Miners are now recognizing the use of emerging digital technology to improve productivity. Mobile technology connectivity between workers and management facilitates communication in the mines, ensuring a safe and productive working environment. Mining companies are also revolutionizing data collection in the field with the help of the Internet of Things, which are smart data solutions that help management to relay important data such as water pressure, temperature, concentration of gases and other information. Cloud technology allows management and employees to quickly access and alter essential information, wherever and whenever needed.

1. The New Face of Mining
Global mineral exploration budget saw two consecutive years of growth in 2017 and 2018 despite
the uncertainty of economic growth in mature economies and volatility of emerging markets, brought
about by the US-China trade dispute. Junior mining companies who survived the previous years’
downtrend increased their exploration budget by thirty-five percent year over year but the majors
continue to account for the majority of planned exploration spending.
Metals prices were also trending upward and company market capitalization recovered from lows in
2015, resulting in many investors to include the mining sector in their investment portfolio. However,
the industry continues to be risk averse though global exploration budget is expected to increase in
2019 particularly for late-stage exploration. Capital market support also financed renewed drilling of
promising prospects in areas with stable political and regulatory systems. Drilling programs focused
mainly on gold but exploration targeting base metal assets also rebounded in the second half of
2018, indicating a vibrant exploration sector activity not seen since early 2013. The bulk of
exploration spending in 2018 went to Latin America which have a high geological prospectivity and
relative political stability. Latin American countries accounted for 4 of the top 10 most popular
destinations led by Peru, Mexico, and Chile.
Meanwhile the Philippines is at number eight of the ten least attractive jurisdictions for mining
investment according to the Fraser Institute’s 2017 survey of mining and exploration companies.The
survey assessed how mineral endowments and public policy factors such as taxation and regulatory
uncertainty affect exploration investment.
By virtue of the initial tax reform package implemented by the Duterte administration, mining excise
tax has been raised from 2% to 4%. Under the proposed second round of reforms, the Department
of Finance wants a “comprehensive mining tax that will give the government a bigger share from
miners’ revenues.” There are pending bills filed in both the Senate and House of Representatives
that plan to impose5% mineral royalties on all mining operations on top of the excise tax on minerals
and other taxes. President Duterte continues to look at the possibility of imposing a ban on open-pit
mining through an executive order (“EO”).
The Mining Investment Coordinating Council is reportedly ready to propose the lifting of the open pit
mining ban for as long as mining laws are strictly enforced. The Department of Environment and
Natural Resources (“DENR”) will recommend the removal of the moratorium on new mining projects
imposed under EO 79 and DENR Memorandum Order 2016-01, premised on the passage of a
“legislation rationalizing existing revenue sharing schemes and mechanisms.” The DENR is also set
to declare high mineral potential areas including all existing operating mines as mineral reservations.
Further, the DENR seeks to promote the establishment of mineral processing plants and mandatory
mineral processing of all nickel ore. It will finalize the national program and road map for the
development of value-adding activities and downstream industries for strategic metallic ores while
requiring all operating mines to have ISO certifications. In both houses of Congress there are
pending mining bills requiring that mineral ores should be processed within the country and
disallowing mining operations from exporting unprocessed mineral ores without a certification of
compliance showing presence or lack of rare earth elements.
It appears that the Philippine government is now looking at different strategies to extract a greater
share of the value from mining operations, employing strategies to include increasing taxes and
royalties, and requiring in-country processing or beneficiation prior to export. These are clear
manifestations of resource nationalism that makes countries like the Philippines less attractive for
mining investment.
License to Operate Remains the Top Risk
According to a 2019 Ernst and Young Report outlining the top ten business risks facing the mining
and metals industry based on a survey of over 250 global mining sector participants, “license to
operate” topped the list. This has been attributed to the rise of resource nationalism and digital

2. transformation. License to operate has evolved beyond the narrow focus on social and
environmental issues. The expectations of society have increased and stakeholder participation has
moved beyond the confines of the local host communities. Social media and the internet brought
about by the fast pace of progress in technology and digital capabilities, are now able to move
information quickly. Resource nationalism has enabled society to examined its role as resources
licensor. Society now expects more than just tax and employment opportunities from resource
developers. New and strict disclosure laws have caused companies to rethink how value is being
created for stakeholder communities including tax contributions, as investors now rely heavily on
such disclosures. At the same time legal processes have enabled host communities and civil
societies to resort to litigation to enforce environmental laws, enjoined potentially destructive
operations, and seek damages for past violations and legacy mines. Any misstep on the part of
resource developers can impact their ability to access capital or may even result in a total loss of
their license to operate.
