Interview: Gerard Brimo
What is needed to encourage growth in the mining sector with a focus on value-added activities?
GERARD BRIMO: The growth of the industry is being hindered by policy problems; until these are resolved there is limited value in a discussion of increasing downstream activities. The main policy problems are the moratorium on new mining permits and the ban on open-pit mining. The former has been in place since 2012 and the latter was brought into effect in 2017, despite it being standard practice all over the world. If we are to develop supply chains integrating upstream and downstream activities, the first step must be fixing the upstream sector and allowing it to grow, and then we can look at the issue of incentives for downstream activities.
The Department of Trade and Industry recently issued a roadmap for the development and integration of upstream and downstream activities in the copper industry. However, there are currently only three copper mines in operation in the Philippines and the sole copper smelter primarily sources its concentrates from abroad. There are three large copper projects that could benefit value-added activities tremendously, but all of them are on hold because of the open-pit mining ban.
How do you expect rising demand for electric vehicles and batteries to impact the nickel market?
BRIMO: Although it currently only accounts for about 6% of total demand, the use of nickel for electric vehicle batteries will undoubtedly be a major growth area for the metal in the years ahead. Most of the mines in the Philippines are nickel mines and the type of deposit that we mine is laterite, with two distinct types of ore, namely limonite and saprolite. These are processed differently and used for different purposes. Currently only limonite can be processed into a nickel product suitable for batteries, using a hydrometallurgical process. There are two downstream processing plants in the country using high-pressure acid leaching technology to process limonite into an intermediate product, which then undergoes further processing in Japan. While Indonesia has been successful in the downstream processing of saprolite, it does not have a similar plant to process limonite, although there are plans to develop one. The question is, therefore, whether or not we can expect to see more plants of this kind in the Philippines.
The problem is that such facilities are extremely expensive. For example, the Taganito plant – which was commissioned in 2014 and has a capacity of 36,000 tonnes of nickel per annum – cost $1.7bn. As such, it required substantial financial backing, an assured supply of ore, stable mining policies and a sensible tax and incentives regime. So we return once again to the issue of policy and the uncertainties that the industry currently faces. If we can fix our policy problems the opportunities for the country will be substantial.
Where is there potential for the Philippines to develop value-added activities using saprolite ore?
BRIMO: The Philippines contains no downstream processing plants for saprolite ore, and therefore it is all exported to China and Japan. The ore is treated by smelting and is converted to ferronickel or nickel pig iron, both of which are used for stainless steel production, with over 60% of nickel being put towards this purpose. It will be difficult for the Philippines to compete successfully in this field as it does not have much high-grade ore compared to Indonesia, nor as many overall resources. Also, a smelter would require its own coal-fired power plant. There is plenty of coal in Indonesia, not so in the Philippines, so we will have to import. Nevertheless, exporting ore is still a valuable activity and is similar to the export of unprocessed iron ore, which generates billions of dollars every year for countries such as Australia and Brazil. The fact that China produces more than 50% of the world’s steel, and needs nickel pig iron, ensures that demand for nickel ore is set to continue. However, since Indonesia resumed exports of the ore, we face rising competition.
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