supply the oxygen of confidence to today's global economy and give people in all of our countries renewed hope for the future," he said .

The OECD expects global trade volumes to slump by 13% this year. "International trade is in freefall," it said.

It expects its member economies to shrink by an average 4.3% this year, with the United States contracting by 4%, the eurozone by 4.1% and Japan by 6.6%. It forecasts Britain's economy will shrink by 3.7% - the worst performance since the second world war.

Separately, the World Bank forecast that growth in the developing world would slow to just 2.1% this year from 5.8% in 2008.

"Across the developing world, we see that conditions of recession are affecting the poorest people, making them even more vulnerable than before to sudden shocks but also reducing opportunities available to them, and frustrating their hopes," said Justin Yifu Lin, the World Bank's chief economist.

The OECD echoed comments made last week by the Bank of England governor, Mervyn King, when he said Britain's worsening budget deficit meant the government had little room to cushion the impact of the recession if it turned out to be deeper than expected.

The government said late last year it expected to have to borrow £118bn in 2009 to cover its deficit but economists now think that number will balloon to £150bn or higher, equivalent to more than 10% of gross domestic product, an all-time record.

"The room for additional fiscal manoeuvre to respond to worse-than-expected activity developments is therefore limited and new measures would need to be accompanied by detailed and credible fiscal consolidation plans in order to ensure that confidence is not eroded," the OECD said.

Until last week, Brown appeared determined to announce a new stimulus package in the 22 April budget, but he was forced to backtrack after King warned against a giveaway.

Opposition politicians have seized on King's warning to embarrass Brown as he prepares to host the G20 summit.

The OECD urged the Bank of England to hold interest rates near zero until the end of next year to support the economy. It sees a further small contraction in national income in 2010 but thinks a recovery should take hold during next year.

The World Bank president, Robert Zoellick, responded by announcing a $50bn (£35bn) programme to counter the decline in world trade.

Speaking in London, Zoellick backed the dollar as the world's main reserve currency but said he feared the world economy could stumble further into recession.

"Everyone needs to approach this crisis with a healthy dose of humility because we've seen surprises; we still face high uncertainty," he said. "It remains a dangerous year in terms of downside risks."

As US President Barack Obama set off for London, fresh figures showed US house prices were falling at their fastest pace on record. They have now lost nearly a third of their value since the 2006 peak.

This will be the first major overseas trip of Obama's presidency, during which he will hold bilateral talks with the leaders of China and Russia among others.

*And the worldwide economic freefall begins, protect yourself through investments in the metal commodities now.

9 of 10 Pinoys see worse times ahead - survey

GMANews.TV - Sunday, February 22

MANILA, Philippines - Nearly nine out of 10 Filipinos see worse times in the next six months due to the global economic crisis, while six of 10 do not expect government to deal with the crisis well.

These were the highlights of a survey conducted on some 1,500 respondents last January by militant think tank IBON Foundation.

"As the country faces uncertainty in the face of the global economic downturn, the latest IBON survey shows that majority of Filipinos doubt that the administration will be able to address the crisis well," IBON said on its website.

It said the survey shows that out of the 86.2 percent respondents who were aware of the global crisis, 61.41 percent said government would not deal with the crisis adequately in the coming six months. Only 4.56 percent said it will deal with the crisis well, while 32.64 percent had no answer.

Worse, IBON said 87.94 percent of the respondents believe that the crisis would worsen their family's livelihood or income in the first half of the year. Only 9.13 percent said the crisis would not have any effect, while an even fewer 1.7 percent believe their situation will improve.

IBON said its survey was conducted from January 7 to 16, 2009 across various regions and sectors nationwide, with a margin of error of plus or minus three percent. - GMANews.TV

*Hard times ahead, as a result of the US printing and flooding the world with it's funny money, each citizen of it's planet is made to bear the burden of it's crazy fiscal policies. Don't be a victim, secure precious metals among your