House not backing down on plan to ban open-pit mining

Photo from the Office of the Speaker

The House of Representatives is not backing down from its plan to ban open-pit mining and revise the taxation of mineral products in the country despite strong opposition from the mining industry.

At a technical working group (TWG) meeting of the House committee on ways and means Thursday, Speaker Gloria Macapagal-Arroyo gave the Department of Finance (DOF) an ultimatum to submit its draft bill on the fiscal regime for the mining industry.

“I will ask the industry, talk to the DOF otherwise we make our own,” she said.

“Talk to the DOF and let the DOF come back with a new draft in three days’ time otherwise we do our own. Anyway, it’s not your priority; it’s only the President’s priority,” she added.

Under the working draft bill of the panel, “mining contractors for all metallic and non-metallic mining operations, whether large-scale or small-scale, shall pay the government a royalty equivalent to:

– if within mineral reservations, 5 percent of the market value of the gross output of the mineral products extracted, exclusive of all other taxes;

– if outside mineral reservations, 3 percent on the first three years of upon the effectivity of the Act, 4 percent on the fourth year and 5 percent on the fifth year.”

At present, a royalty is imposed only on mine sites declared as mineral reservations.

READ: Imposition of royalty on all mining operations eyed

Arroyo also proposed that open-pit mining be clearly defined and prohibited in the bill.

But Gerard Brimo, chair the Chamber of Mines of the Philippines, said the imposition of such royalties would “dry up investments” and eventually kill the industry.

“There are two things that can impact us: it will dry up investments, and I have no doubt that that will happen, and secondly and perhaps more alarming in the short term is that companies that are currently struggling because prices are low… but if they get hit with such a big imposition it’s possible that they may close before their time,” he said.

But Arroyo recounted how Filminera Resources Corp. Director Gloria Tan Climaco talked to her two days ago about Finance Secretary Carlos Dominguez III’s stand on the proposed measure.

Climaco, she said, told her that the establishment of the fiscal regime on mining is not a priority of Dominguez and that it was Arroyo’s.

Arroyo was apparently irked by this, citing that it was President Rodrigo Duterte’s explicit directive to ban open-pit mining and tax the industry during his State of the Nation Address.

“When Gloria Tan Climaco came to me two days ago, she said that the measure you are preparing is going to kill the industry. I said, ‘do not tell me that, this is an administration measure. Tell it to the DOF.’ And she said, ‘but I told Sonny Domiguez,’ and listen to this DOF officials. She showed me the text, ‘that is not my priority. That is GMA’s priority’,” the former president said.

“And I said, ‘excuse me. I’m the one who opened up the mining industry in 2004 and it is my priority to kill the industry?’” she added.

If the DOF does not respond with their request to submit a counter-proposal until Tuesday, Arroyo said they would include in the bill provisions imposing royalty fees to mining firms even to those operating outside mineral reservations.

She added that open-pit mining would be clearly defined in the bill and would be prohibited.

“In other words, our bill will specifically, will explicitly prohibit open-pit mining as defined and give a grace period to be determined by the DENR during which they pay the tax that you say will kill the industry,” Arroyo said.

“Our proposal is if it’s mineral reservation, if it’s FTAA (Financial or Technical Assistance Agreement), if it’s mining firm, they all pay a royalty, the same royalty, that’s my proposal unless I hear from the DOF,” she also said.

DOF Assistant Secretary Ma. Teresa Habitan said they would comply to this.

The still unnumbered substitute bill to House Bill Nos. 422 and 7994 seek to establish a rationalized and single fiscal regime applicable to all mineral agreements and retaining the imposition of corporate income tax on the mining sector, among others.  /muf