Revenue sharing still a sticky mining issue

The government’s six-point agenda on mining is on the table, and revenue sharing continues to be a sticky point.

Stakeholders, including miners, civil society groups (CSOs), and local government units (LGUs), have said they agree on the need for responsible mining to contribute more to the economy with minimal environmental risk. The question on to how the spoils will be divided remains, however.

The government presented its general statement and 6-point agenda to stakeholders on Thursday (large-scale miners in the morning and small-scale miners in the afternoon), and Friday (CSOs and LGUs).

Sources said the “complicated” discussions focused mainly on revenue sharing between the government and mining industry.

Mines and Geosciences Bureau (MGB) director Leo L. Jasareno, who declined to comment on the discussions, said in a phone interview that the government was not able to wind up its consultations with large-scale miners.

During the meeting, hosted by the Makati Business Club, not all the agenda points were covered due to the “sheer number of topics,” Jasareno said. As such, there will be another consultation, possibly this week.

Guillermo M. Luz, co-chairman of the National Competitiveness Council, said last Thursday’s consultations with large-scale miners went smoothly, though time ran out on the discussions on mining revenue sharing and effective management of the sector. He said the steps being taken to put together the government’s mining policy is one of the most “open-minded processes” in the country.

Luz is part of the study group of the Makati Business Club working on mining reforms.

The AIM is helping study and compare different revenue sharing arrangements, Luz said. This includes models in Chile and Peru, among other countries. Revenue management schemes—such as the so-called “super fund” of Timor Leste, considered to be one of the models of best practices—are also on the table, Luz said.

He said the International Monetary Fund is also expected to come up with a study.

A copy of the government policy statement presented to stakeholders highlighted a six-point agenda crafted to guide Malacañang’s mining policy:

— Ensure responsible mining’s contribution to the country’s sustainable development, i.e., economic and social growth and environmental protection.

— Adopt international best practices to promote good governance integrity in the sector.

— Ensure the protection of the environment by adopting technically and scientifically sound and generally accepted methods, as well as indigenous best practices.

— Enforce the primacy of national laws over local issuances to harmonize laws, policies, and regulation.

— Ensure a fair, adequate and equitably shared economic benefit for the country and the people.

— Deliver efficient and effective management of the mining sector.

However, the policy statement containing the agenda, in its present form, does not directly address the issue of LGUs banning open pit mining despite the government’s position that it is not prohibited under the Mining Act of 1995.

The six-point agenda presented during the consultations had been based on a joint resolution recently signed by the Climate Change Adaptation and Mitigation and Economic Development clusters of the Cabinet. The resolution said that the agenda was crafted to set the direction and lay the foundation for the Aquino administration’s so-called Responsible Mining Policies.

Among the proposed actions on revenue sharing being discussed are:

— Reinforce state ownership of all mineral resources including valuable minerals in mine wastes and mill tailings, and get the government’s due share when utilized, without prejudice to liabilities of mining contractors for the said wastes and tailings facilities.

— Establish mineral reservations for the development of strategic industries for the collection of royalties from mining contractors, which shall be prospectively applied.

— Encourage and promote the use of foreign technical assistance agreement, joint venture and co-production agreements in mining contracts with appropriate guidelines on formula to be used, to facilitate negotiation of better sharing schemes, e.g., 50-50 net of taxes.

— Study the possibility of applying appropriate Home State rules and regulations on foreign mining companies operating within the Philippines through bilateral agreements.

— Develop with the participation of the private sector and the academe a road map for the establishment of value-adding and/or downstream processing of minerals in the country.

— Ensure inter-agency coordination relative to government share in mining revenue, and hasten LGU access to their share in mining revenue (similar to Peza share).

— Study how LGUs can get direct access to their share.

— Review existing taxes, fees, and incentives being given to mining firms and leveraging employment generation/jobs.

While discussions are understandably complex, the clamor for a “final” mining policy had been growing in the mining sector as applications remain pending without a policy direction. All agree, however, that once declared “final,” the government’s mining policy must make the rules of the game clear and stable for all to benefit.