Philippines says no new mining permits until law passed

Environment Secretary Ramon Paje

MANILA, Philippines – The Philippines said Monday it would not approve new mining permits until Congress passed a bill increasing royalties on the industry as part of new rules governing the sector.

The policy is contained in a new executive order signed by President Benigno Aquino III aimed at overhauling policies governing the industry to boost state revenues while putting in place measures to protect the environment, tourism and agriculture.

Environment Secretary Ramon Paje, who announced the new rules, said the key provision would impose a five percent royalty on the gross earnings of mining companies compared to the existing two percent tax.

However he said this would require passage of a bill in Congress, expressing hope it would be passed soon.

“Basically, the executive order intends to increase the revenues of government from mining,” he told reporters.

“There will be no new mining agreements before the new legislation on revenue is passed,” he added.

He stressed the order would respect the existing mining agreements with the 33 mining operations already in the country but would be imposed on new entrants.

He said that if the law was passed by 2016, the country could earn an additional 16 billion pesos ($372 million) from the higher royalties.

In addition, the order raises certain fees for mining companies which could raise an additional 760 million pesos, he said.

It also designates all mine waste and tailings as state property, allowing the government to extract any remaining minerals, potentially raising another 50 billion pesos, Paje added.

The order also bans mining in 78 areas designated as “eco-tourism” sites and in “prime agricultural and fishing areas”.

It also bans mining in certain “island eco-systems,” to be defined later.

The Philippines is believed to have some of the biggest mineral reserves in the world — the government estimates the country has at least $840 billion in gold, copper, nickel, chromite, manganese, silver and iron ore deposits.

However, the minerals have been largely untapped, partly because of a strong anti-mining movement led by the influential Catholic Church, while poor infrastructure and security concerns have also kept investors away.