Philippines Mining Report

Published 12 February 2015

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Philippines Mining Report

BMI View: The mid-2014 exit of Glencore Xstrata from the USD 5.9bn Tampakan copper-gold project reflects continuing challenges for mining investment in the Philippines, largely due to subdued metal prices . Moreover, resource nationalism will remain a threat as the Philippine government continues to consider raising taxes on the mining sector.

Falling metal prices and fading attraction of frontier mining will continue to dampen investment into the Philippines' mining space over the coming years. As spotlighted by the exit of Glencore Xstrata from the USD5.9bn Tampakan project in South Cotabato, which announced its decision to sell its stake in the mine in a bid to prune its portfolio and focus on the development of brownfield projects, we expect the majority of international miners to focus on brownfield investment rather than costlier and riskier greenfield projects. Indeed, we believe frontier regions will suffer the brunt of cutbacks in investment given the inherent risks and huge capital commitment associated with immature regulatory frameworks and a paucity of sound infrastructure. However, domestic players will continue to expand their footprint and develop deposits deemed economical. Average annual sector growth will come in at 5.3% in 2015-2019, though this will be from a low base. Moreover, the mining sector will continue to make up a minor part of the wide Philippine economy.

Philippines - Number Of Operating Metallic Mines
2010 2011 2012 2013 2014*
Source: Mines and Geosciences Bureau. Note: *As of Q314.
Copper (with gold) - - - 1 1
Copper (with gold & silver) 3 3 3 2 3
Copper (with gold, silver, & zinc) 1 1 1 2 1
Gold (with silver) 8 5 6 6 6
Chromite 1 2 3 3 3
Nickel 15 18 21 24 27
Iron - 1 2 3 5
Total Operating Metallic Mines 28 30 36 41 46

Despite Mineral...

Table of Contents

BMI Industry View
7
Table: Philippines - Number Of Operating Metallic Mines
7
SWOT
12
Industry Forecast
13
Copper: Sharp Slowdown From Boom Years
13
Table: Philippines - Copper Mine Production
15
Gold: Losing Sparkle With Falling Prices
15
Table: Philippines - Gold Mining Projects
17
Table: Philippines - Gold Production Forecast
18
Nickel: Nickel Asia To Drive Growth
19
Table: Philippines - Nickel Production Forecasts
21
Industry Risk Reward Ratings
22
Asia - Q3 2014
22
Table: Asia - Mining Risk/Reward Index
26
Risk/Reward Ratings
26
Rewards
27
Industry Rewards
27
Country Rewards
27
Risks
28
Industry Risks
28
Country Risks
28
Table: Philippines - Mining Industry Value & Production Forecasts
29
Regulatory Development
30
Table: Asia - Mining Regulatory Scorecard
31
Table: Philippines Political Overview
32
Commodities Forecast
34
Commodity Strategy
34
Iron Ore: Fading Iron Will
34
Steel: Global Glut To Weigh On Prices
36
Aluminium: Fundamentals To Remain Weak
37
Copper: All Eyes On China
38
Lead: Outperforming Its Troubled Peers
39
Nickel: Monthly Outperformer
41
Tin: Outperforming A Weak Field
42
Zinc: Further Consolidation Likely
43
Table: Select Commodities - Performance & BMI Forecasts
45
Competitive Landscape
46
Table: Philippines - Largest Listed Mining Companies
46
Company Profile
48
Nickel Asia
48
Table: Nickel Asia - Key Financial Data
50
Philex Mining Corporation
52
Table: Philex Mining - Key Financial Data
54
Semirara Mining Corporation (SMC)
56
Table: Semimara Mining - Key Financial Data
58
Regional Overview
60
Asia - Q3 2014
60
Challenges
60
Opportunities
63
Global Industry Overview
68
Challenges
68
Table: Mining - Select M&A Deals
72
Cause For Optimism
75
Methodology
82
Industry Forecast Methodology
82
Sources
83
Risk/Reward Rating Methodology
84
Table: Mining Risk/Reward Ratings Indicators
86
Table: Weighting Of Indicators
87

The Philippines Mining Report has been researched at source and features BMI Research's mining and commodity forecasts for metals, minerals and gems, covering all major indicators including reserves, production, exports and values. The report also analyses trends and prospects, national and multinational companies and changes in the regulatory environment.

BMI's Philippines Mining Report provides industry strategists, service companies, company analysts and consultants, government departments, trade associations and regulatory bodies with BMI's independent forecasts and competitive intelligence on the mining industry in Philippines.

Key Benefits

  • Use BMI's independent industry forecasts on Philippines to test other views - a key input for successful budgeting and planning in this mining market.
  • Target business opportunities and risks in Philippines's mining sector through our reviews of latest mining industry trends, regulatory changes and major deals, projects and investments in Philippines.
  • Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. KPIs and latest activity), Key Projects Tables and Competitive Landscape Tables.

Coverage

BMI Industry View

Summary of BMI’s key forecasts and industry analysis, covering mining reserves, supply, demand and prices, plus analysis of landmark company developments and key changes in the regulatory environment.

Industry SWOT analysis

Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the mining sector and within the broader political, economic and business environment.

BMI Industry Forecasts

Historic data series (2009-2013) and forecasts to end-2019 for key industry and economic indicators, supported by explicit assumptions, plus analysis of key risks to the main forecasts. Indicators include:

  • Mining industry: Industry size (USDmn), real growth (%), % of GDP, employment (‘000), workforce as % of total workforce, average wage (USD).
  • Output: Production volumes (‘000 tonnes, carats etc.) for all major metals, minerals, ores and gems mined in each state, including bauxite, copper, gold, coal, lead, silver, tin, titanium, uranium, zinc etc.
  • Exports: Value of exports (USDmn) for all major metals, minerals, ores and gems mined in each state.
  • Commodity markets: Global demand, supply, stocks and benchmark prices (USD) for aluminium, copper, lead, nickel, tin, zinc, gold and steel.

BMI’s Mining Risk Reward Index

BMI’s Risk Reward Indices provide investors (mining companies and support service providers) looking for opportunities in the region with a clear country-comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide indices of highest to lowest appeal to investors, with each position explained.

Competitive Landscape Tables & Analysis

Comparative company analyses and tables detailing USD sales, % share of total sales, number of employees, year established, market cap/NAV, ownership structure, production and % market share.

Key Projects

Details and analysis of all current and planned developments (new ventures, capacity expansion and other investments) across the sector broken down by metal/ore.

Company Profiles*

Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.

Sources

The Mining reports are based on an extensive network of primary sources, such as multilateral organisations (UN, WB, IMF), national chambers of commerce and industry, national statistical offices, government ministries and central banks, and multinational companies.

*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.

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Testimonials

'An essential, multi-faceted research tool. BMI’s thorough understanding of the major market players enables an informed – and informative – review of the sector’s actual performance, together with useful insights into current industry issues, which are topped-off with detailed and invaluable forecasts of industry and macroeconomic trends.’

Senior Research Analyst, ABC International Bank plc