Under the Mining Act of 1995 and its implementing rules and regulations, the following are the legal
requirements for a company to have a license to operate:
• Technical and financial qualifications to engage in large-scale mining;
• The area being applied for is open and available for mining activities and is not located within
any of the areas where mining is prohibited;
• An approved environmental compliance certificate, showing that the impacts of mining in the
area can be mitigated and/or remediated through proper environmental protection measures;
• An approved Project Feasibility Study, showing that the mine has enough ore reserves to
operate profitability, and can give government a fair share in revenues.
• The endorsement/approval of the local government units (province, municipality/city, and
barangay) that will be impacted by the proposed mining activity; and
• Free and prior informed consent of the indigenous peoples, if the area being applied for is within
their ancestral domains.
New Digital Technology
Miners are now recognizing the use of emerging digital technology to improve productivity. Mobile
technology connectivity between workers and management facilitates communication in the mines,
ensuring a safe and productive working environment. Mining companies are also revolutionizing data
collection in the field with the help of the Internet of Things, which are smart data solutions that help
management to relay important data such as water pressure, temperature, concentration of gases
and other information. Cloud technology allows management and employees to quickly access and
alter essential information, wherever and whenever needed.
Robotics allow more autonomous vehicles and machinery to make operations smoother resulting in
better safety, greater efficiency and cheaper running costs. In engineering industries which require
hard labour intensive tasks, robots will be able to take over and do things faster and more efficiently
than humans ever could. Predictive analytics is used currently to reduce maintenance costs and
improve equipment availability.
New Workers
While automation and data analytics technologies may increase efficiency, these will require a
workforce that is skilled in data science, analytics, predictive modeling and mechatronics. However,
recruiting and retaining this workforce will increase expenses as there is a limited pool of people with
these skill sets. Current workforce will also need retraining as knowledge resources and will be
required to possess a new set of skills needed to operate new machinery and technology, or work
along-side and support automated systems.
Universities and data sciencecompanies that develop innovations could gain an edge in exploration.
Further, exploration innovation will not come only from engineering or geology; it will also emerge
from biochemistry, bioengineering, and computer science—disciplines too complex for resources

3. companies to manage in-house. Demand for new jobs such as data scientists, statisticians, and
machine-learning specialists is already on the rise among resource developers. Within ten years,
mining companies could employ more PhD-level data scientists than geologists. Mining
organizations are also employing new tools including cloud-based human resources systems, data
analysis of employee performance and real-time digital learning to manage and develop talent.
New Energy Sources
Fossil fuels are the conventional sources of energy to run mine equipment and electricity for
processing, representing a significant part of mine operating costs. Companies are now opting for a
mix of energy sources — fossil fuels, hydroelectricity and renewable energy. Mines, seeking to
reduce costs and greenhouse gases,will be investigating ways to replace diesel-powered equipment
with electric ones, as battery storage technology becomes more reliable and affordable. This will
bring a number of benefits including the reduction of underground diesel emissions and ventilation
costs.
The integration of conventional and renewable sources is critical to ensure reliable and safe power
for the mine. Such solutions will enable the mining industry to diversify its energy sources, reduce
consumption of fossilfuels and carbon emissions,and cut operating costs.This will ultimately create
a new generation of mines that will enhance the industry’s global competitiveness, long-term
sustainability, and more importantly, public acceptance.
New Threats
While digital technologies will make mines more efficient, mining companies will have to allocate
budgets for cybersecurityand devote additional resources to improve their defenses and work harder
in embedding security-by-design due to the increasing potential of cyberthreat. As the digital
transformation agenda forces organizations to embrace emerging technologies and new business
models, cybersecurity is important because there is a heightened exposure to fraud, corruption and
other related risks. Increased global connectivity means that anyone with access to company data
especially those uploaded to cloud applications, can exploit weaknesses in data security.
Companies’ critical digital and physical assets are therefore at a greater risk of theft, damage and
manipulation than ever before.
