July 14th: New mining policy ‘to protect’ tourism areas.
THE new mining executive order (EO) signed by President Benigno Aquino III is hoped to protect tourism areas from mining.
Aquino signed EO 79 on Saturday aiming to harmonize mining industry, local and national governments, and environment advocates.
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Areas closed to mining applications, applications for mineral contracts and concessions are tourism development areas, as identified in the National Tourism Development Plan (NTDP); areas under the Integrated Protected Areas System, areas in Section 19 of the Philippine Mining Act of 1995 and Prime agricultural lands.
Aquino, likewise, crafted measures to improve small-scale mining (SSM) activities, with SSM stakeholders ordered to comply with the People’s Small-Scale Mining Act of 1991 and regulating activities to areas declared as People’s Small-Scale Mining Areas or Minahang Bayan.
SSMs will also be limited to metallic minerals except gold, silver, and chromite banning the use of mercury in all operations.
In Benguet the small-scale mining industry earned P250 billion for the last 15 years and around three tons of gold had been sold to accredited buyers from 2002 to 2007.
While the entire mining industry in the province contributes exports amounting to $220,695,002 (P9,269,190,084 at P42 to the dollar) with government earnings amounting to P714,699,856 including excise tax, national and local impositions, occupational and extraction fees.
Itogon Mayor Oscar Camantiles lauded the new executive order, saying “this is favorable for the municipality.”
Camatiles said the order protects both Baguio and Benguet from exploitive mining activities.
Camantiles said the return to government of abandoned ores in tailings dams will also be a welcome development.
“We are [waiting] for the implementing rules and regulations which the Department of Environment and Natural Resources (DENR) will be releasing,” the mayor added.
Camantiles said the DENR is given 60 days to release the IRR on the new mining order.
Aquino also increased excise taxes for the government from two to five percent, making true pronouncements of a larger government share of mining revenues and a ban in areas deemed crucial for tourism.
The new EO is said to make abandoned ores in tailings dams government owned, while denying new mine agreements until a law is passed on a rationalized sharing scheme with new mine areas undergoing public bidding.
Aquino included “all mining contracts, agreements, and concessions approved before the effectively of this Order shall continue to be valid, binding, and enforceable so long as they strictly comply with existing laws, rules, and regulations and the terms and conditions of the grant thereof. For this purpose, review and monitoring of such compliance shall be undertaken periodically.”
Aquino also created a Mining Industry Coordinating Council composed of the Secretary of the Department of Justice, Chairperson, National Commission on Indigenous Peoples, and the president of the Union of Local Authorities of the Philippines.
By Ma. Elena Catajan, Sun Star Baguio.
July 14th: ‘Mining EO disrespects local autonomy’.
MALOLOS CITY, Philippines – The new mining policy recently issued by Malacañang is disrespectful of local autonomy and of the expression of different sectors, especially on asset reforms in the country.
Akbayan party-list Rep. Arlene Bag-ao said that Executive Order 79 of President Aquino only legitimized existing mining contracts.
She said the EO does not respect the sentiments of the people affected by mining operations as reflected in ordinances passed by 40 provinces who oppose mining.
Bag-ao cited Section 12 of the EO which instructs local government units that the exercise of their powers and functions must be consistent and in conformity with the regulations, decisions and policies already promulgated by the national government with regard to the management, development and utilization of mineral resources.
Bag-ao noted that the provision of the EO is contradictory to the existing mining law which states that a mining company must secure endorsement from the local government unit that has jurisdiction over the mining site.
She said endorsement from local government units like the province, town, city or barangay is required by law because they are the ones who can best define the classification of the land and the possible impacts on their constituents once it is utilized for mining.
By Dino Balabo (The Philippine Star)
July 14th: Philippines Government introduces temporary mining ban until new revenue-sharing arrangements take effect.
A new law designed to encourage large-scale mining investments in the Philippines while restricting potential damage to the environment will prevent any new projects from being established until the detail of new revenue-sharing arrangements can be worked out.
John Yeap a partner in the Energy & Natural Resources group at Pinsent Masons, the law firm behind Out-Law.com, said that there were issues arising from the country’s new Executive Order 79 that would require “careful analysis”, particularly by new entrants looking to invest in mining activity in the Philippines in the short term. The proposed overhaul of revenue-sharing arrangements with the Government, for example, whilst not uncommon globally, would nevertheless require further review to properly assess its implications, he added.
Once passed, the new revenue-sharing law could result in the imposition of a 5-7% royalty on revenue from all of the country’s mining projects, in addition to an existing 2% excise tax.
The Order temporarily bans the granting of new mineral agreements until the new revenue sharing scheme is established by the country’s Congress. In the meantime the Department of Environmental and Natural Resources (DENR), the Government department responsible for administering the permitting regime, will only be able to grant exploration permits. These give explorers the first option to develop and utilise the minerals in their respective regions once the new arrangements come into effect.
In March Indonesia signed a decree limiting foreign ownership in the country’s mines to 49% of the total investment, a move that Natural Resources lawyer Kate Terry of Pinsent Masons said at the time was indicative of a “wider international trend for greater national control over resources and the revenues they generate”.
The mining industry in the Philippines is still relatively small; however, the country potentially holds untapped mineral wealth worth more than $840bn, according to a US State Department report on the Philippine economy. International credit ratings agency Standard and Poor’s recently uprated the country’s credit rating from BB to BB+ – just one level below stable investment grade – while the country also experienced the biggest rise in GDP in the first quarter of this year since 2004.
