Government seeks 50% share of mining revenues

The government wants a bigger share, possibly as high as 50 percent, in revenues generated by mining firms operating in the country, Finance Secretary Cesar Purisima said Tuesday.

Speaking at the Philippine Economic Forum held at the Philippine International Convention Center in Pasay City, Purisima described what the government was currently getting from mining firms as “measly” and that increasing its share in mining revenues would allow the public to benefit more from the use of the country’s natural resources.

He said the government was studying revenue-sharing schemes observed by governments and mining firms in other countries to determine what can be best implemented in the Philippines. So far, the 50-50 sharing scheme is preferable, he said.

“We really want more share for the government … The economics of mining will have to be considered, but I would love a 50-percent share for the government,” Purisima said.

Clusters’ meeting

Confronted by key issues of government revenues and environmental losses, Malacañang will try to iron out differences on its new mining policy during a meeting of its clusters on the economy and climate change on Friday.

President Benigno Aquino III will issue an executive order (EO)  on mining “that is acceptable to everyone,” his spokesperson, Edwin Lacierda, told reporters Tuesday. He said several clusters were meeting to formulate and finalize the EO.

The President was supposed to have signed the EO last month. However, the release of the document was deferred because, according to Palace officials, they still had to conduct wider consultations.

Most of the mining firms in the country hold mineral production sharing agreements (MPSA) as contracts backing their operations.

Under such contracts, they pay the national government a 2-percent excise tax on their revenues. Such contracts are given to mining firms that are owned by a majority of Filipinos.

Under the Mining Act, however, mining firms that are owned by a majority of foreigners may operate in the country using financial or technical assistance agreements (FTAAs) as contracts. The deals, however, require them to remit 50 percent of their revenues to the national government.

Very few mining firms operate under the FTAAs.

Revenue-sharing deals

Purisima said the government might find it prudent to apply to the mining sector the revenue sharing scheme observed in the Malampaya power project, under which the government and the private-sector investor, Shell Exploration B.V., each get a 50-percent share in revenues.

The Department of Finance earlier estimated that the government was getting P2 billion annually from mining companies, largely through MPSAs.

Such an amount is small, Purisima said, and the public should benefit much more from mining through higher shares for the national government.

“What we have gotten in the past were little, considering that these [mineral resources] are our [the public’s] assets,” Purisima said.

Draft EO

The government has come up with a draft executive order requiring mining firms to pay the government 5-percent royalties on top of the excise tax.

Over the weekend, Mr. Aquino told the Inquirer that the EO draft prepared by the Climate Change Commission was returned because some people, including its “authors,” were opposing it.

He said he did not want a total ban on mining. If small-scale mining would be allowed in some areas, it has to be more responsible than the current practice, he added.

At a press briefing, Lacierda said Friday’s meeting of several clusters would address the concerns of those for and against intensified mining operations in the country.

He said these clusters would try to finalize the mining EO, which has been in the works since late last year.

“You’ve seen the mining forum where there are several disparate sectors concerned with mining,” Lacierda said, referring to last week’s mining forum where antimining advocate Gina Lopez and tycoon Manny V. Pangilinan, representing Philex Mining Corp., engaged in a heated discussion over the mining situation.

Communications Secretary Ricky Carandang said the clusters on the economy and climate change had been meeting informally and it would be their first time to sit down and discuss the details of the EO draft.

More inputs

Carandang explained that when the draft was sent back to its authors, the President wanted the economic cluster and other concerned agencies to formally give their inputs.

“I think some of the copies (of the draft) were leaked to the media. The problem was that the draft has not been vetted by other agencies,” the official said.  For one, he said, the economic cluster “had not weighed in on it.”

Purisima’s statements that the government’s bid to get a fair share from mining revenues would “certainly” be discussed during the clusters’ meeting, he added.

Carandang conceded that the current debate on mining was “very emotional” and that he would like to think of a “center that is willing to live with some amount of compromise.”

“And that’s who we’re trying to appeal to when we come up with a mining policy. You will not satisfy all stakeholders,” he said.

Complaints

Purisima said the government should to study other ways to generate more revenues from mining.

The plan to increase taxes or to require mining firms to pay royalties has elicited complaints from some members of the mining sector. They said such a plan would be a turnoff to investors as it constituted inconsistency of policies.

They said many firms had taken into account existing tax policies  before they decided to invest a large amount of money for mining exploration projects in the country, and that having to pay more to the government was tantamount to changing the rules in the middle of the game.

On the contrary, Pangilinan expressed willingness to agree to the government’s plan.

He was quoted in an earlier Inquirer report that mining firms might give a 50-percent revenue share to the government, but that it must be based on net revenues rather than gross revenues.

The sharing scheme must take into account revenues net of expenses to ensure that mining firms won’t operate at a loss, Pangilinan said.