China and Japan are competing to invest in $1 trillion worth of mineral resources in the Philippines, shedding light on one of the economic incentives behind President Rodrigo Duterte’s headline-grabbing Asia pivot.
Both Asian heavyweights are interested on building out the southern province of Mindanao, Carlos Dominguez, finance secretary of the Philippines told CNBC’s “Squawk Box” on Thursday.
As the Philippine’s second-largest island, Mindanao is home to half of the country’s mineral wealth, including copper, gold, iron, aluminum in addition to significant natural gas and oil deposits. The region’s untapped resource wealth could be worth as much as $1 trillion, according to a 2011 leaked cable from the U.S. embassy in Manila released by Wikileaks.
Wikileaks’ database of confidential information says the United States Geological Survey (USGS) has been keeping a secret of its discovery of gold in Mindanao that was estimated to worth more than 1 trillion dollar, and billions of dollars worth of nickel, copper, aluminum, and zinc.
When asked who was more keen on tapping Mindanao’s resource abundance, Dominguez said “the Chinese have expressed interest but they don’t have too much activity.”
“Our previous administration barely spoke to the Chinese government while we have been in close cooperation with the Japanese for over 60 years,” he continued.
Indeed, Japan certainly appears to have a head start. In March, state aid agency Japan International Cooperation Agency (JICA) injected $9.42 million into the island’s infrastructure development while a group of Japanese food companies said they were pumping $500 million to process aquacultured products in certain Philippine regions, including Davao.
China’s presence on the island includes a power plant as well as various mining companies, but a number of deals are expected following Duterte’s newfound alliance with Beijing. Both China and Japan, in addition to South Korea and Philippine firms, are pitching to build a railway system that would connect the entire Mindanao Island.
“So far, Japan has been the largest ODA [official development assistance] provider to The Philippines, with a total of $5.7 billion. The Chinese have offered ODA assistance of $6 billion but that’s just starting up…We’re happy to getting support from both neighbors,” Dominguez noted.