Pangilinan backs ‘more equitable’ government share from mining

Manuel V. Pangilinan

Philex Mining Corp. chairman Manuel V. Pangilinan (known as MVP)  has expressed support for proposals to give the  government a bigger share of mining profits.

Pangilinan told reporters on Monday that the country’s largest mining firm, along with other mining stakeholders, agreed with the government’s view that there should be a “more equitable” sharing of the “profits” derived from mining.

The Philex head was responding to Finance Secretary Cesar V. Purisima’s comments last week pushing for a 50-50 revenue sharing in mining.

Pangilinan said: “He (Purisima) referred to revenues. I would refer to it as ‘profit’ from mining. I think for us it’s more  ‘after cost,’ meaning that both operating cost and the cost of investment made by the  developer will have been recovered, then what’s left of the revenue can be shared 50-50. Otherwise, in a low metal price environment the miner will be operating at a loss.”

Standard deal

Pangilinan said such a deal would be similar to the scheme applied to the Malampaya (natural gas) power project. “The Malampaya scheme is fairly standard for oil and gas concessions, although the specific figures may vary,” he said.

Pangilinan said Philex would not oppose a government move to get more taxes and would even be willing to help craft programs that would put mining taxes and revenues under further regulation.

“The total taxes paid in 2011 by Philex will be P3.2 billion,” Pangilinan said.

However, he  expressed concern over some provisions of a draft executive order (EO) on mining reform, referring to a proposed moratorium on mining and another one requiring total economic valuations (TEV) before mining applications are approved.

“In (Philex’s) Silangan (project) for example, at present prices, total resources estimated as of mid-2011 would be worth about $35 billion. That is the value of the resources in the ground. How would you value that under TEV and against what? We don’t know, so that’s one concern,” Pangilinan said.

Philex estimates the project cost for developing the Silangan project will be around $1 billion over three years.

Earlier, Purisima said a group in President Benigno Aquino III’s Cabinet would prepare the final draft executive order specifying the share of mining revenues that would go to the government.

Environment Secretary Ramon J.P. Paje, however, assured stakeholders that the government will “respect” existing contracts and that the proposed  reforms will simply optimize existing rules and regulations to give the state the maximum benefit from mining.

Industry concerns have been particularly strong against proposals to “review” contracts, set a total economic valuation scheme in mining areas before applications for mineral extractions are allowed, and for failing to address the need to harmonize national laws, which allow mining, with local government laws that ban mining in general or open pit extraction in particular, which is one method of mining.