Alarm Bells Sound in New York as Duterte’s Audit Roils Minesby
OceanaGold CEO says ‘investors are very worried’ about country
TVI Pacific says plans to list its local unit placed on hold
The list of problems facing Philippine President Rodrigo Duterte, from a sinking currency to a stock-market exodus, just got longer. The threat to shutter about three-quarters of the nation’s mines risks savaging the country’s reputation among investors, according to the head of a company whose operations face suspension.
“I just came from New York, and investors are very worried about the Philippines,” OceanaGold Corp. Chief Executive Officer Mick Wilkes told reporters in Manila on Thursday, two days after his company’s Didipio project was listed among sites slated for suspension unless it fixed problems uncovered in a nationwide environmental audit. “This has done irreparable damage to the reputation of the Philippines for foreign investment.”
Still, the company is confident there won’t be an impact on operations from issues raised. “I can work with the secretary and the department to resolve them very quickly,” Wilkes said, referring to Environment Secretary Gina Lopez. No suspension order has yet been issued.
Since being sworn in in late June, Duterte has roiled markets, embarked on a crackdown against the illegal drug trade that’s left thousands dead and stoked tensions with overseas partners from the U.S. to Europe. As the plain-spoken and sometimes profane leader has made his mark, the peso has dropped to a seven-year low and overseas investors have sold local stocks. After a review of the country’s mines, Lopez said this week only 11 of 41 had made the grade.
Canada’s TVI Pacific Inc. is also dealing with the fallout. The company, which owns a stake in a Philippine unit that operates the Agata nickel mine, said the project was recommended for suspension. As a consequence of that, and the uncertainty spurred by the audit, plans to list TVI Resource Development (Phils.) Inc. on the local exchange are now on hold.
“We are certainly taken aback by the audit findings,” TVI Pacific Chairman Cliff James said in a statement. The Agata mine, which employs 1,660 people, remains in operation and the company said it too is confident it’ll be able to address the concerns raised by Lopez’s department.
The country is the world’s top nickel producer, accounting for about a quarter of global mined supply, and the threat to production has roiled prices this quarter. Three-month nickel is about 10 percent higher on the London Metal Exchange since the end of June, and traded at $10,375 a metric ton on Friday.
At first, the Philippines’ main mining group welcomed the investigation, saying it would weed out operators that didn’t follow standards. In recent days that stance changed as the Chamber of Mines of the Philippines said the checkup hadn’t been impartial. Lopez responded this week that it was done fairly.
“The professionalism of the audit was quite good,” said Wilkes, who added that most of the community around his company’s copper-and-gold site was in support. “We were happy with the way the audit was carried out. We just hope that the findings from the audit, as it was done by teams on site, were carried through the whole process.”
‘On the Ground’
In the run-up to the results, the government signaled it was optimistic the drive to clean up the industry would actually lure investment. Environment Undersecretary Leo Jasareno told Bloomberg in an interview: “You are attracting investments because investors are assured that when they put their money on the ground, there’s sustainability.”
Lopez met with mining executives in Manila on Thursday, telling them her agency would help the industry to address the issues raised in the audit. The bottom line is “for the country’s natural resources to be used in a way that benefits the most number of people,” Lopez told the gathering, according to a statement from the environment department.
“There are people who benefit, but many others who don’t and suffer,” Lopez said. “And they fight with each other. That’s the most painful -- when the presence of a business interest creates social fissure,” she said.