London 21/07/2016 - Concerns that mining in the Philippines has been affected by the recent audit have been overblown, the Philippines Chamber of Mines' legal expert Ronald Recidoro said.
Still, some companies remain at risk of enforced closures and industry investment is on hold, he told FastMarkets in an interview.
"For companies that are fully compliant with environmental laws, they are confident of passing the forthcoming audit," he said.
Shortly after taking office, newly installed Philippines Department of the Environment and Natural Resources (DENR) secretary Regina Lopez, formerly an environmental rights activist, launched an environmental audit of the mining industry and suspended several operations in the country.
Five mining companies have had their licences to dig for metal suspended including two producers of nickel ore, of which the Philippines is a key supplier to the main consumer market of China.
Operations at BenguetCorp Nickel Mines and Zambales Diversified Metals - with combined capacity of 20,000-25,000 tonnes per year - were suspended last Friday by the government while it reviews their environmental impact and each company's rehabilitation programmes.
These developments have seen LME three-month delivery nickel prices surge to $10,900 per tonne today, their highest since August 2015 - investors are betting on a dwindling of international supply following Indonesia's ore ban last year. Physical refined nickel markets have have seen little effect yet, though.
But supply fears may be overstated, with production losses not as great as have been widely reported regarding Zambales in particular.
"The four mines 'suspended' in Zambales have not been operating since 2015 due to a prior cease-and-desist order issued by the local EMB [Environmental Management Bureau]," Recidoro said.
And in any case most major mining projects in the Philippines are fully compliant with international mining regulations, making it difficult for them to be shut down even if the government wished to do so, he added.
"While we in the Chamber of Mines were initially apprehensive of the new DENR Secretary's pronouncements (given her history as a vocal anti-mining activist), the DENR is still bound by existing law and policy, and the Secretary cannot arbitrarily shut down mines without due process," he said.
MINING COMPANIES SPEEDING UP COMPLIANCE PROCESS
Out of the 43 operating large-scale metallic mines in the Philippines, 21 have already secured ISO 14001 (environmental administrative order issued last) certifications for their environmental management systems and therefore are unlikely to be cited.
"The rest are all still in the process of getting certified. However, these companies still in-process are the smaller mines and will not substantially impact the country's exports of metallic ores," Recidoro said.
Mining companies are already making efforts to speed up their application process and many are in the final stages of compliance, he added.
On the other hand, the government audit will be rigorous; the Chamber of Mines is concerned that it will take longer than the three-week timetable initially outlined.
"There are about 43 large-scale metallic mines, hundreds of non-metallic mines and quarries, and thousands of small-scale mining operations throughout the country - legal and illegal," he said.
Those that have not complied with regulations are at risk of having their export permits suspended.
"There is a risk of suspension of operations, given that the penalty for non-compliance is the suspension of their Environmental Compliance Certificates (ECCs) and the non-issuance of Ore Transport Permits (OTPs)," Recidoro said.
But in the long run mining in the Philippines should grow as long as miners ensure appropriate environmental conditions are met, with 10 major mining projects in the pipeline awaiting regulatory approval, he added.
"We take heart in President Duterte's early pronouncement that he will support the mining industry provided that mining is done in compliance with the highest standards - citing Australia and Canada as examples," Recidoro said.
(Editing by Mark Shaw)