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Philippines Faces Catastrophic Prospects for Nickel Industry After Proposed Tax on Ore Exports
Philippines Faces Catastrophic Prospects for Nickel Industry After Proposed Tax on Ore Exports

Philippines Faces Catastrophic Prospects for Nickel Industry After Proposed Tax on Ore Exports

  • 31-Jan-2023 12:46 PM
  • Journalist: Peter Schmidt

Philippine: The Philippine government is considering implementation of a tax on Nickel ore exports to incentivize miners in the country, the second biggest exporter of the material globally. Nickel is used in the making of stainless steel and batteries for electric vehicles, and such a tax would encourage miners to invest in local processing rather than exporting raw ore.

The Philippine Nickel mining industry has received a warning from its head this Tuesday. A government plan to impose a 10% tax on Nickel ore exports could cause local producers to close shop.

"The initial proposal in the House of Representatives was 10%. That will kill the industry," Dante Bravo, president of the Philippine Nickel Industry Association, stated.

The Philippines is looking to levy taxes on Nickel ore exports as a way of incentivizing miners in the world's second-biggest supplier of the material - which is utilized in the production of stainless steel and batteries for electric vehicles - to invest in local processing rather than merely exporting unprocessed ore.

Antonia Yulo Loyzaga, Secretary of the Department of Environment and Natural Resources --which also oversees the mining sector—expressed "there's a range of actions including a progressive look at taxing exports" of raw Nickel.

Indonesia is an example of a country that has seen the benefits of banning Nickel ore exports. As a result, there has been an influx of investment into mineral processing plants, and the trend is set to continue with additional bans on exports for other metals such as tin.

However, Rodrigo Bravo argues that a comparison to Indonesia is not valid due to Indonesia's access to greater reserves which support investments in local mineral processing.

The Philippines is home to 34 operating Nickel mines and is a major exporter of Nickel ore. Most of this ore is shipped to China, with some going to Japan, but domestically the country only has two Nickel processing plants. These plants are owned in part by Nickel Asia Corporation - owned in turn by Sumitomo Metal Mining Co Ltd.

In 2020, the Philippine government reported that from January to September, the country produced 22.5 million dry metric tonnes (dmt) of Nickel ore worth 46.8 billion pesos ($859 million). This is a decrease from 27.2 million dmt during the same period in 2021.

To increase its revenue, the Philippine government is looking into implementing a new fiscal regime for mineral ore exports, which would include royalties of 3% on gross output of large-scale miners and a margin-based windfall tax.

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