Natural Resources Accounting (PEENRA)
MINERAL RESOURCES ACCOUNTS
Minerals are natural substances -- usually comprising "inorganic element or compound, having an orderly internal structure and characteristics, chemical composition, crystal form, and physical properties" (NAMRIA-DENR, 1991). Any concentration of these minerals, with a potential economic value that can be extracted at a profit, is considered a mineral resource. Despite its small area, the Philippines is one of the world's richly endowed countries in terms of mineral resources. In 1994, the estimated levels of metallic and non-metallic mineral reserves stood at 7 billion metric tons and 50 billion metric tons, respectively. Copper accounted for the bulk of metallic mineral resources of about 72 percent; while nickel’s share was estimated at 16 percent (Figure 1). Among the non-metallic minerals, limestone and marble accounted for about 39 and 29 percent, respectively (Figure 2). In terms of chromite resources, the Philippines is also one of the most endowed countries. In fact, the country's refractory chromite resource in Zambales is considered as one of the largest in the world.
The mining industry plays a very important role in the country’s economic development. For one, the industry provides employment opportunities to a significant portion of the population, directly and indirectly. The launching of a mining project spurs local and regional economic development as mining firms invest in road infrastructure, utilities, and other facilities within the mine site. Mining, likewise, contributes to the country's foreign-exchange earnings through exports. Furthermore, the industry provides additional revenues for the government through taxes and fees paid on mining and other related activities. The mining activities involve operations that have significant impact on the environment. In most facets of the mining activities, there is always the potential for environmental and ecological problems -- from the construction of mining facilities, the extraction of ore, to the processing of minerals.
Mineral resources are non-renewable. Once extracted, the ore is gone and will take a very long time to replenish. Mining activity, therefore, is faced with the sustainability issue. Serious implications may arise if this issue is not properly addressed. While the construction of the asset account for the other natural resources is undoubtedly important, it is more crucial for the minerals because of the exhaustibility of these resources.
Gold reserves at the beginning of 1988 was estimated at 101.6 million metric tons (MT), equivalent to about 240 MT of gold metal. Between 1988 and 1994, a total of 27.7 million MT of gold ore, containing about 36 MT of metal was extracted. On the average, this is equivalent to an annual extraction of 3.9 million MT of gold ore.
Extraction of Gold Reserves in Ore Form
(in Million Metric Tons)
However, actual annual data show that the level of ore extraction dropped by a hefty 42.9 percent in 1990 and 25.7 percent in 1993 (Figure 1). The slight increase in the world metal price of gold in 1990 failed to raise the country’s production. During this year, three major gold mines temporarily ceased operation, evidence of the then problems which besieged the domestic mining industry.
The reported stock of copper in ore form increased from 4,106 million MT in 1988 to 4,597 million MT in 1994 (Figure 2). However, copper reserves suffered a setback in 1990, when it declined by 7.2 percent from the previous year’s level before resuming its increasing trend.
From 1988 to 1994, the extraction of copper ore registered a decreasing trend, with an annual average decline of 12.1 percent. The same trend was exhibited by the metal content which declined from 277,746 MT in 1988 to 130,910 MT in 1994. Copper mining companies slowed down in their production as lower prices of copper metal in the world market discouraged further expansion of activities.
Other factors which contributed to the low extraction for the years concerned included power shortages, closure of the Marcopper Mining Corporation in the second half of 1991, the eruption of Mt. Pinatubo, and the unusual heavy rainfall. During the seven-year period, a total of 346 million MT of ore was extracted, with a metal content of 1.3 million MT.
From 1988 to 1990 -- on the average -- most of the chromite-producing companies experienced a relative boom, as reflected by the increases in their extraction. For the said period, the total chromite ore extraction grew at an annual average of 30.1 percent, despite the earthquake that jolted Luzon island in July 1990.
However, starting 1991, a downtrend was experienced as a result of the volcanic eruption. This catastrophe deluged service roads with mudflows thus, affecting the transport of the output of one of the biggest chromite producers in that location. Power shortage and other geological factors affected the operations of most chromite mining companies in the succeeding years.
As a result of reduced extraction and positive other accumulation, the stock of total chromite ore reserves registered an annual average growth of 1.5 percent for the period 1988-1994. The corresponding metal content posted an average annual growth of 0.4 percent for the same period. In contrast with the physical asset accounts for which estimates were undertaken by type of chromite, the monetary asset account for chromite was estimated only on an aggregate basis.
Beginning in 1991, the stock of ore reserves started to decline. In 1993, the nickel metal production tremendously dropped, the effect of the slowdown in the international demand for nickel, coupled with increased production in the earlier years, which dampened the market price of nickel metal.
Iron ore, one of the Philippines’ largest mineral deposits, is not being extracted at present. This was due to the higher cost of production, making the local prices of iron not competitive to world prices. However, exploration for possible mining sites is still being done. In 1989, there was an addition of 10.1 million MT in total reserves. Several mining areas explored in 1992 were found positive with iron, resulting in a huge increase in ore reserves of 298.6 million MT, with a metal content of 124.0 million MT.
During the period 1988 to 1994, manganese reserves in ore form registered an annual average growth of 2.7 percent -- from 1.4 million MT in 1988 to 1.6 million MT in 1994. The extraction of manganese ore exhibited fluctuations for the years in review. In 1992, exploration for more possible mining sites in several areas was conducted. This resulted to an increase of ore reserves by 203,014 MT, with a metal content of 87,843 MT at the end of the year, gross of extraction.