July 21st: Small miners’ ore limit defined.
THE SUPREME COURT (SC) has backed a government agency’s strict definition of the production limit for small-scale miners.
The high court’s second division, in a June 4 12-page decision, affirmed the Department of Environment and Natural Resources (DENR) position in computing the annual 50,000 metric tons (MT) of ore restriction for small-scale miners under Presidential Decree (PD) No. 1899 and denied petitions for review of SR Metals, Inc.; San R Mining and Construction Corp.; and Galeo Equipment and Mining Company, Inc.
DENR has defined the production limit in terms of “run-of-mine” per year, referring to ore from the mine before being processed. The measure lumps other materials with the sought-after mineral.
In November 2004, then Environment Secretary Angelo T. Reyes issued a cease and desist order suspending the companies’ operations after their combined ore reached 177, 297 dry metric tons (DMT).
The three firms questioned the suspension order before the Court of Appeals (CA), citing a Department of Justice opinion which states the term “ore” should be confined to nickel and cobalt and should exclude all other materials that do not have economic value.
The CA, however, denied the mining firms’ petitions, saying DENR correctly adopted PD 1899’s restrictions for small-scale miners. The firms then elevated their plea to the Supreme Court.
In its ruling, the high court noted the firms’ summary of shipments showed it took 151,612 DMTs of ore to extract 1,699.66 DMTs of nickel and cobalt (Ni-Co).
“This means that if we are to subscribe to the mining corporations’ interpretation of how to measure mined ore by measuring only the Ni-Co and excluding the gangue, small-scale miners are virtually given the license to continuously collect large volumes of ore until the 50,000 DMTs of Ni-Co limit is met,” Associate Justice Mariano C. del Castillo wrote
“It must be emphasized that mining, whether small or large-scale, raises environmental concerns,” SC added. “DENR saw it proper to conservatively measure the production of metallic materials apparently bearing in mind the more intense impact of such kind of mining to the environment.”
Associate Justices Antonio T. Carpio, Arturo D. Brion, Jose Portugal Perez and Estela M. Perlas-Bernabe concurred with the decision.
By Mikhail Franz E. Flores, Business World On-Line.
July 20th: Atlas Mining gets option to raise Berong Nickel stake.
Atlas Consolidated Mining and Development Corporation has just entered into a Memorandum of Understanding (MOU) with Toledo Mining Corporation (Toledo) so it can raise its stake in Berong Nickel Corporation to 30 percent from 25.5 percent.
In a disclosure to the Philippine Stock Exchange, Atlas Mining said the MOU covers the reorganization of Berong which includes the option for Atlas Mining to increase its equity interest in Berong.
The MOU also provides for the mechanics for streamlining the current corporate structure of Berong to improve efficiency of administration.
It also includes the execution of a new shareholders’ agreement between Atlas Mining and Toledo that will define the rights and obligations of the shareholders with regard to the management and control of Berong.
DMCI Mining Corporation has acquired a controlling interest in Toledo.
“While we continue to focus on our copper business, we have always believed that the Berong nickel mine is a world-class asset,” said Atlas
Mining executive vice president Adrian Ramos.
He added that “we are excited that a company with the success and expertise of DMCI Mining Corporation has taken on the challenge of driving the development of the project.”
Atlas Mining incurred a 79 percent drop in net income to P118 million in the first quarter of 2014 due mainly to lower prices, expiry of Carmen Copper’s income tax holiday and unrealized foreign exchange loss of P159 million on its dollar-denominated debts.
The firm said that, had the 2013 copper prices been maintained, there should have been an additional P300 million in net income. Without the effect of the three factors, net income would have increased by 17 percent.
“While the financial results for the first quarter reflect a challenging start to 2014, the operational results show that we are on track on increasing production as we see upswing in throughput and recovery rate with the completion of the initial commissioning of Carmen Copper’s expanded ore beneficiation plant,” said Ramos.
He added that “we also continue to see the favorable impact on our production costs as per pound cost of copper is nearing our target range.”
“We are looking forward to an accelerated period of growth for the remainder of 2014 as we continue to realize the benefits of the recently commissioned ore processing plant as well as the continuous development of its higher-grade orebody to achieve steady improvement in our operating margins and net income,” said Ramos.
By Manila Bulletin
July 19th: Philippine Oceana plans training centre.
OCEANAGOLD is planning to construct an underground mining training facility in the Philippines to provide for the future workforce requirements of its Didipio gold-copper mine.
Didipio, 270km north of Manila, produced its first ore from open pit operations in December 2012 and expects to begin underground mining in 2019.
The company has formed a partnership with training company Site Group International to do the training at the facility, noting the broader benefits of the initiative for the Asia-Pacific region.
“OceanaGold’s Didipio underground mine will begin development in 2015 and we will need workers skilled in underground mining,” Oceana CEO and MD Mick Wilkes said.
“Our partnership with Site Skills Training will allow us to meet this need and create something for other underground miners in emerging economies to use.
“Working with the leading mining training company in the Philippines will ensure graduates meet our high standards for health and safety, trade and soft skills.”
Oceana and Site Group have reached an agreement with Mastermyne to provide guidance with the construction of that facility and input on the curriculum and training methodology.
Immersive Technologies is expected to supply underground mining simulators for the project.
Site Group CEO and MD Vern Wills welcomed the plan at a function hosted by Australian Ambassador Bill Tweddell in Manila.
“We applaud the vision of OceanaGold to support the creation of the underground mining training centre that will service the industry regionally and will meet a growing need in the marketplace,” Wills said.
“OceanaGold is a company that is focused on development of their staff and working with the local community in building assets that benefit the community.”
The initiative coincides with another push by Site Group to develop heavy vehicle equipment operating skills in the region.
A separate partnership between the training company, Immersive and Caterpillar equipment dealer Monark-Cat has aimed to train to establish a state-of-the-art heavy vehicle training centre in the Philippines.
“The facility will be unique in the Philippines and will service the mining and construction industries,” Wills said.
“Well-trained operators will be safer, more productive and save on the operating and maintenance costs of the heavy vehicle.”
The creation of the training centre represents a combined investment of more than $US5 million ($A5.3 million).
Although more than 1000 students per year are expected to have access to training at the site, it will still fail to meet current and projected operator requirements.
Shares in Oceana were last trading 6.2% higher at $A3.42, while Site Group was up 7.1% at 15c.
By Justin Niessner, MNP.net
July 19th: Philippines to submit 1st mining industry report.
THE Philippines is currently drafting its first country report on the mining industry for submission to the Extractive Industries Transparency Initiative (EITI) international board in December this year, according to the Department of Finance (DOF).
Regular country reports are among the requirements for admission to the EITI, a global standard ensuring transparency of revenues from natural resources, said DOF Assistant Secretary Teresa Habitan, who is also the focal person for the Philippines EITI (PH-EITI), a multisectoral group that will oversee the implementation of EITI.
The Philippines was admitted as a candidate country to the EITI program on May 22, 2013, in Sydney, Australia.
Admission to the EITI program is mandated by Executive Order No. 79, signed by President Benigno S. Aquino III on July 6, 2012. The law seeks to implement reforms in the mining sector to “ensure environmental protection and responsible mining” of mineral resources.
Under Section 14 of E.O. No. 79, the country is called to join the EITI “to improve transparency, accountability, and governance in the sector.”
The EITI, created through E.O. No. 147, aims to promote transparency, ensure better governance, and make sure that the government gets its “just share” of revenue from the industry, said Habitan, who spoke at a public forum on minerals development held July 10 at the Development Academy of the Philippines.
This as Habitan said figures on how much is actually collected from the extractive industry are “disparate” and widely varying.
The Bureau of Internal Revenue (BIR) has its own data, while the Mines and Geosciences Bureau (MGB) also has its own figures that include the royalties that companies pay.
