FISCAL incentives such as tax breaks can be a good tool to encourage greater investment in the mining and processing of critical minerals, according to the United Nations Department of Economic and Social Affairs (Undesa).

In the report World Economic Situation and Prospects 2025, Undesa said the mining and production of critical minerals can boost job generation and help countries attain the Sustainable Development Goals (SDGs).

Undesa said fiscal incentives can include income tax holidays and tax breaks, accelerated depreciation, investment allowances, tax credits, and reduced royalties.

“It is essential for resource-rich economies to create an attractive investment environment to mobilize private capital in support of the mining and processing of critical minerals, including the acquisition of technological innovations that can enhance efficiency, reduce environmental impact, and support the development of new methods for resource extraction and refinement,” the report stated.

Undesa tagged nickel and cobalt among the critical minerals that could be mined and produced here.

Nickel in the country accounts for 3.7 percent of mineral reserves while cobalt accounts for 2.4 percent.

In terms of share of production, the report said nickel accounts for 11.1 percent while cobalt, 1.7 percent in the Philippines.

Nickel and cobalt, along with other critical minerals in Asia mined and produced in China, Indonesia, and the Philippines, can help attain no less than six SDGs.

These are SDG 7 on affordable and clean energy; SDG 8, decent work and economic growth; SDG 9 on industry, innovation, and infrastructure; SDG 10 on reduced inequalities; SDG 12 on responsible consumption and production; and SDG 13, climate action.

However, Undesa said fiscal incentives may prove less effective if there is political instability, inadequate infrastructure, and high business costs.

These incentives could also reduce government revenues, “encourage profit-shifting, and hinder the ability of countries to mobilize domestic resources, particularly if fiscal incentives are overly generous.”

“The effectiveness of using tax incentives to promote the advancement of critical minerals development is open to debate, and countries need to be cautious in implementing them and ensure that they are well targeted,” the report stated.