MANILA (Reuters) – The head of the Philippine nickel mining industry warned on Tuesday that the government’s plan to impose an up to 10% tax on nickel ore exports could force local producers to close up 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, told Reuters.
“We need to be heard so the government will understand our side,” said Bravo, who is also the president of miner Global Ferronickel Holdings Inc.
The Philippines is looking at taxing nickel ore exports to encourage miners in the world’s second-biggest supplier of the material – which is used in making stainless steel and batteries for electric vehicles – to invest in local processing instead of just selling raw ore.
Bloomberg News on Monday quoted Environment and Natural Resources Secretary Antonia Yulo Loyzaga, whose department also oversees the mining sector, as saying “there’s a range of actions including a progressive look at taxing exports” of raw nickel.
The idea is to follow in the footsteps of Indonesia, where a ban on nickel ore exports has attracted massive investment into processing plants. Indonesia wants to replicate the policy for other metals, including tin.
But, Bravo said, a comparison to Indonesia is flawed because it has more reserves to support investments in local mineral processing.
The Philippines has 34 operating nickel mines and exports most of its nickel ore to China and some to Japan. But it has only two nickel processing plants, which are both partly owned by the Philippines’ biggest ore producer Nickel Asia Corp.
Nickel Asia is partly owned by Sumitomo Metal Mining Co Ltd.
China, the world’s top nickel consumer, imported 33.23 million tonnes of nickel ore and concentrate from the Philippines last year, accounting for 83% of its total imports of 40.02 million tonnes, according to Chinese customs data.
“Given the lion’s share of ore supply from Philippines, an export tax would result in higher costs for producers in China,” a Chinese trader said. “But it would take a while for the tax to come into effect, if it ever gets approved.”
The proposed tax on mineral ore exports is part of the overall plan to establish a new fiscal regime for the industry to boost government revenue.
A pending legislative bill proposes royalty payments of 3% on gross output of large-scale miners, a margin-based windfall tax, on top of other taxes.
(Reporting by Enrico Dela Cruz; additional reporting by Siyi Liu in Beijing; Editing by Kanupriya Kapoor)
