MANILA, Philippines—Aquino Cabinet members have signed onto a mining policy statement that in effect targets P16 billion a year as the government’s share in mining revenues, according to Environment Secretary Ramon Paje.
Paje said he, Finance Secretary Cesar Purisima and Executive Secretary Paquito Ochoa Jr. have signed the policy statement, which Paje has described as more “general” in terms of language and scope than the executive order that would contain details on how government would want to proceed with mining issues. Among the top issues to be addressed are mining revenue and the conflict between national and local laws.
Paje said the government would also be “open” to industry proposals to have a 50-50 profit sharing scheme instead of the fixed 5 percent royalty to be imposed by declaring mineral reservations. However, any scheme to be considered must yield P16 billion or more in yearly revenue for the government.
Paje said the government would hold consultations with mining industry players on April 26 and with civil society groups on April 27. The consultations will discuss details such as revenue, environmental and administrative issues, and procedures, according to Paje.
This also meant the “general” statement on mining would not likely change, Paje said.
“But of course, the ticklish issue is still revenue,” Paje said. “I am willing to accept any substitute so long as it can equal the revenue that it can generate, which is P16 billion or higher per year.”
As early as late 2010, the government had already been considering expanding the collection of 5 percent royalty from all mining assets.
The proposal, if approved by President Aquino, may be implemented by declaring all mining properties into mineral reservations. In such a case, even operating mines would be in mineral reservations and the companies operating them would have to pay 5 percent royalty on top of a 2 percent excise tax from gross sales.
At present, not all mining projects are located in declared mineral reservations.
In 2011, the government initially estimated that it could get about P800 million annually from excise taxes alone.
Paje has explained that the imposition of a 5-percent royalty would be akin to renting out a house. “The miner has exclusive rights to a mining area so the state should earn from its assets even if a company takes its time exploring and developing a mine.”
“The way things are now, the government only earns when a company goes into production. But what about the period before that? No other company can occupy their mining area even if they delay exploration or development. That is not good for the country,” Paje said.
The Chamber of Mines has already submitted to the Department of Environment and Natural Resources a position paper saying that the conversion of areas into mineral reservations in order to collect an additional five-percent royalty on top of the two-percent excise tax has caused uncertainties, confusion and concern among local and foreign investors.
“It will be important for the Philippines to issue a clear statement on how the country intends to intensify the mining industry’s growth as one of the priority industries by way of establishing a stable investment environment without any additional tax imposition,” the group has said.
The Chamber of Mines and foreign investors in the mining industry have also endorsed the implementation of the Extractive Industry Transparency Initiative to stamp out graft and corruption and improve transparency in permit issuances and tax payments.