New World Commodities
At the same time, digital technologies have resulted in a change in commodity demand for critical
minerals such as cobalt, lithium and copper. These minerals are required to manufacture energy
conversion and storage equipment needed to supply the renewable energy industry which already
is beginning to transform and disrupt global demand.
The rise of electric vehicles and the production of an ever-growing variety of high tech and green
technologies, from batteries, smart phones and laptops to advanced defense systems have also
boosted demand and competition for new world commodities. The European Union, South Korea,
Japan and US, are defining some minerals as ”critical” to ensure they are available for their supply
security and future prosperity. Chinese state-owned enterprises are also already taking a significant
proportion of the lithium-ion battery supply chain by purchasing and funding lithium and cobalt mines
as well as downstream processing.
New Miners
With the advent of digital technology and rising demand for new world commodities, the business of
mineral exploration, development and production will not be conducted solely by traditional mining
houses and junior companies.The mining and metals companies that will be the winners in the future
will ultimately be those who have learned to adjust their business models and collaborate with other
industries. Within their organizations, some miners are either using venture capital firms or setting

4. up specialist internal teams to identify more specialized mining prospects as they seek to capture
value beyond their core portfolios.
The typical profile of a miner will also change. Technology companies may become direct or indirect
investors as a way of shoring up and securing supply. With scarce new world commodities supply
like cobalt and lithium and other rare earth minerals, cash-rich technology companies will venture
into mining to ensure that they can continue to produce their products. Major metal consumers,such
as tech giants, are moving to control whole value chains from raw material sourcing up to product
delivery. Sovereign funds of rich economies, like Saudi Arabia and Norway will become major
stakeholders in the sector as they look for investment opportunities for their petroleum revenue
windfalls. On the other hand, state enterprises will wish to secure supply for national industries and
protect jobs. Metal traders once again awash with cash because of recent strong commodity prices,
are looking for opportunities and will reemerge as prominent players in the sector. Using blockchain
technology, new technology entrants can engage in mining without owning any mines or distribution
infrastructures in the same way that Uber does with no cars and Airbnb, with no real estate listings.
Conclusion
Change is the only certainty for today’s global mining industry. While the mining industry is currently
benefitting from a positive outlook despite the ongoing trade war, the local industry is still facing a
lot of uncertainty because of resource nationalism, regulatory issues, political risk, community
relations and social license to operate. Mining companies will increasingly adopt emerging digital
technologies to transform their operations in order to gain benefits such as reduced costs, improved
health and safety of workers, minimized environmental impacts and a better understanding of the
ore body. Innovative technologies will also facilitate the better management of operational costs,
improve extraction methods, streamline distribution, and increase worker productivity. Companies
will need to attract talents adept at emerging technology and adopt a level of flexibility in their
business models by building partnerships with non-traditional, new technology “miners” for future
growth.
Fernando “Ronnie” S. Penarroyo specializes in Energy and Resources Law, Project Finance and
Business Development.He may be contacted at fspenarroyo@gmail.com for any matters or inquiries
in relation to the Philippine resources industry. Feel free to follow Atty. Penarroyo on LinkedIn
(https://www.linkedin.com/in/fernando-s-penarroyo-2b8a7312/)
References
Beroe, Iniyakumar, Global Mining and Exploration Trends, 21 August 2019
https://www.beroeinc.com/article/global-mining-and-exploration-trends/
Law, Jonathan, Changing the Face of Mining, Jonathan Law, CSIRO, 23 September 2019
https://www.csiro.au/en/Research/MRF/Areas/Resourceful-magazine/Issue-18/Changing-the-face-
of-mining
Risks and Opportunities for Mining: Outlook 2019, KPMG International,
https://assets.kpmg/content/dam/kpmg/xx/pdf/2019/02/global-mining-risk-survey-2019.pdf
Top Ten Business Mining Risks Facing Mining and Metals in 2019-20, Ernst and Young, 2018,
https://assets.ey.com/content/dam/ey-sites/ey-com/en_gl/topics/mining-metals/mining-metals-
pdfs/ey-top-10-business-risks-facing-mining-and-metals-in-2019-20_v2.pdf
World Exploration Trends 2018, S&P Global Market Intelligence, March 2019,
https://www.spglobal.com/marketintelligence/en/documents/world-exploration-trends-march-
2019.pdf