Philippine Industry Roadmap for Copper · Philippine Industry Roadmap for Copper Presented by: Mr. Angel Veloso Chairman, PASAR Dusit Hotel 13 August 2013

Philippine Industry Roadmap

for Copper

Presented by:

Mr. Angel Veloso

Chairman, PASAR

Dusit Hotel

13 August 2013

MINING

ORE

MINERAL PROCESSING

•Crushing & Grinding

•Classification/sizing

•Flotation

CONCENTRATE

ELECTROLYTIC REFINING

SMELTING

COPPER CATHODE

•Heat Treatment

•Hot/Cold Rolling

•Wire Drawing

•Heat Treatment

•Rolling

•Forging

•Extrusion

•Heat Treatment

•Alloying

•Forging

•Casting

COPPER IMPORTS: CATHODES, WIRES, INGOTS AND OTHER SEMI-FINISHED FORMS

EXPORT

PRODUCTS

WIRE

•Electrical/Electronics Industry (wires, cables, accessories, etc.)

BARS, SHEETS, STRIPS

•Household and Construction Materials (pipes, tubings, roofing, nails, rivets, etc.)

•Aviation and Marine Industry

•Automobile Industry

BRASS, BRONZE AND OTHER ALLOYS OF COPPER

•Automobile Industry (wheels, radiators, engine blocks, linings, etc.)

•Aviation and Marine Industry (vessels, tanks, pipings, etc.)

•Household and Construction Materials

DOWNSTREAM INDUSTRY APPLICATIONS OF COPPER

PREVAILING CONDITIONS

CONCENTRATES 100%

IMPORTED

CATHODES 90%++

IMPORTS

RODS 95-100% IMPORTS

COPPER RAW MATERIALS

100% IMPORTS

COPPER

MINING (CONCENTRATE

S)

COPPER SMELTING

(CATHODES)

CASTING (RODS), WIRES

& CABLES

AUTO WIRE HARNESSES;

FOILS

100% EXPORTED

95-100% EXPORTED

95-100% EXPORTED

A DISJOINTED INDUSTRY

EX

PO

RTS

LOC

AL

PROD’N

IMP

OR

TS

0200400600800

1000

2009 2010 2011

Export

Import

Volume of Export and Importof Copper Products ('000

Metric Tons)

Industry Profile/Situationer

0

5000

10000

15000

2012 2015 2017

C opperMiningS ector

Employment

0

1

2

3

S hort-term

(2016)

Medium-

term (2022)

L ong-term

(2030)

Increased contribution to the

economy (% of GDP)

Industry Profile/Situationer

PRODUCT/ SERVICE COVERAGE

Major products:•Concentrate•Cathode and blister• Rolled products, tubes, rods and other semi-finished

products•Wires and cables, harnesses, plating and foils

MAJOR PLAYERS

1. Philex Mining Corporation2. Carmen Copper Corporation3. TVI Resource Development (Phils.), Inc.

INDUSTRY ASSOCIATION/S

Chamber of Mines of the PhilippinesPhilippine Electric Wire Manufacturers Association (PEWMA)

LINKAGES

local mining operations, copper smelters, copper wire and cable operations

Geographical Location of Companies

Oceanagold (Philippines), Inc. Dipidio, Nueva Ecija

PASAR Complex, Leyte Industrial Development Estate, Isabel, Leyte

TVI Resource Development (Phils.), Inc., Cabanatuan,

Zamboanga del Norte

Silangan Mindanao Mining Co., Inc., Brgy. Luna, Surigao City

Proposed copper wire rod facility

Tampakan copper project, South Cotabato

Copper Wire & Cable Manufacturers

Carmen Copper Corporation, Toledo Cebu

Philex Mining Corporation, Padcal, Tuba, Benguet

SWOT ANALYSIS MATRIX

STRENGTHS

• Significant reserves (8 billion tons of ore)• Presence of major copper mining development projects (Tampakan, Silangan, etc.)• Presence of a world class smelting facility

• A well-established, thriving local wire and cable industry• Facilities for rod casting already exist (but mostly idle)• Existence of an institutional mechanism for safeguarding

copper product standards

• Incentives schemes are institutionalized under BOI and PEZA• Funds are available for investing in technology that can be

developed locally • Relatively low land/plant development cost • Potential for tapping cheaper sources of energy, i.e., natural

gas

WEAKNESSES• Strong anti-mining sentiment by some groups • LGUs that issue that issue anti-mining rules that are against

national mining• Incentives scheme generally not applicable to local producers

selling to the domestic market

• Reliability of electric power (threats of power interruptions) • High cost of power (3x higher than Indonesia)• Existing rod manufacturing facilities not energy-efficient,

produces output with physical characteristics posing challenge to new wire manufacturing equipment

• Minimum delivery, quality and payment system issues in local cathode supply raises just-in-time issues

• High domestic freight costs• Tariff distortions

OPPORTUNITIES• Faster PH economic growth through a possible re-focusing on

industrial development • Strong global demand for mineral products from rapidly-

industrializing economies especially Brazil, Russia, India and China

• Undisputed advantage of copper over other materials in the electrical industry

THREATS• Global demand could make it more attractive to sell

concentrates and cathodes abroad than to supply local manufacturers

• Heavy dependence of local copper industry on the construction market, which is cyclical

• Aluminum wire now being used for internal application

• PHL to have a fully integrated copper industry from mining to manufacturing at the end of 2030

• Full integration of the copper industry

• Development of the downstream industries

• Enhancement of the copper industry value chain

• Increased contribution to the GDP from .2% at present to 2% in 2030

• Increase in export of copper products by 15% during the roadmap period from 2015-2030

Vision, Goals & Targets

Goals

Goals

Vision

Targets

Goals

Goals

Vision

Targets

STRATEGIES

INFORMATION-SHARING, CONSULTATION AND COORDINATION

AMONG KEY INDUSTRY PLAYERS THROUGH THE ESTABLISHMENT OF AN APPROPRIATE INSTITUTIONAL MECHANISM

PROMOTE INVESTMENT IN SUSTAINABLE COPPER WIRE ROD

FACILITIES

AS AN INITIAL STEP TOWARDS INDUSTRY INTEGRATION

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

DEVELOPMENT OF NEW, HIGH VALUE PRODUCTS TO INCREASE THE

VALUE CHAIN, DIVERSIFY AND DEEPEN THE INDUSTRY

Administrative Bottlenecks

• 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

• 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

Major Reforms

• Inclusion of copper products in the 2014 IPP

• Where eligible, mining areas to be included as economic zonesbut with locator incentives limited to what will be in the fiscalregime being discussed at the MICC

• Where eligible, mining areas to be included as economic zonesbut with locator incentives limited to what will be in the fiscalregime being discussed at the MICC

Concrete Project Timeline

Completion of the Copper Wire Rod Feasibility Study 2013

Strengthening of tie-ups with international copper organizations

2014

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)

[email protected]

Engr. Guillermo S. Laquindanum

Director, Supervision and Monitoring Department, Board of Investments

890-9544 (tel. no.); 895-3649 (fax)

[email protected]