President Benigno Aquino III . FILE PHOTO
Aside from extracting more revenues from the mining industry, the government plans to wield control over a wider range of lucrative mineral resources, including oil and gas under a new mining policy being fine-tuned by Malacañang.
A proposed executive order (EO) drafted by the Cabinet clusters on climate change mitigation and economic issues laid down six points as part of the Aquino administration’s mining agenda.
These include the declaration of the primacy of national laws over local laws allowing small-scale mining, which has set off criticisms from governors.
President Benigno Aquino was supposed to sign the EO, considered to be a “game changer” in the country’s mining development, last week. He said he did not do so because he was “not comfortable” with “some language” in it.
In a statement, the Chamber of Mines of the Philippines (CMP) said it appreciated the review of the draft EO and the “apparent care” by which the government was approaching the mining policy issue.
“Our member-companies are eagerly waiting for the issuance of the executive order to enable them to pursue their mining activities that are expected to bring in more capital investments to help catalyze socioeconomic development, particularly in remote poverty-stricken areas of the country,” the chamber said.
Governors to nix EO
According to a draft of the EO obtained by the Inquirer, the government welcomes “responsible” mining development while ensuring that the country’s ecological richness “is properly valued and protected” because of its “potential of improving the economy and uplifting the lives of Filipinos.”
The Philippines is among the world’s top producers of nickel and copper and has 32 metallic mineral operations.
Under the proposed policy, the government plans to adopt international best practices to promote good governance and integrity in the sector.
But Agenda 4 of the draft document states that national laws would prevail over local laws related to small-scale mining, a sector that the national government would want to regulate. This declaration has been challenged by local government executives.
On Friday, Albay Governor Joey Salceda noted in a forum that 40 provinces had already passed antimining ordinances and said that governors would ask the court to strike down the EO once it was signed.
‘Spitballing’
On Monday, however, Mr. Aquino dismissed Salceda’s statements as “premature.”
“I hope people won’t make any comment until the EO is out,” his spokesperson, Edwin Lacierda, said Tuesday. “It is because we’re spitballing here until we see the provisions of the EO … It’s just all talk… It’s all speculations.”
“Let’s wait. Let’s put on hold our concerns. Let’s put on hold our fears,” Lacierda told reporters even as he acknowledged that he had not seen the approved version of the EO.
“For all intents and purposes, those concerns might have been addressed,” he added.
According to the draft EO, the government aims to have more regulation over small-scale mining and the middlemen who buy and trade minerals.
‘Go, no-go areas’
The draft clarifies the definition of small-scale mining, its scope, and those who can apply for contracts, as well as introduces “medium-scale mining” as a new tier of mining operation.
Mining activities are to be prohibited in more areas under the proposal. The areas include prime agricultural lands, island ecosystems, and ecotourism sites.
Geohazard maps and forecasts of climate change events are to be used to determine “go and no-go” areas for mining, according to the document.
The mining sector has been calling for the lifting of the government moratorium on the approval of mining permits. Since 2010, the Department of Environment and Natural Resources (DENR) has not signed any new mining permit pending review of the applications.
More taxes
The government plans to impose a “windfall profit” tax on mining companies. For this provision to become a reality, the draft policy prescribed Congress legislation to impose the tax and other additional levies.
Other possible sources of revenues for the government were the auction of mining tenements, imposition of higher administrative fees, and the promotion of joint ventures and foreign technical assistance contracts with mining companies, which allows the government to negotiate a bigger share of the profits.
In its statement, the CMP said it was supporting new legislation “adopting a progressive tax system that will allow government to further increase its share in mining revenues.”
While firms in most mining jurisdictions, such as Australia and Chile, are taxed on the basis of net profits, Philippine companies pay taxes based on gross output, it noted.
“The mining industry holds so much potential to help in the country’s economic and social development, especially with the current robust metals’ prices worldwide,” the chamber said.
“Investors are ready to put their stake in the country, and the government only needs to maintain regulatory certainty and ensure the proper implementation of current laws and fiscal regime.”
Under the proposed policy, the government and the private sector seek to ensure that social and environmental protection measures are in place in a mining area before, during and after the mining operations.
Insurance coverage
On Agenda 1, the government raises the possibility of insurance coverage for the communities and the surrounding environment, as well as perpetual liability for the maintenance of closed sites. It was not clear, however, if this will be the responsibility of the mining firm.
Abandoned mines and tailings are to be owned by the government. Tailings from old mines still contain plenty of metals like nickel, iron and gold, according to the DENR.
Although the minerals will be considered state assets, the draft policy made it clear that cleaning up of the area would be the mining contractor’s responsibility.
The proposal called for a massive study of the fiscal schemes, processes and procedures for the extractive industry, including those “being utilized for oil and gas and other energy-related extractive industries.”
At least two agencies are to be created to promote and regulate mining under the draft EO. These are the Mineral Industry Development Council, to replace the defunct Minerals Development Council, and a task force against illegal mining.
Villafuerte
In a press statement, Camarines Sur Governor Luis Raymund Villafuerte Jr., vice president of the League of Provinces of the Philippines, said the majority of governors were in favor of responsible mining and not necessarily opposed to the proposed EO.
“Some just have concerns on the draft executive order, specifically on the following issues—proper consultations with the local government units, ensuring the environmental viability of mining operations, the regulatory powers of local government units over mining operations, and fair and equitable sharing of revenues from such operations,” Villafuerte said.
“Mining operations should be conducted in a manner that would ensure that the environment would be protected, that the local government units would have a say in regulating them, and that the local government units should get a fair share of the revenues that are generated by the government on such operations and the population would derive substantial benefits.” With a report from Christine O. Avendaño