Wu Zhengping Talks about Sino-Philippine Mining Cooperation: Excavating Great Potential to Prevent Risks in Advance

Excavate Great Potential to Prevent Risks in Advance - Wu Zhengping, Economic Counselor of the Chinese Embassy in the Philippines Discusses Sino-Philippine Mining Cooperation

Recently, Wu Zhengping, the Economic and Commercial Counselor of the Chinese Embassy in the Philippines, came to Guangxi to attend the China-ASEAN Mining Cooperation Forum. He encouraged Chinese entrepreneurs to actively “go global” and cooperate with the mineral-rich Philippines for mining. However, he also stressed that it is necessary to Understand the risks that may be encountered and consider preventive measures in advance.
Wu Zhengping said that for Sino-Philippine mining cooperation, there are three sentences that can be used to summarize: First, the potential is enormous; Second, there is a certain risk; Third, it must be stable and stable.

The potential of mining cooperation is huge Wu Zhengping said that the Philippines is rich in resources, has a large population, and economic development is in the middle reaches of the world and has great potential for development. The friendship between China and Africa goes back to ancient times. In 2010, the trade volume between China and the Philippines was 27,746 million U.S. dollars. Currently, China is the Philippines' third largest trading partner and the Philippines is China's sixth largest trading partner among ASEAN countries.
The mineral resources in the Philippines are very rich and the mining potential is huge. According to statistics, 30% of the country’s land reserves have great potential for mineral development, among which gold, copper, nickel, chromium, and manganese are particularly abundant. The estimated total price of various mineral resources is more than US$84 billion. According to the data from the Philippine Bureau of Geology and Mineral Resources, based on per unit area of ​​mineral reserves, the Philippines has the third-largest gold reserves in the world, the fourth-largest reserves of copper ore, the fifth-largest reserves of nickel ore, and the sixth-largest reserves of chromium ore in the world. Bit. Due to constraints in laws, policies, exploration, and financial resources, only 1.5% of the country's land is currently authorized for exploration and development. The current mining output in the Philippines accounts for only about 1.5% of GDP, and minerals exports account for 5% of total exports.
In 2010, due to the increase in mineral product prices, the output value of metal minerals in the Philippines reached 2.6 billion U.S. dollars, a year-on-year increase of 39%, of which gold production value was 70.5 billion pesos, an increase of 34%; platinum production value was 1.2 billion pesos, an increase of 66%; copper and gold production value was 15.8 billion pesos. , an increase of 46%. In 2010, the investment in the Philippines' national mining project was 956 million U.S. dollars, and the Philippine Geological and Mineral Bureau estimated that the investment in mining projects this year will be US$1 billion, an increase of 5% year-on-year, and the output value will further increase. From these data, the Philippine mining industry is far from a pillar industry. There is still great potential for mining development.
In addition to rich mineral resources, investment in the Philippines has the following advantages: First, the Philippines and China are close to each other with low transportation costs; Second, the Philippines has relatively good English and convenient communication; Third, the Philippine government pays more attention to mining development and supports the mining industry. Revitalization, there is a law to develop minerals in the Philippines.

Investors must guard against risks Although mining investment in the Philippines has many advantages, it is important to note that mining development itself is a high-risk industry, and companies must be prepared to prevent mining investment risks in advance and fully understand the Philippine mining legal policy.
First of all, it is important to note that Philippine law sets the threshold for entry of foreign capital. The Philippine Mining Act stipulates that all mine resources in the Philippines shall be owned by the state, and any exploration, development, utilization, and processing of mineral products must be supervised and controlled by the government. Enterprises engaged in mining operations need to obtain appropriate permits and related agreements from the government. Among them, mining processing permits have no restrictions on foreign capital, but mining has more restrictions on foreign capital. Small-scale mining can't involve foreign investment at all. Medium-sized mining allows foreign companies to account for less than 40% of shares, while large-scale exploration and development allows foreign investors to hold 100% of shares. However, this form of investment is very demanding and must be signed with the President’s office. The technical assistance agreement (FTAA) has relatively complicated procedures for approval, so there are relatively few companies that have obtained FTAA so far.
Second, the administrative efficiency of the Philippine government is not very high. According to the World Bank's "Transnational Investment in 2010" report, it takes an average of 80 days to establish a foreign company in the Philippines, and the average level of 10 ASEAN countries is 68 days.
Third, the situation of cooperators is mixed and difficult to distinguish. It is necessary to pay special attention to the fact that local philippines in the Philippines are usually run by large families. Many families and children have scattered mineral rights and long authorisations. Foreign investors often do not understand the ownership of minerals.
Fourth, security and infrastructure reasons have increased investment risks.

Investing in the mining sector must be steadily played Wu Chengping said that at present, the Sino-Philippine mining cooperation is still at an advanced stage of exploration. However, “there is no difficulty in the world and I am afraid that everyone is interested”. As long as we pay attention to strategy and strive for a win-win situation, Sino-Philippine mining cooperation will continue to advance. . The following four aspects need to be paid attention to in carrying out mineral resource cooperation.
First, it is necessary to thoroughly study the laws and policies of the Philippines and the local environment. In order to make adequate preparations in the early stages, we can also make necessary consultations with lawyers or professionals. In reality, often there are some companies that come out of the Philippines who do not understand the situation in the Philippines, do not conduct research on the feasibility of the project, and are not willing to make necessary consultations. The result is that investment is not successful or suffers heavy losses.
Second, we must choose local partners with integrity and competence. The social environment in the Philippines is relatively complex. When it comes to the development of the mining industry in the Philippines, if they can get acquainted with local trusted partners through reliable channels, they can remove many obstacles for future operations. However, if they hold the idea of ​​exclusive interests, are unwilling to cooperate with the local people, or do not find a reliable partner, their investment success rate is not high.
The third is law-abiding business, honest business, paying attention to fulfilling social responsibilities, taking care of the local people and creating good public relations. The situation in the Philippines is relatively complex, and politicians, media, non-governmental organizations, local communities and other aspects must be considered in all aspects. At the same time, mining cooperation in the Philippines must strictly abide by the laws governing mining protection. It should not only focus on immediate interests, but also focus on sustainable development.
The fourth is to actively contact with the Chinese embassy in the Philippines and related industry associations in China. Since monofilaments do not form a line, and there is no single forest, it is difficult for Chinese enterprises to develop overseas by relying on their individual operations. Enterprises must pay attention to the collective strength and focus on collective wisdom. Should make full use of the Chinese Embassy in the Philippines, the Chinese Industry Association to provide information, establish contact channels, and safeguard the legitimate rights and interests of enterprises. These are important resources and channels that Chinese companies can use in the development of mining cooperation in the Philippines.
In addition, Chinese companies investing in the Philippines should not only consider cooperation in prospecting and mining, but should also actively consider cooperation in mineral processing to create jobs and taxes for the local community and give back to society. In short, only by forming a relationship of mutual benefit and co-profit with the local community, the cooperation between Chinese companies and the Philippines will have a strong vitality.

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