At a media briefing the country’s Environment and Natural Resources Secretary, Ramon JP Paje, said that the order was aimed “not only at optimising revenues from the mining industry for the government” but also at improving environmental standards on projects. The new policy also provides for a review of the performance of existing mining operations, based on guidelines in the specific mining contract as well as national laws. The Order also expressly prevents mining in specified areas including environmentally protected areas, tourism development areas and “prime agricultural lands”.
“These areas are ordered closed to mining in order to ensure their protection for the future generations,” Paje said, adding that “only those that are able to strictly comply with all the pertinent requirements will be eligible for the grant of mining rights”.
Under the Order potential mining areas with “known strategic mineral reserves” will be declared “mineral reservations”, as set out in the Philippine Development Plan and a National Industrialisation Plan. The policy also stipulates that the grant of new mining rights over areas of “known and verified mineral resources and reserves” will be undertaken through a competitive public bidding process, with due consideration given to the “social acceptability” of the proposed project.
July 14th: Mining EO gets wary welcome from businessmen.
The Joint Foreign Chambers expressed concern about the uncertainty that may arise from certain sections of Executive Order 79 on mining reforms, including provisions that government would not enter into new mining agreements until new legislation on revenue sharing gets passed.
In a statement, JFC highlighted Section 4 of the EO, which states that, while the government will continue to grant and issue exploration permits, it will “decouple” such agreements from the granting of mineral agreements, which will not be entered into until a law rationalizing revenue sharing takes effect.
Such a decoupling, the JFC said, is an investment deterrent.
“The EO states that those with exploration permits will have the first option to develop, should an economic deposit be discovered. The JFC is of the view that no mining company can be expected to spend extremely large amounts of money on exploration without certainty, the grant of a mining title and without first knowing the fiscal regime,” the group said.
On the provision requiring consistency of local ordinances with national laws, JFC said that to attract and deliver certainty of investment into the Philippines, the government should prioritize the resolution of this long-running issue.
“The JFC awaits clearer advice from the government as to how it plans to implement this very important test of investor confidence,” the group said.
The JFC also noted that government’s intention to bid out new or newly cleared mining areas with “known and verified mineral resources and reserves” is “relatively untried” in other regimes around the world.
JFC said it is concerned that this process is “open to self-serving manipulation.”
The group then suggested that the Philippine government consult with stakeholders as to how it implements its plan to close certain areas to mining applications in situations that are not genuinely high-value areas of significance to conservation, tourism, agriculture or aquaculture.
The JFC also welcomed several areas within the 22-point EO of particular interest, including: the enforcement of environmental standards; formation of a Mining Industry Coordinating Council; streamlined permitting process or a one-stop shop for all mining-related applications and processes within six months from the effectivity of E.O. 79; the commitment to provide the timely release and even an increase in the share of national wealth from mining to the local government units; and tackling illegal mining, establishment of mineral reservations.
Relatedly, while acknowledging the government’s desire to improve its revenue share from mining production, the JFC welcomed the Philippine government’s recent invitation to the International Monetary Fund to to analyze local conditions and make recommendations on the fiscal regime for mining in the country.
By: Riza T. Olchondra, Philippine Daily Inquirer.
July 14th: Philex Mining’s project may be delayed due to moratorium.
MANILA, Philippines – A project of Philex Mining may be delayed because of the extended moratorium on mining permits.
Under Executive Order 79, the moratorium will stay until Congress raises the tax rate on mining.
Philex Mining chairman Manuel Pangilinan hopes Congress can quickly enact a new law on mining so Philex can proceed with its Boyongan-Bayugo project in Surigao.
“There are 2 pieces of property in Silangan – Boyongan and Bayugo properties. Boyongan already has the NPSA, so we have the relevant permits to do that. Yun Bayugo wala pa, it’s just an exploration permit. So baka maantala yun because of this EO,” he said on Thursday.
“It’s a function of how quickly Congress and Executive can enact the relevant legislation on taxation (on mining,” he added.
July 14th: Philippines warned on mining moratorium.
The Australia-New Zealand Chamber of Commerce has hit out at the Philippines’ moratorium on new mining permits and a plan to increase taxes on the industry, saying it could scare off investors.
The group’s President Ian Porter says he does not think companies will spend money to explore on the islands without the prospect of a licence to mine.
Philippines President Benigno Aquino’s executive order on mining policy, details of which were released Monday, is aimed at boosting revenues from the sector while increasing environmental safeguards.
A key provision of Mr Aquino’s order is a proposal to hike taxes to from two to five percent of mining companies’ gross earnings, a move that requires approval from a Congress dominated by Aquino allies.
But Mr Porter says the tax hikes involved will also be bad for business. He says foreign investors will also want to know the taxes and levies the government will impose on projects before committing money.
Other business groups have also been vocal in their opposition to plan. The Joint Foreign Chambers, which represents major foreign business groups, said the moratorium on new mining agreements created uncertainty among prospective investors in the mining sector.
The group, in a statement, said companies would not engage in exploration activities unless they had a firm mining agreement and knew how much they would be taxed.
“No mining company can be expected to spend extremely large amounts of money on exploration without certainty, the grant of a mining title and without first knowing the fiscal regime,” the statement said.
Other business groups have called for the Philippines congress to pass the bill quickly to avoid a slowdown in investment and damage to the country’s economic growth.
Officials had said they were hopeful it would be passed this year, though they could not give guarantees.
The government estimates the Philippines has at least $840 billion in gold, copper, nickel and other deposits but this has largely been largely untapped, due to anti-mining campaigns, poor infrastructure and security concerns.