Stakeholder Roundtable Executive Summary

The Philippine Nickel Industry Association (PNIA) convened three Nickel Initiative (NI) roundtable discussions (RTDs) from March to May 2023. The RTDs formed part of the PNIA Nickel Initiative, an advocacy platform designed to promote dialogue, knowledge sharing, and convergence among nickel industry stakeholders.

In particular, the RTDs sought to facilitate exchange of views and recommendations on topics that are relevant towards accelerating nickel industry growth. It aimed to determine action points that will enhance synergy and collaboration among stakeholders in driving policies and programs that will promote the interests of the industry, environment, and communities.

The RTDs were attended by representatives from public and private sectors, including the PNIA Board of Directors and member companies.

Enticing Investments

To attract foreign direct investments (FDIs), the RTD participants highlighted the need for the government to adopt a high-level and global industry promotion strategy. Through priority programs and policies, it should be able to communicate its full resolve to develop nickel mining and processing. Policy stability and ease of business should be achieved.

The Philippines, however, was listed as part of the “10 least attractive jurisdictions” for investments based on the Policy Perception Index of the Fraser Institute’s Annual Survey of Mining Companies 2021. The industry is also faced with possible imposition of new taxes. The current effective average tax rate (EATR) in mining ranges from 50% to 60%, higher than the EATR in other countries which ranges from 40% to 50%. These taxes include corporate income tax, excise tax, mineral reservation royalties, IP royalties, business tax, etc.

The industry was advised to take the lead in developing the nickel roadmap, while the government, particularly the Department of Trade and Industry (DTI) through the Board of Investments, committed to support the effort by funding meetings and consultations, convening relevant initiatives, among others. The Department of Finance (DOF) expressed its willingness to continuously dialogue with the industry on fiscal policies that are acceptable to the public and private sectors.

KEY RECOMMENDATIONS
• Create an industry roadmap to focus on urgent policy reforms.
• Institutionalize dialogues on matters that are critical to attracting investments such as value-add processing, incentives, taxation and misalignment or conflict between national and local laws.
• Conduct comparative / benchmarking studies between the Philippines and countries such as
Indonesia, Chile, and South Africa in relation to their mining policies and practices.
• Establish a one-stop-shop similar to the energy sector’s EVOSS system.
• Strengthen industry promotion and marketing efforts at the global stage.

Value-Add Processing

The Philippines is looking at a policy direction wherein local industries could deepen its integration in the global value chain by providing additional mineral processing and/or inputs, particularly in support of the booming electric vehicle industry. Towards this end, the DTI has established the Green Metals Initiative and created a technical working group (TWG) to pursue shared goals with the industry.

The RTD participants recognize the positive impact that value-add creation will bring. The nickel industry supports the government’s value-adding thrust but stresses the need to study the approach appropriate for the Philippines.

Concerns, were raised regarding the cost and commercial viability of nickel processing. An investment amounting to around US$1.6 billion for High Pressure Acid Leach (HPAL) processing is needed to establish a processing plant while nickel production cost in the Philippines was estimated to be more expensive at almost double than the average global production cost.

Despite this, the industry calls for continuing conversation and research on making value-add processing commercially viable given the huge demand for nickel products. With hundreds of millions of fossil-run vehicles possibly shifting into electricity, demand for nickel as inputs to electric vehicle batteries is expected to increase. PNIA expressed interest in collaborating with the Department of Science and technology (DOST) and academic institutions in developing technologies and/or mobilizing experts who could help make nickel processing in the Philippines cost-effective.

KEY RECOMMENDATIONS
• Conduct feasibility study on nickel processing.
• Determine the country’s actual nickel ore reserves and its location.
• Explore R&D collaboration among the industry, DOST, and the academe.
• Develop an attractive fiscal regime and incentives.

Environmental Sustainability

Philippine environmental laws are among the strictest globally and are on par with global standards. Responsible mining companies comply with the laws, provide budget for environment law enforcement, and monitor its outcomes. There is, however, a need to strengthen law enforcement and results monitoring.

At present, the Department of Environment and Natural Resources (DENR) is using geospatial technologies to improve policy compliance and reforestation efforts. It is also reviewing policies for possible gaps and concerns. Regulations in relation to tree cutting, reforestation, biodiversity, and identification of mineral rich areas vis-à-vis protected areas and no-go zones for mining are among those that will be assessed.

DENR is rolling out the negotiated sustainability agreement mechanism which emphasizes open communication and collaboration with the industry rather than imposing a regulatory policing relationship. It is engaging industry players to embrace the concept of shared responsibility wherein industry organizations help ensure its members’ compliance with regulatory policies.

KEY RECOMMENDATIONS
• Review environment policies related to tree cutting and reforestation, identification of mineral-rich areas vis-à-vis protected areas, biodiversity, and carbon credits.
• Collaborate with the DENR Geospatial Database Team regarding the mapping of areas that critically need reforestation and with high bamboo concentrations.
• Conduct training and information campaign on biodiversity.
• Explore developing carbon credit mechanism.

Local Community Development

Along with the goal of environment sustainability are efforts to contribute towards building self-reliant communities. Under the Social Development and Management Program (SDMP), mining companies are mandated to allocate 1.5% of their total operations cost for community programs such as health, livelihood, and education. Local governments decide on which projects should be included in the SDMP plan based on identified socio-economic needs.

While some local governments have effectively partnered with mining companies in maximizing SDMP for their communities, others weren’t as successful. Towards this end, the RTD participants discussed possible interventions to improve SDMP implementation.

Recommendations include the conduct of local needs assessment, aligning SDMP workplans with the cities/municipalities’ local development plan, capacity building for local governments and mining companies’ community relations teams, and incentivizing LGUs with good SDMP implementation experience. Incentives may include the granting of the Seal of Good Local Governance from the Department of Interior and Local Government (DILG).

In parallel, NCIP shared their call for indigenous peoples (IPs) to be entitled to higher royalties which at present is computed at 1% of gross mining revenues. The PNIA remarked that it is one with the IPs’ dream of having a better quality of life. However, mining companies – as government’s contract partners either via Mineral Production Sharing Agreement (MPSA) or Financial or Technical Assistance Agreement (FTAA) – are obliged to share income from the minerals not only with the IPs but also with the national and local government agencies. IP royalties is just one of the many taxes and fees imposed on the industry.

KEY RECOMMENDATIONS
• Rollout capacity building programs to help strengthen the knowledge and skills of LGUs and mining companies’ community relations teams relevant to SDMP planning and implementation.
• Coordinate with the DILG regarding the granting of SGLG to local governments that have effectively utilized their SDMP funds for community development.

Public-Private Sector Partnership

The PNIA proposed the institutionalization of joint public-private sector initiatives towards developing the nickel industry. A draft Memorandum of Agreement (MOA) on the partnership, which will work on follow-through dialogues and consultation as well as industry roadmap development and policy reforms, was presented. DENR and DTI-BOI expressed willingness to form part of it.

USAID expressed interest to provide technical assistance while the Australian Embassy encouraged knowledge sharing and dialogues between the industry and the Australian mining community.