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Gov’t eyes bidding on mine permits

/ 03:20 AM September 16, 2011

Environment Secretary Ramon Paje on Thursday said the government was considering auctioning mining permits instead of granting them on the basis of “first come, first served” in a bid to discourage stock manipulation and raise more revenues.

Paje issued the statement a day after he told the annual conference of the Chamber of Mines of the Philippines that the government would not allow companies to obtain mining permits only to raise funds in the stock market.

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“This is not the kind of mining we want to encourage.  The government is allowing mining operations in the country because we want to generate revenue for the government and the Filipino people and to fuel the country’s economic development,” Paje said on Thursday.

He said putting mining tenements on the bidding block should minimize corruption.

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“Under the first come, first served rule, the power of the secretary is very big. We would like to remove that. We could remove corruption by tendering it,” he said.

Paje also noted that auctioning the permits would provide additional revenues to the government. “We can probably start the bid at $250,000,” he said.

500 permits

The Mines and Geosciences Bureau has issued 500 permits, according to the Department of Environment and Natural Resources (DENR).

But some of these permits are being used for speculative trading or sold to other companies, without generating revenue for the government.

Since the beginning of the year, the DENR has been canceling permits that remained unused and inactive applications. The operation is expected to last until the end of the year.

“Consistent with the instruction of President Aquino, the DENR will resume the granting of mining permits only after we have fully cleansed the wang-wang, or undesirables, in the mining industry,” Paje said.

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The moratorium has been criticized by the chamber, which said that this has led to a slowdown in mining investments and was hurting the entire economy.

In a keynote speech at the opening of the chamber’s conference on Wednesday, Paje announced that the government planned to resume accepting mining applications.

He also said that the DENR would review appeals from 30 percent of the rejected applications, and formulate guidelines for public bidding of exploration areas and joint ventures in mining deals.

Tax increase

In his statement on Thursday, Paje also said that the DENR would push for the increase in the taxes imposed on mining firms.

“The 2-percent excise tax, which is the share of the government according to the Mining Act, is not enough to pay for the environment cost considering the fact that mining is an extractive industry. This is the reason why the DENR is pushing for the payment of a 5-percent royalty by mining companies,” Paje said.

Mining companies have opposed the proposal, saying higher taxes would further discourage the entry of investments.

The mining industry is forecast to grow 17 percent this year, with the metals sector seen rising 24 percent. Investments could reach $18 billion by 2016, nearly fivefold the $3.8 billion over the last six years, according to the DENR.

The Philippines is the world’s fifth most mineralized country, with large reserves of minerals, including gold, copper and nickel.

Transparency initiative

Executive Secretary Pacquito Ochoa said at opening of the annual mining conference on Wednesday that the country would ensure transparency in revenues by participating in the London-based Extractive Industry Transparency Initiative, which requires companies and governments to publish what they pay and receive.

Ochoa said the mining industry was being scrutinized by various sectors because of the harm done to the environment and communities in the past.

“For mining to be acceptable, it must be guided by the principles of sustainable economic development, environmental protection, social equity and, of course, good governance,” he said.

On the verge of a boom

Philip Romualdez, president of the Chamber of Mines of the Philippines, said the local mining industry was on the verge of its biggest boom in history as robust metal prices continued to draw more local and foreign investors.

But he said the government moratorium on mining permits and a concerted campaign by environment activists against mining were threatening $14 billion to $20 billion in potential investments in the next five years.

Last year, investments reached $956 million and could have surpassed $1 billion had some projects not been delayed, he added.

“As we allow you to mine, we cannot allow you to dirty the environment,” Paje told the conference.

He also clarified that the government had not suspended the issuance of permits but wanted to first find out what happened to the 500 mining permits it had issued, since only 30—or 6 percent—were in operation.

Paje said 94 percent of the permits had apparently been sold, traded or used to raise company shares in the stock market.

“Those who want to mine are welcome, those who will not mine are not welcome,” he added. With a report from AP

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TAGS: Chamber of Mines of the Philippines, Environment Secretary Ramon Paje, Mines and Geosciences Bureau, mining permits, stock manipulation, stock market
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