IN the beginning, God created heaven and earth. Shortly thereafter, God received a show-cause notice in account of why he shouldn’t be cited for failure to file an environmental impact statement. He was granted a temporary planning permit for the project, but was stymied by a cease-and-desist order for the earthly part.

Then God said, “Let there be light.” Officials immediately demanded to know how the light would be made. Would it require strip mining? What about thermal pollution?  God explained that the light would come from a huge ball of fire and provisional approval was granted with the provision that no smoke would result.  God said, “Let the earth bring forth green herb and such as many seed.”

The Environmental Protection Agency agreed, so long as only native seed was used. Then God said, “Let waters bring forth creeping creatures having life; and the fowl that may fly over the earth.”

Officials pointed out this would require approval from the Department of Game coordinated with the Heavenly Wildlife Federation and the Audubongelic Society. Everything went along smoothly until God declared that he intended to complete the project in six days.

Officials informed God it would take at least 200 days to review his many waiver applications and environmental impact statements. After that, there would have to be a public hearing and then there would be a 10-to 12-month probationary period before. At this point, God created hell.

According to the Department of Environment and Natural Resources, the Philippines is the “fifth most mineralized country in the world.” It has 13 known metallic and 29 non-metallic minerals. It ranks second in gold deposits, third in copper reserves, and sixth in chrome deposits.  The country is considered to be the only natural source of chromium. Food for thought: Kuwait has the fifth-largest oil reserves in the world. Can you imagine what Kuwait would look like today if they decided to halt oil production?  By the way, Kuwait also happens to be the fifth-richest country in the world in terms of per capita income.

I am all for mining in the Philippines. Our country is blessed with these natural resources and our people should be the beneficiaries if these resources are to be exploited. I think the government should spend much more time thinking about how to make sure mining companies practice responsible mining and how the profits from these resources taken from our soil directly benefit the folks that live in these areas. We need to stop bowing to what British author Jeremy Clarkson refers to as the “ecomentalist.”

Just think about Baguio City. Back in the 1930s, Baguio was a model city with homes, parks and playgrounds designed by the top architects of the time. This city had a vibrant economy and was an ideal place to live and work, all because of mining.

This is the 21st century. In this century, respectable and responsible mining companies develop valuable mining properties and after production is completed, these companies are responsible for rehabilitation, regeneration, re-vegetation and reforestation of these properties into livable and productive areas.

The last heyday for Philippine mining stocks was back in the 1970s.  Fortunes were made and lost in this period as all sorts of mining companies went public. Buying mining stocks is a tricky business and one needs to be careful because buying these stocks at the wrong time can prove very costly. There are generally four stages (capturing the rights, discovery, development and production) you need to look for when buying or selling a mining stock.  The first stage is capturing the rights to explore and develop the property.  In the Philippines this is a very complicated and time consuming process.  I would not touch a mining stock until all these permits are secured which could take years.

Once the rights to explore are in hand, the discovery phase begins. This is an exciting time as news about ore reserves, ore grade, and feasibility studies flow freely. This is a good time to dip your feet in, but you need to be careful because once the discovery phase is completed, there is a period of disinterest because of the time lag between the discovery phase and the next, which is the development phase.  In this period of disinterest a mining stock can lose a significant amount of value.

The development phase is generally when you will need to ante up.  This is when the big money is needed. This is when shareholders of the mining company will have to raise substantial funding for the project. The good news is that there is confirmation that the mine can be profitable. The problem with the development stage is that it could take a long time for a mine to be developed. Sometimes up to five years and who knows what will happen to the market price of the ore you are mining in that period.

The production phase is the safest time to buy mining stocks but by this time the stock may have matured significantly so your upside will be limited. My personal view is that you should avoid mining stocks when the rights to explore and develop are not in hand. You should be in trading mode during the discovery phase and take a longer-term view once development and production is underway.  I think you can minimize risk and maximize you returns this way. Happy mining.

(The author is the investment director for equity portfolio management for ATR KimEng Asset Management and chairman of its investment committee. For comments, you may e-mail him at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .)