PH Gov't Losing Mineral Resources to Black Market

Manila Bulletin, August 28, 2020 | Go to article overview

PH Gov't Losing Mineral Resources to Black Market


The Philippine government has been losing billions of money as the bulk of the country's mineral production from small-scale mining - mainly gold - are still being sold straight to the black market, a Philippine Institute of Development Studies (PIDS) research showed. The government think tank made this assumption largely on the basis that small scale miners sell their gold to the informal sector instead of the Bangko Sentral ng Pilipinas (BSP).

But PIDS also said there is still no way for the government to measure the contribution of small-scale mining to the economy because most of its output is leaked through the black market.

According to PIDS, the main factor why small scale miners prefer the black market is the imposition of tax on gold production of small-scale mining in 2010 by BSP and Bureau of Internal Revenue (BIR).

PIDS said this "led to unintended consequences" and resulted in BSP's gold purchases drastically falling from 28.56 metric tons (MT) in 2010 to 0.95 metric tons in 2012. Latest figures in 2018 pointed to a much lower 0.33 metric ton in purchases by the BSP. At present, the BSP buys gold through its five buying stations located in Baguio City, Davao, Zamboanga, Naga, and Quezon City.

The subsector of small-scale mining is largely informal in the Philippines despite testaments on the ground that it accounts for roughly 70 percent of all precious mineral produced in the country," PIDS said.

"Despite efforts to formalize the sector, there have been numerous barriers to its formalization, which translate to opportunities foregone, not only for the economy, but also for the well-being of affected communities. The small-scale mining subsector is now almost invisible in terms of captured benefits, and the workforce behind it," it added.

PIDS said that "it is time that the bureaucracy put a stop to these losses and ensure that industry outputs do not disappear through the black market." It then suggested the government formalize markets for the small-scale miners. "While the only legal sale of gold from small-scale mining is through BSP, the establishment of the bank's buying centers greatly depends on scale economies. To augment this, there needs to be an accreditation scheme by the bank for gold buying centers," PIDS said. …

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