DENR: Higher mining fees a boon

MANILA, Philippines—The Department of Environment and Natural Resources (DENR) said it would impose more charges on the mining industry to maximize government revenues at a time when the price of minerals such as gold and silver were soaring in the world market.

Environment Secretary Ramon Paje said he had proposed to President Benigno Aquino III several reforms in the mining industry to optimize the government’s control over the country’s mineral resources.

These reforms and new fees could give the government an income of about P8 billion yearly, Paje said in a recent interview.

“You are destroying the environment somehow through mining. Thus, you have to recover something from the environmental degradation,” he said.

Paje said his proposals lay down new charges for the mining industry. It is expected that Mr. Aquino would issue an executive order soon imposing the reforms and lifting the moratorium on new mining applications.

One of the major changes proposed involves the ownership of mine tailings and waste, which are worth “billions” of pesos, Paje said.

Some old and abandoned mining areas still have mine tailings from which gold, copper and iron ore could still be extracted, he said. These are resources that mining firms would be eager to get their hands on, he said.

Minerals such as gold and silver have seen record-high prices these past months. Gold reached $1,500 per ounce in April on the back of economic uncertainties in Europe, the United States, and the Middle East.

Instead of allowing mining firms to claim abandoned sites and their mineral resources, “we are proposing that these become the property of the state,” Paje said. The government can then auction off the extraction of minerals from these tailings to private companies, he said.

The government is also proposing to compel mining applicants to pay an annual occupational fee of P60. At present, companies only pay the fee once they submit an application, Paje said.

For failing to collect the occupational fee annually, the government is losing P750 million a year, the DENR chief said.

“When you get an application, the claim is yours exclusively. But if you are letting the land go idle for 10 years, the government is not getting an income,” Paje noted.

Charging royalties

Aside from these charges, the government is also thinking of charging mining firms a royalty fee.

Paje previously said he had suggested to the President that 21 mining sites he declared “mineral reservations.”

Declaring an area a mineral reservation, which means its products are of “strategic” value to the country, would compel a mining firm to pay royalties to the government.

Paje said the Aquino administration stands to earn about P7 billion a year from royalties.

Mining companies paid P340 million in excise taxes to the government in 2009, an insignificant amount compared to their total gross sales of about P150 billion, Paje said.

At present, nine mineral reservations have been declared throughout the country. These are found in Ilocos Norte, Zambales, Bulacan, Camarines Sur, Samar island, Surigao del Norte, Compostela Valley, Zamboanga del Norte and all offshore areas around the country.

Paje said mining firms had agreed in principle to the imposition of the royalty fees. However, he noted that they had suggested “payment options.”

“They don’t want an across-the-board 5-percent royalty fee, for instance. They want it based on profits,” the environment secretary said, adding that the government was willing to discuss the rates with the industry.