Moreover, regional governments and local government units (LGUs) also impose fees that are not reflected in the national data.
The EITI is “tasked to get the whole picture” of what the government is actually getting, she added. Companies which have elected to participate in the EITI “must show how much they paid the government.”
Because there is yet no central agency compiling all the collections from the mining sector, Habitan said the first phase of the EITI covers information-gathering only on the more than 30 large-scale mining companies in the Philippines.
The PH-EITI will try to compile all acquired data from the BIR, MGB, Bureau of Customs, Department of Energy, LGUs, and the mining companies themselves, and reconcile all the figures.
In the second phase, the group will include small-scale mining companies in their studies.
In an earlier media interview, Department of Finance Secretary Cesar V. Purisima said mining represents only 1.04 percent of GDP but has potential to attract foreign direct investments and increase exports.
“However, President Aquino wanted to ensure mining was not only profitable but more importantly sustainable for our communities and our environment. EITI allows us to track revenues to ensure accountability through transparency,” he added. “Looking forward, mining can only be sustainable if we institutionalize reforms and good governance through initiatives like EITI.” (Philexport)
Published in the Sun.Star Cagayan de Oro newspaper on July 19, 2014.
July 18th: DMCI buys Philex Mining HQ in Pasig.
MANILA — Philex Mining will be looking for a new home after selling its decades-old headquarters in Pasig.
Philex Mining on Friday said it raised P777 million from selling the property without providing more details.
DMCI, a major developer in the area, said it was the buyer of the 1.2 to 1.3-hectare property. That meant it paid about P64,750 – P59,769 per square meter.
DMCI built a residential and office project in the area that was Globe Telecom’s headquarters until last year. It has since built several other residential projects there. – ANC
July 14th: Does the government want mining?
While the contribution of mining to the economy has been substantial in the past, the adverse effects of irresponsible mining have tainted its significant role in the nation’s progress. What needs emphasizing is that the so-called evils of mining are mostly found in small mining operations – use of mercury, exploitation of miners, involvement of criminal elements – while large mining operations with substantial investments from both local and foreign businessmen have toed the regulatory line.
The present investors in mining have persisted in their ventures despite the obstacles at the national and local levels, in terms of extensive and lengthy consultation processes, a myriad of environmental regulations, local ordinances fixing numerous fees and civil society interventions. Only their faith in the country and the possibility of unleashing of the substantial mineral reserves in service of the country keeps these investors going.
In many countries, national government support to the mining industry has been consistent, given its net positive effect on the economy. The government has laid out infrastructure that allows the easy passage of mineral resources to processing plants and to ports for export. Incentives are provided, given the large investments required and the necessary arrangements with countless stakeholders. Educational and vocational institutions are given subsidies to ensure the steady flow of competent and skillful mining engineers and other professionals.
In the Philippines the mining industry has been getting mixed messages. On one hand there have been general statements of support during investment missions here and abroad. Visiting investors are given general assurances when they meet high ranking government officials. On the other hand, there has been slow progress in creating a facilitative environment for mining investments. Despite the constant and insistent urgings of business groups for legislation and regulations that will make mining investments attractive to investors, the government has not responded with the resolve and speed indicating a sincere interest and concern for the sector.
The Aquino government has an opportunity to set the record straight. The Mining Industry Coordinating Council has submitted a draft bill to the Office of the President which contains a proposed tax structure –either a 10 percent tax on gross revenues, or a tax of 55 percent on adjusted net mining revenues plus a percentage of the windfall profits, whichever means higher revenues for government. The Chamber of Mines of the Philippines has stated that “such proposal is much higher than the (government) share in large mineral-producing countries such as Canada, Australia, Chile, Peru, Papua New Guinea and South Africa.” As an alternative, the chamber supports the passage of House Bill 3586 with its sliding tax rate depending on world metal prices. This is reasonable given that the share of both government and business adjusts depending on market conditions as compared to a situation where one party continues to rake in revenues despite decreasing earnings due to low world market prices.
