Aquino set to sign mining EO

DAVAO CITY—A new mining policy expected to be issued Friday by President Benigno Aquino hopes to generate more revenues for the government in the face of a high demand for metallic resources while excluding about 78 more areas from mining activities.

Aquino said here on Wednesday that he hoped to come out soon with the much-awaited executive order (EO) spelling out the government’s revised mining policy in the midst of intense debate between industry leaders and environmentalists through the years.

Without going into details, the President said small-scale mining would be further regulated throughout the country under the new EO, which, he added, was undergoing “fine-tuning” in certain provisions for being “superfluous.”

Mining and oil shares rose 1.64 percent in the Philippine stock market on Wednesday following Mr. Aquino’s statements.

The managing director of First Grade Holdings, Astro del Castillo, said the issuance of the new rules would trigger a significant spike in investments from new and old mining companies. “If you look at the industry, they have really stepped on the brakes over the past year,” he said in an interview.

The new policy would expand the functions of the Mineral Development Council, said a source privy to the matter.

Under the plan, a new council composed of the Cabinet clusters on environment, climate change and economic issues would assess mining projects and rules related to the industry. It would also propose legislation for the mining industry.

78 tourism areas

Asked how the new EO will be able to balance out concerns on environment protection and economic gains, Mr. Aquino said that one of its provisions would designate “roughly” 78 areas to be reserved for tourism “and mining cannot happen there.”

Extractive activities would be disallowed in agricultural and ecotourism areas, according to the source. At present, mining is barred only in areas under protected status.

The President noted that the provision in the draft EO that “mining cannot happen in prime agricultural lands” had also been stated in the law extending the implementation of the Comprehensive Agrarian Reform Program which, in turn, prohibited the conversion of irrigated lands.

“So I asked our lawyers: ‘Do we need to put this down there when it’s very clear that there is such a law? Do we have to reiterate?” he said, adding that the government might end up being a laughingstock for this.

He said small-scale mining sites would be declared “Minahan ng Bayan.”

The President, who was interviewed by reporters after attending a convention of leaders of the Autonomous Region in Muslim Mindanao at Waterfront Hotel here, said he had asked his executive secretary, Paquito Ochoa, to look into the government’s share of mining revenues and to flesh out the basis for imposing either higher taxes or royalties on mining projects.

Balanced policy

At present, the government is collecting a 5-percent royalty tax on mineral reservations and a 2-percent excise tax on gross sales of mining products. In 2011, excise taxes from mining amounted to some P800 million.

“Do we need legislation to effect a better return for the state?” the President said, “And then—all taxes involved—[public revenues] … will not even reach 10 percent of what they (mining firms) are making from the extraction of our resources. That seemed not fair.”

In Manila, Environment Secretary Ramon Paje said the mining policy “will ensure a balance policy between extractive activities and environmental protection.”

While it will open the Philippines to mining activities, it will make sure that companies follow environmental and safety laws, Paje said.

The final draft submitted by Ochoa to the President on Monday took into consideration the inputs made in a joint Cabinet economic and environmental cluster that were called in to ensure the government will be able to strike a balance between economic gains and environment protection.

Administrative fees

In separate interviews, officials of the Department of Environment and Natural Resources (DENR) said the new mining policy would not yet impose the royalty tax on mining companies, a levy vehemently opposed by the industry.

To raise more money from the sector and pending legal issues on the royalty tax, the government would impose higher administrative fees, such as occupational and application fees, which are used by mineral speculators, Paje had said in a previous interview.

Owners of idle mineral lots do not pay an occupational fee to the government, leading to losses of P760 million, Paje said. A lot owner is mandated to pay an occupational fee of P60 per hectare only when the land is placed under a Mineral Processing Share Agreement.

Mineralized lots which are fenced off and left undeveloped have produced mineral speculators that drive up the cost of land for legitimate mining companies and lead to revenue losses for the government, the DENR officials said.

While mining industry leaders are pressing the government to be more accommodating to them, the new EO is expected to inflame environmentalists and conservationists who oppose the promotion of mining in a country with high biodiversity and is very vulnerable to extreme weather effects.

40 provinces vs mining

According to Mines and Geosciences Bureau (MGB) Director Leo Jasareno, the “antimining sentiment” has affected the growth of the industry, pointing out that about 40 provinces have adopted laws restricting mining activities.

Legitimate mining companies were also haled to the Supreme Court, he said.

“The antimining advocacy is bringing us down … it is hurting the country,” Jasareno said.

The Philippines saw a decline in mining investments in the past year. According to data from the DENR-MGB, total Philippine metallic mineral production value during the first quarter this year plummeted by a staggering 38 percent, from P31.40 billion to P19.61 billion year on year, or an P11.79-billion shortfall.

He attributed the antimining sentiment to the lack of information on sustainable mining. Communities receive little or no revenues from mining firms in their midst, he said.

The mining industry was also at fault. For years, they have abandoned mines and flouted environmental laws in the Philippines, Jasareno said.

Easier for legit miners

Fund managers hailed the President’s announcement that new rules on mining could be out by the end of the week.

Analysts said the signing of the new executive order should mean that new mining contracts would finally be granted, helping the country tap the potential impact of the industry on economic growth.

“This will create a lot of local jobs. This will also create a lot of indirect income for communities because of the support services,” Joey Roxas, president of Eagle Equities, said Wednesday.

Concerned government agencies should act fast and approve pending petitions for contracts by companies that comply with the requirements under the new order, Roxas said.

“The market wants to see contracts granted quickly if the government wants to show that they do not really mean to hold back the industry,” he said. “The new rules should make the environment easier for legitimate miners,” he added.

He said the Philippines has a long history in mining, with cities like Baguio and Toledo in Cebu province tracing their early developments to the industry. “These cities would not exist if not for mining,” Roxas said.

He said the issuance of the presidential order would lead to an immediate improvement in the performance of mining  stocks on the local bourse. With reports from Kristine L. Alave, Paolo G. Montecillo and Riza T. Olchondra in Manila

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TAGS: Business, environment, Government, Mining