Philippines: Controversial mining law in the pipeline

Reading Time: 2 minutes
Phil mining
Click to enlarge

A new mining law in the Philippines is expected to boost the government’s tax revenue, but has also alarmed the mining industry which has developed mistrust in the country’s legal environment.

Amendments to the Executive Order No.79 (EO79), approved in 2012 modifying the former 1995 Mining Law, will be submitted to the 16th Congress of the Philippines in June. These modifications hope to conclude the never-ending discussion on mining activities in the country proposing a new revenue-sharing scheme and more eco-friendly practices.

The EO79, which came into effect in July 2012, brought several modifications to the original 1995 Mining Law, and was initially acclaimed by the industry as well as the public for its liberal framework.

However, in August 2012 the collapse of a mine in Itogon, Luzon Island, where around 20.6 million tonnes of waste ended up in a nearby river system, lifted concerns about the environmental impact of irresponsible mining practices.

The event led authorities to reformulate the EO79 by introducing new amendments with the goal of stimulating investment, increase the government’s share of revenues from mining operations, as well as to heavily fight illegal mining and protect environmentally sensitive areas.

The new proposal, based on several studies by different working groups under the Mining Industry Coordinating Council (MICC) and the Mines and Geosciences Bureau (MGB), aims, among other issues, at increasing the minimum capital requirement for firms applying for permits to between $250.000 to $2.4 million and also to raise applications fees.

Furthermore, royalties for mining activities have been raised to 10 per cent in the proposal, Ramon Jesus P. Paje, Secretary of the Department of Environment and Natural Resources, explained that “the 10 per cent lumps together all taxes due from mining firms, such as the 2 per cent excise tax on minerals and the 5 per cent royalty collected from firms operating within areas identified as mineral reservations, as well as an adjustment for windfall revenues”.

Anticipating the new bill, the government decided in March 2013 to end processing all new mining agreements, that way cancelling over 500 existing applications. Nevertheless, in a new bid round the MGB put 1.200 blocks on offer – but it received just a few applications which highlighted the rising mistrust of the private sector in the country’s legal environment.

Private sector phobia has also been reflected in a recent MGB study on future mining investments. The study foresees cuts of 218.5 per cent in projected volumes for the next four years that will accumulate to $3.1 billion. An earlier assessment by the MGB predicted $2.06 billion investments in 2013, but they will likely only reach $718.47 million. For 2014, investments are expected to reach just $851.75 million instead of $2.47 billion as previously estimated. Expected investments in 2015 and 2016 were also revised to 757.6 million and 619.5 million respectively.

On the positive side, the Philippines sit on large reserves of minerals. Estimated mineral deposits stand at 8.03 billion tonnes of copper, 4.91 billion tonnes of gold, 810 million tonnes of nickel, 480.26 million tonnes of iron, 39.66 million tonnes of chromite and 433.88 million tonnes of aluminium. The Philippines have the world’s third-largest reserves of gold, the fourth-largest of copper and the fifth-largest of nickel.

According to the MGB, the mining industry’s contribution to the Philippines’ GDP has been around the 0.7 per cent while mineral exports accounted for 4.9 per cent of total exports in 2012. These figures are still very low considering the country’s potential, and the government hopes to finally boost investment with a definitive and clear framework on mining practices. However, on the private side, mining companies fear that the new bill will just bring higher royalties and stricter environmental requirements.

Do you like this post?
  • Fascinated
  • Happy
  • Sad
  • Angry
  • Bored
  • Afraid

Reading Time: 2 minutes

Click to enlarge

A new mining law in the Philippines is expected to boost the government’s tax revenue, but has also alarmed the mining industry which has developed mistrust in the country’s legal environment.

Reading Time: 2 minutes

Phil mining
Click to enlarge

A new mining law in the Philippines is expected to boost the government’s tax revenue, but has also alarmed the mining industry which has developed mistrust in the country’s legal environment.

Amendments to the Executive Order No.79 (EO79), approved in 2012 modifying the former 1995 Mining Law, will be submitted to the 16th Congress of the Philippines in June. These modifications hope to conclude the never-ending discussion on mining activities in the country proposing a new revenue-sharing scheme and more eco-friendly practices.

The EO79, which came into effect in July 2012, brought several modifications to the original 1995 Mining Law, and was initially acclaimed by the industry as well as the public for its liberal framework.

However, in August 2012 the collapse of a mine in Itogon, Luzon Island, where around 20.6 million tonnes of waste ended up in a nearby river system, lifted concerns about the environmental impact of irresponsible mining practices.

The event led authorities to reformulate the EO79 by introducing new amendments with the goal of stimulating investment, increase the government’s share of revenues from mining operations, as well as to heavily fight illegal mining and protect environmentally sensitive areas.

The new proposal, based on several studies by different working groups under the Mining Industry Coordinating Council (MICC) and the Mines and Geosciences Bureau (MGB), aims, among other issues, at increasing the minimum capital requirement for firms applying for permits to between $250.000 to $2.4 million and also to raise applications fees.

Furthermore, royalties for mining activities have been raised to 10 per cent in the proposal, Ramon Jesus P. Paje, Secretary of the Department of Environment and Natural Resources, explained that “the 10 per cent lumps together all taxes due from mining firms, such as the 2 per cent excise tax on minerals and the 5 per cent royalty collected from firms operating within areas identified as mineral reservations, as well as an adjustment for windfall revenues”.

Anticipating the new bill, the government decided in March 2013 to end processing all new mining agreements, that way cancelling over 500 existing applications. Nevertheless, in a new bid round the MGB put 1.200 blocks on offer – but it received just a few applications which highlighted the rising mistrust of the private sector in the country’s legal environment.

Private sector phobia has also been reflected in a recent MGB study on future mining investments. The study foresees cuts of 218.5 per cent in projected volumes for the next four years that will accumulate to $3.1 billion. An earlier assessment by the MGB predicted $2.06 billion investments in 2013, but they will likely only reach $718.47 million. For 2014, investments are expected to reach just $851.75 million instead of $2.47 billion as previously estimated. Expected investments in 2015 and 2016 were also revised to 757.6 million and 619.5 million respectively.

On the positive side, the Philippines sit on large reserves of minerals. Estimated mineral deposits stand at 8.03 billion tonnes of copper, 4.91 billion tonnes of gold, 810 million tonnes of nickel, 480.26 million tonnes of iron, 39.66 million tonnes of chromite and 433.88 million tonnes of aluminium. The Philippines have the world’s third-largest reserves of gold, the fourth-largest of copper and the fifth-largest of nickel.

According to the MGB, the mining industry’s contribution to the Philippines’ GDP has been around the 0.7 per cent while mineral exports accounted for 4.9 per cent of total exports in 2012. These figures are still very low considering the country’s potential, and the government hopes to finally boost investment with a definitive and clear framework on mining practices. However, on the private side, mining companies fear that the new bill will just bring higher royalties and stricter environmental requirements.

Do you like this post?
  • Fascinated
  • Happy
  • Sad
  • Angry
  • Bored
  • Afraid