For the sake of the economy and the Filipino people, the Aquino administration should make its decision now. If it wants the mining industry to be a prime mover of the Philippine economy, it should not kill it with an unreasonably high tax regime. The Aquino administration should support House Bill 3586.
Business Bits. It is ironic that a number of the critics of the “cross border transfers” considered by the Supreme Court as unconstitutional were officials of the previous administration that also practiced it. They also were part of an administration considered by public in surveys as heavily corrupt and whose head is facing plunder charges. Their constant criticism is meant to convince the Filipino people that all government officials are corrupt in order to make palatable their own corrupt practices or their having benefited from such corruption.
By Manila Bulletin
July 12th: Foreign firms call for review of mining zones, tax scheme.
COMMIT. Investors – especially foreign investors – hopes President Aquino would include in his State of the Nation Address that the government commits to upholding and enforcing the current Mining Act (of 1995).COMMIT. Investors – especially foreign investors – hopes President Aquino would include in his State of the Nation Address that the government commits to upholding and enforcing the current Mining Act (of 1995).
MANILA, Philippines – Businessmen – especially foreign ones – are urging the Aquino administration to make investments in mining more competitive and to support minerals development as part of its inclusive growth and economic strategy.
They hope to hear his position on this in the State of the Nation Address (SONA) of President Benigno Aquino III on July 28.
Julian Payne, president of the Canadian Chamber of Commerce in the Philippines (CanCham) said on Thursday, July 10, that foreign investors want to see the government commit to upholding and enforcing the current Mining Act of 1995.
The government should also review the recent “no go zones” in published maps which make 85% of the country off limits to minerals exploration, Payne said in a forum on minerals development policy at the Development Academy of the Philippines.
Despite authorities’ pronouncements on supporting environmentally and socially responsible mining, foreign investors see many actions by national and local authorities that discourage mining – “forward talk with backward walk,” Payne said.
Mining fiscal regime is ‘tough’
The Philippines’ mining fiscal regime was already “tough” for foreign investors, Payne said, quoting a 2012 study by the International Monetary Fund (IMF).
With recent unilateral moves by the government to cancel the Investment Tax Holiday for national investors, and to cancel the cost recovery period for foreign investors, the fiscal regime for mining has become completely uncompetitive for both local and foreign investment compared with other countries, Payne stressed.
The authorities are considering a new legislation, which “increases the tax rates; taxes projects even when they become loss-making including when commodity prices are low; and imposes windfall-profit taxes when commodity prices are high,” Payne cited.
With such a proposed new fiscal regime, the already low level of investment in mining will likely decrease further given opportunities in other mining economies, Payne said, citing feedback from foreign investors.
“[It] could kill the mining industry and its great potential to contribute to inclusive growth and development,” Payne said.
Proposals for mining zones
Foreign investors support proposals for the creation of Mining Economic Zones, similar to the Philippine Economic Zone Authority (PEZA) zones, Payne said.
Also, 50% of mining revenue received by the national government should immediately be allocated to the local government units (LGUs) where the mining projects operate and the impacts occur, Payne proposed.
Currently, 40% of direct taxation is earmarked for LGUs, but actual distribution to them has been very slow, Payne noted.
He said that contrary to the accusations of some politically-motivated anti-mining groups, large-scale, publicly listed, and foreign mining firms are the ones who can be relied on most for responsible minerals development.
“They are subject to the public scrutiny of exchange listings, proactive shareholders concerned about environment, human rights, and labor conditions, and international watchdog groups – both governmental and non-governmental,” Payne said.
As such, foreign investors want a strong statement by President Aquino that he supports a minerals industry in the Philippines – including foreign investments.
“[We want to hear] that he intends to retain the current Mining Act of 1995, to strictly enforce it by allocating greater resources to the relevant regulatory agencies, and to make one change in it – to allow foreign investors to invest on an equal footing with national investors in order to encourage the deployment of foreign capital, technology, and best practices,” Payne said. – Rappler.com