Philippine Industry Roadmap for Copper Presented by: Mr. Angel Veloso Chairman, PASAR Dusit Hotel 13 August 2013
DOWNSTREAM INDUSTRY APPLICATIONS OF COPPER ORE MINING MINERAL PROCESSING • Crushing & Grinding • Classification/sizing • Flotation CONCENTRATE SMELTING ELECTROLYTIC REFINING COPPER IMPORTS: CATHODES, WIRES, COPPER CATHODE EXPORT INGOTS AND OTHER SEMI-FINISHED FORMS PRODUCTS • Heat Treatment • Heat Treatment • Heat Treatment • Hot/Cold Rolling • Rolling • Alloying • Wire Drawing • Forging • Forging • Extrusion • Casting WIRE BARS, SHEETS, STRIPS BRASS, BRONZE AND OTHER ALLOYS OF COPPER • Electrical/Electronics Industry • Household and Construction • Automobile Industry (wheels, radiators, engine (wires, cables, accessories, etc.) Materials (pipes, tubings, blocks, linings, etc.) roofing, nails, rivets, etc.) • Aviation and Marine Industry (vessels, tanks, pipings, etc.) • Aviation and Marine Industry • Household and Construction Materials • Automobile Industry
PREVAILING CONDITIONS IMPORTS CONCENTRATE CATHODES RODS COPPER RAW S 100% 90%++ 95-100% MATERIALS IMPORTED IMPORTS IMPORTS 100% IMPORTS LOCAL PROD’N COPPER CASTING AUTO WIRE COPPER SMELTING (RODS), WIRES HARNESSES; MINING (CATHODES) & CABLES FOILS (CONCENTRATE S) EXPORTS 100% 95-100% 95-100% EXPORTED EXPORTED EXPORTED A DISJOINTED INDUSTRY
Industry Profile/Situationer Volume of Export and Import Employment of Copper Products ('000 Metric Tons) 15000 1000 10000 800 Export C opper 600 Mining Import 5000 400 S ector 200 0 0 2012 2015 2017 2009 2010 2011 Increased contribution to the economy (% of GDP) 3 2 1 0 S hort-term Medium- Long-term (2016) term (2022) (2030)
Industry Profile/Situationer Major products: • Concentrate • Cathode and blister PRODUCT/ SERVICE • Rolled products, tubes, rods and other semi-finished COVERAGE products • Wires and cables, harnesses, plating and foils 1. Philex Mining Corporation 2. Carmen Copper Corporation MAJOR PLAYERS 3. TVI Resource Development (Phils.), Inc. Chamber of Mines of the Philippines INDUSTRY Philippine Electric Wire Manufacturers Association ASSOCIATION/S (PEWMA) local mining operations, copper smelters, copper wire and cable operations LINKAGES
Geographical Location of Companies Oceanagold (Philippines), Inc. Dipidio, Nueva Ecija Philex Mining Corporation, Padcal, Tuba, Benguet PASAR Complex, Leyte Industrial Development Estate, Isabel, Leyte Copper Wire & Cable Manufacturers Proposed copper wire rod facility Carmen Copper Corporation, Toledo Cebu Silangan Mindanao Mining Co., Inc., Brgy. Luna, Surigao City TVI Resource Development (Phils.), Inc., Cabanatuan, Zamboanga del Norte Tampakan copper project, South Cotabato
SWOT ANALYSIS MATRIX STRENGTHS WEAKNESSES • Strong anti-mining sentiment by some groups • Significant reserves (8 billion tons of ore) • LGUs that issue that issue anti-mining rules that are against • Presence of major copper mining development projects national mining (Tampakan, Silangan, etc.) • Incentives scheme generally not applicable to local producers • Presence of a world class smelting facility selling to the domestic market • A well-established, thriving local wire and cable industry • Reliability of electric power (threats of power interruptions) • Facilities for rod casting already exist (but mostly idle) • High cost of power (3x higher than Indonesia) • Existence of an institutional mechanism for safeguarding • Existing rod manufacturing facilities not energy-efficient, copper product standards produces output with physical characteristics posing challenge to new wire manufacturing equipment • Incentives schemes are institutionalized under BOI and PEZA • Funds are available for investing in technology that can be • Minimum delivery, quality