A confluence of factors such as the expected impact of Tax Reform for Acceleration and Inclusion (TRAIN) on mining operations, self-imposed closures, and uncertainty in policies will continue to drag the value of the countrys metallic production throughout the year amid improving world prices for metals.
For the first time in a year, the value of the countrys metals output sank, ending the first quarter of the year with a 6.5 percent decline. The value ended at P22.51 billion versus the P23.96 billion recorded during the same period last year.
And given the pressing issues in the local minerals industry, outlook for 2018 is quite lackluster, Mines and Geosciences Bureau (MGB) said.
This, as the string of mine suspension due to environmental-related issues and mine imposed non-operations due to unfavorable weather conditions and maintenance status that clearly dominated the production scene in 2017 are expected to spill over this year.
It is important to note that mine output in 2017 was generally sluggish, and it was only due to the improved metal prices that the industry was able to remain upbeat. This is generally the case in the first quarter of 2018. Mineral analysts are projecting that metal prices will gain more ground in 2018 given the strong global demand and production shortfall, MGB said.
Aside from metal prices, other market forces that will have an impact on the overall performance of the local mining industry in 2018 and in the coming years include the price of fuel, foreign exchange rate, and the implementation of TRAIN.
Mining is a fuel-intensive industry and the increased tax rates for diesel, gasoline and other fuel products will increase the operating cost in mining operations.
On the part of government, there will be an increase in the revenues collected from mining as a result of the increase in the excise tax rate for minerals and mineral products from 2 percent to 4 percent.
In total, the countrys metallic production value during the first quarter of the year suffered a deficit of P1.45 billion.
The negative performance was due to the overall production shortfall of most mining companies, MGB said.
Precious metal gold was the key mineral product in the first quarter with a significant share of 47 percent, or P10.52 billion, while direct-shipping nickel ore and mixed nickel-cobalt sulfide took the second spot accounting for 29 percent, or P6.46 billion.
Copper followed with 23 percent, or P5.25 billion. The joint output value of silver and chromite contributed 1.23 percent or P0.27 billion.
As for the production, Golds output was down from 6,167 kilograms with estimated value of P12.16 billion, to 5,279 kilograms with estimated value of P10.52 billion, year-on-year, lower by 888 kilograms and P1.65 billion in volume and value, respectively.
Meanwhile, the slow start of mine production of direct-shipping nickel ore for 2018 was attributed to the wet weather condition that usually prevail in the areas of Dinagat, Agusan and Surigao Provinces during the early part of the year.
Nickel mining operation, being surface mining, is always vulnerable to the weather condition, MGB noted.
To date, 20 nickel mines operate in the said provinces and 12 reported zero production for the first quarter of the year.
The red metal which accounted for almost 23 percent, or P5.25 billion, of the total metallic mineral production value was down by 3 percent, or 2,355 dry metric tons in mine output from 72,194 dry metric tons to 69,839 dry metric tons, year-on-year.
Despite the decrease in production volume, its value went up by 10 percent, or P462 million, from P4.79 billion to P5.25 billion year-on-year.
The growth was attributed to the upbeat copper price during the period from US$2.60 per pound to US$3.12 per pound, a US$0.52 per pound uptrend.
In terms of metal prices, nickel and copper strengthened by 27.06 percent and 20.10 percent, respectively.
Nickel, in particular, displayed an upbeat price from US$4.58 per pound to US$5.83 per pound, year-on-year, or an upswing of US$1.24 per pound.
According to analysts, the improved price of copper and nickel was attributed to growth in global demand coupled with production disruptions among major producers due to weather or policy-related reasons.
Gold also advanced by 9.14 percent, from US$1,218.54 per troy ounce in 2017 to US$1,329.89 per troy ounce. The increase in investment demand was the primary factor, according to market experts.
In contrast, silver price declined from US$17.41 per troy ounce to US$16.74.
The last time the value of metals output dipped was in end 2016 when metallic mineral production value incurred an 8 percent shortfall P109.84 billion in 2015 to P100.56 billion.
It eventually recovered in the first quarter of 2017 when metallic mineral production value grew by 5.10 percent from P22.79 billion in the first quarter of 2016 to P23.96 billion.
The momentum was sustained throughout 2017.
This article provided by NewsEdge.