They said prevailing low metal prices in the world market are also expected to dampen interest for fresh exploration in the country.

"I think the industry is still reeling from low international metal prices and consequently, most companies are restricting their investments to countries and projects that have the most appeal," Robert Guest, president of the Philippine Mineral Exploration Association, told Reuters.

"I think that companies would like to work here and would like to do business here," Guest said. "However, the worldwide situation is such that other countries remain... a more (interesting) alternative for investment," Guest said.

The association represents local and foreign firms involved in mining exploration. Other industry officers said foreign firms were waitingfor the Supreme Court to act on a class suit filed by tribesmen in February 1997 to void the Philippine Mining Act before committing more investments.

The mining Act allowed up to 100 per cent foreign equity in local projects but has been challenged by tribesmen who say natural resources are a heritage which should not be exploited by foreign firms.

"The biggest stumbling block is the Supreme Court challenge to the mining Act," WMC (Phils) Inc vice president for corporate affairs Ed Coronel said.

"WMC cannot make any substantial decision on further investment, realising that there is still no resolution to the Supreme Court case," he said.

The local unit of WMC Ltd of Australia has so far spent $40 million in its Tampacan copper project in South Cotabato province in southern Philippines, Coronel said.

The Tampacan copper reserve, reputed to be one of the biggest finds in the country, is scheduled to start commercial production by 2004 "if plans do not miscarry", Coronel said.

Since the approval ofthe Philippine Mining Act in 1995 only two firms -- WMC and Arimco Mining Pty Ltd, both based in Australia -- have been given permits to explore up to 81,000 hectares of prospective mining areas in the country for at least 25 years.

Several foreign companies are also seeking such permits, known as financial or technical assistance agreements (FTAAs).

Industry officials said approvals of new permits were stalled by mounting environmental concerns and a law which took effect in November 1997 giving tribesmen rights to negotiate terms in the exploration of their ancestral lands.

They said no new FTAAS were released by the government after WMC and Arimco's since most of the areas being applied for were located in so-called ancestral lands. The rules on mining exploration in these lands were finalised late last year.

Of the Philippines' 79 provinces, 61 are classified as having ancestral lands.

Major mining companies are abandoning plans to invest in large exploration in the country because of the redtape in getting permits, industry officers have said.

"The big boys are gone," an industry analyst who requested not to be identified said. "Everybody's watching what will happen now to WMC and Arimco. They are the test cases of the government's liberalisation policy," the analyst said.