a. Operating Mines

As of December 31, 2003, the number of operating mines consists of:

• 1 large-scale gold mine (Victoria Project of Lepanto);
• 1 large-scale copper mine (Padcal Project of Philex);
• 4 medium-scale nickel mines

Palawan Project of Rio Tuba Mining Corp.
Cagdianao Project of Cagdianao Mining Corp.
South Dinagat Project of Hinatuan Mining Corp.
and Taganito Project of Taganito Mining Corp.

3 medium-scale chromite mines

Masinloc Project of Benguet Corp
Omasdang Project of Crau Minerals
and Homonhon Project of Heritage Resources Mining Corp.

5 medium-scale gold mines

Canatuan Project of TVI Resources Philippines, Inc.
Acupan SSM Operations of Benguet Corp.
Diwalwal Direct State Development Project of the Natural Resources Development Corp
Banahaw Gold Project of Philsaga Mining Corp.
Paracale Gold Project of Johnson Gold Mining Corp.

• 16 cement plants and quarries
• 140 limestone quarries (agriculture and industrial uses)
• 18 rock aggregate quarries and crushing plants
• 216 industrial sand and gravel quarries and crushing plants
• 9 marble plants and quarries
• 334 large to medium scale quarries of various non-metallic minerals; and

More than 1,700 small quarries and commercial/special sand and gravel mining operations covered by permits issued by local government.

The geographical distribution of the major operating metallic mines and cement plants and quarries are shown in Figures 26 and 27, respectively.

The existing number of metal mines is small compared to the 58 metal mines that operated in the 80s (Figure 8) when the industry accounted for over 20% of Philippine exports. However, the trend for nonmetallic mines shows an abrupt change in 1993 (Figure 9), after the enactment of the Local Government Code which effectively transferred the function of the national government in the issuance of quarry and small-scale mining permits to the local government units (LGU). This drop in number can be attributed principally to the confusion caused by the devolution of permitting function to LGUs. It is interpreted that a great number non-metallic producers either did not submit production reports due to confusion in authority or were probably not accounted for by the LGUs during that year. Understandably, the LGU, particularly the provincial governments were not yet prepared organizationally and systems and procedures have not been put in place immediately to monitor mining operations, and also collect and process production reports.

The progressive drop in the number of metallic minerals producers have been caused principally by a combination of economic, technical and financial reasons.

In the later part of the seventies, investments in mining contracted and continued to follow a downtrend until 1983 after brief surges in 1978 and 1980 following generally bullish years. Gold prices in 1980 soared to US$ 870 per ounce while copper kept pace and peaked at US$ 1.43 per pound. The market trend in the following year made a complete turnaround. The situation was aggravated by the increasing costs of operations accounted mostly by power, the devaluation of the peso that pushed up interest rates, and the untimely increase in the rate of the ad valorem tax for mineral products.

Marcopper posted its first loss in 1981 while Sabena closed its operation. Other mines that were severely affected by the crises were the Ino and Bagacay Projects which shut down in the late 1980. Many major mines were forced to borrow capital to support their operations despite high interest rates. Those that failed to secure financing were forced to close. Among those that closed due to increasing operating costs were Western Minolco, Baguio Gold, Acoje Mining and Hercules Minerals

Eventually, many of the copper mines with substantial exposure to government banks like the Development Bank of the Philippines and the Philippine National Bank were foreclosed. By 1987, the Batong Buhay Project, Sipalay Copper Project, and the Maco Copper Project of North Davao were transferred to the Asset Privatization Trust.

In 1984, Letter Of Instruction (LOI) No. 1416, which suspended all tax obligations payable by mining companies classified by the Ministry of Trade as “distressed”, was signed to avert the negative impact of the continuing decline of copper prices. These suspended taxes shall become due and payable until such time when copper prices had improved. Five mining companies availed of this assistance. During this period copper price hit the bottom but gold price continued to become stable and remained to be the only compensating factor in most copper operations. Chromite and nickel during such time were beginning to perform well. However, the death of Senator Benigno Aquino in 1983 threatened once again the revival of the industry. Cost cutting measures were drastically resorted to by the remaining surviving mines.

With the installation of the new Aquino Government in 1986, investments in mining began to grow. Copper price at the end of 1988 reached an average price of US$ 1.18 per pound indicating improvements in the international metals market. Executive Order No. 340 was then signed into law providing for the repayment of the taxes suspended under LOI No. 1416.

In 1989 and 1990, investments in the industry climbed up to new heights reaching the billionth mark due to renewed interest in Philippine mining. The foreign investments infused into the Far Southeast Copper Gold Project in Benguet signaled a new beginning of investor confidence. At the onset of 1990, commodity prices began to fall once again. While copper was stable at US$ 1.00 per pound, gold prices began to fall. With increasing costs of production and the ill effects of the energy crises and natural calamities, the industry was again beset with a series of mine closures. In 1992, the Siana gold project suspended its operations due to mine flooding brought about by a typhoon, the Dizon mine encountered technical problems with its ore causing inefficiency in its milling process, the Atlas mine laid off its managers and thousands of its workers due to financial problems, the Acupan mine decided on a permanent closure, and the North Davao copper operation finally shut down. To minimize heavy losses, the surviving mines began laying off their employees resulting to further reduction in industry production.

The combined forces of financial, environmental and technical reasons, in the succeeding years, saw the closure of the biggest copper mining projects in the country, namely: the Atlas copper mine in Cebu, the Marcopper copper mine in Marinduque, the Lepanto copper mine in Benguet, and the Dizon mine in Zambales. These closures cause a decline of more than half of the 1993 industry production. The case of gold, however, was the opposite. Four new players entered into the industry but only to close down by the end of the decade. Nickel exhibited an unprecedented increase in production until the early second century. The impressive showing can be attributed to the long dry seasons brought about by the El Nino in 1998. Chromite has been very erratic, but generally showed a declining trend in production. This slow decline may have been caused by the dampened demand for refractory chromite due to emerging technology for liner substitutes and also because of the undesirable environmental effects of some chrome products.

A map showing the geographical distribution of operating mines, some closed mines, and cement plants and quarries are shown in Figures 11 to 13.