and payment system issues in developed locally local cathode supply raises just-in-time issues • Relatively low land/plant development cost • High domestic freight costs • Potential for tapping cheaper sources of energy, i.e., natural • Tariff distortions gas OPPORTUNITIES THREATS • Faster PH economic growth through a possible re-focusing on • Global demand could make it more attractive to sell industrial development concentrates and cathodes abroad than to supply local • Strong global demand for mineral products from rapidly- manufacturers • Heavy dependence of local copper industry on the industrializing economies especially Brazil, Russia, India and China construction market, which is cyclical • Undisputed advantage of copper over other materials in the • Aluminum wire now being used for internal application electrical industry
Vision, Goals & Targets Goals Vision • PHL to have a fully integrated copper industry from mining to manufacturing at the end of 2030 • Full integration of the copper industry Goals • Development of the downstream industries • Enhancement of the copper industry value chain • Increased contribution to the GDP from .2% at present to Targets 2% in 2030 • Increase in export of copper products by 15% during the roadmap period from 2015-2030
STRATEGIES Goals INFORMATION-SHARING, CONSULTATION AND COORDINATION AMONG KEY INDUSTRY PLAYERS THROUGH THE ESTABLISHMENT OF Vision AN APPROPRIATE INSTITUTIONAL MECHANISM PROMOTE INVESTMENT IN SUSTAINABLE COPPER WIRE ROD FACILITIES AS AN INITIAL STEP TOWARDS INDUSTRY INTEGRATION Goals MORE ACTIVE ADVOCACY ROLE FOR INDUSTRY STAKEHOLDERS ON NATIONAL POLICY ISSUES AFFECTING THE VIABILITY OF THE INDUSTRY, INCLUDING SUPPORT FOR THE DEVELOPMENT OF WORLD CLASS MINES Targets DEVELOPMENT OF NEW, HIGH VALUE PRODUCTS TO INCREASE THE VALUE CHAIN, DIVERSIFY AND DEEPEN THE INDUSTRY
Adminis Administr trativ tive e Bottlenec Bottlenecks ks • Cyclical market • Smuggling and fake goods • Lack of integration between copper mining and copper smelting • Tariff distortion • High level issues regarding development of large mines
Ma Major R jor Ref efor orms ms • Give a clear direction on open pit mining in the guidelines of E.O. 79 and uphold the primacy of national mining laws over local laws • Inclusion of copper products in the 2014 IPP • Where eligible, mining areas to be included as economic zones but with locator incentives limited to what will be in the fiscal regime being discussed at the MICC • Where eligible, mining areas to be included as economic zones but with locator incentives limited to what will be in the fiscal regime being discussed at the MICC
Concrete Project Timeline Completion of the Copper Wire Rod Feasibility Study 2013 Strengthening of tie-ups with international copper 2014 organizations
Next Steps • Creation of an organization of key industry players that would cover smelting, casting and other electrical-based manufacturing of copper products • Generation of data among members to gauge collective performance of various segments of the industry • Monitoring of policy, market, technological and other developments and creation of opportunities for the industry • Advocacy work taking into consideration national issues with impact on the industry • Building relationships among other segments of the industry with similar interests
Contact Details Mr. Angel N. Veloso Chairman, Philippine Association Smelting & Refining Corporation (PASAR) 845-6014 (tel. no.); 889-6332 (fax) jun.veloso@gmail.com Engr. Guillermo S. Laquindanum Director, Supervision and Monitoring Department, Board of Investments 890-9544 (tel. no.); 895-3649 (fax) gslaquindanum@boi.gov.ph
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