The extractive industry in the Philippines is set to expand over the long term at an annual rate of 10.3 percent from 2020, the Department of Finance (DOF) said yesterday.
Ma. Teresa Habitan, DOF assistant secretary, said during the 8th National Conference of the Philippine Extractive Industries Transparency Initiative (EITI) yesterday growth will mainly be driven by the oil and gas sector’s 20-year compounded annual growth rate of 26 percent on the back of the Philippines’ relatively slow transition to decarbonization.
“The non-metallic mining sector’s compounded growth rate of 10 percent per year is also a major contributor to the industry’s expansion over seven years,” Habitan said.
Habitan added the contribution of the coal and metallic mining sectors are at single-digit of 9.7 and 7.7 percent, respectively, but can be considered significant with the production of coal and metals steadily growing.
Habitan said all sectors of the local extractives contracted to an average of 16 percent.
“The nonmetallic mines were the most affected by the COVID-19. Almost all of those that responded to the survey said their volume of production plummeted by around 50 percent and more than half of them experienced a reduction in their sales by about the same proportion,” Habitan said.
“The metallic mining sector, therefore, is relatively resilient to extreme conditions such as COVID-19, a precursor for the sector to also take on other long term risks in the future,” she added.
Habitan said despite its negative impacts, the pandemic offered a few silver linings for the extractives.
“The lifting of the suspension of mining contracts was fast-tracked at the height of the community quarantine to help jumpstart the pandemic-battered economy; the DTI (Department of Trade and Industry) issued Memorandum Circular 20-22 that included the oil, gas, coal, and mining sectors in the list of establishments deemed essential and, hence, were allowed to continue operations even under ECQ (enhanced community quarantine),” Habitan said.
Habitan said the industry’s gross domestic product share hovers at around one percent, which means there is still much room to contribute to it.
“The same thing goes with its exports to major destinations,” Habitan said.
Habitan said the sector should take advantage of its strengths: significant contribution to gross value added (GVA) specifically the metallic mines; steady growth of exports; proper handling of commodity price shocks; pricing of nonmetallic commodities that is independent of the global market; consistent generation of employment opportunities; openness to adapting to necessary changes brought about by extreme events; keenness of mining sector on automation; and a degree of optimism that the overall business environment will get better post-pandemic.
The virtual conference served as the public launch of the 7th EITI Report, which contains the results of continuing efforts to promote transparency and accountability in the extractives sector, comprising the oil, gas, coal and mining industries.
Bayani Agabin, DOF undersecretary, said during the event that the seventh report reconciled a total of P56.7 billion in revenues from the mining, oil and gas industries for fiscal year 2019.
This amount is lower by 14 percent than the reconciled revenues reported for 2018.
“The decrease was due to lower collections by government agencies. The Bureau of Internal Revenue, in particular, posted lower collections from oil and gas projects. This is consistent with the GVA for oil and gas that fell by 52.6 percent in the period,” Agabin said.
