A golden opportunity we can’t miss

(Second of two parts)

Agenda 3: Ensure the protection of the environment by adopting technically and scientifically sound and generally accepted methods as well as indigenous best practices.

1. On the identification of additional areas closed to mining:

a. The choice for competing land use should be based on knowledge and information as a result of competent and expert study. The best option for the government is to encourage exploration to best evaluate the resources.

b. Any such declaration should comply with RA 7942, Section 19d.

c. An updated ground survey should be conducted by the DENR to identify forested and already logged-out areas.

d. A more judicious approach should be adopted in the inclusion of watershed areas as most of the mineralized areas in the country (about 2,000 hectares) and some of the most productive mining areas are in small watersheds.

2. On the use of geo-hazard maps/multihazard maps for the country and forecast of climate change to determine “go” and “no-go” areas for mining:

a. The concerns over mining activities in geo-hazard areas are already addressed in the comprehensive EIS for proposed mining activities.

b. Identified concerns are mandatorily addressed by engineers and scientists as part of the risk assessment study and design criteria of the proponent.

Agenda 4: Enforce the primacy of national laws over local issuances and harmonize laws, policies and regulation.

1. Immediate resolute action will be a huge boost to the industry and will renew influx of big investors waiting for a more stable policy environment.

2. The FPIC should be secured by the government through the DENR and not by the industry. Only when the FPIC is secured that these areas should be opened for investments.

Agenda 5: Ensure a fair, adequate and equitably shared economic benefit for the country and the people.

1. Strictly implementing the current fiscal regime is already favorable to the government with 40 percent-50 percent government share under an MPSA. Any modifications should be well studied. A progressive system of taxation should be considered where the government’s share increases when market prices are high and equitably adjusted when prices decline. This promotes sustained growth of the industry.

2. On the establishment of mineral reservations for the development of strategic industries for the collection of royalties from mining contractors, which shall be applied:

a. Section 5 of the Mining Act mandates that the establishment of mining reservation must be driven by national interest, i.e.:

i. A need to preserve strategic raw materials for industries critical to national development or certain minerals for scientific, cultural or ecological value—and not principally by revenue generation through the collection of royalties from mining contractors.

ii. Establishment of mineral reservations must strictly follow the requirements set forth by law for prior public consultation.

3. On encouraging and promoting the use of foreign technical assistance (FTA), 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):

a. A study by a credible third party is recommended to understand the current tax situation:

i. Comparison with other countries;

ii. Assessment of international competitiveness;

iii. Consider significant risks, capital intensiveness and gestation period;

iv. Possibility of applying appropriate Home State rules and regulations on foreign mining companies operating within the Philippines through bilateral agreements; and

v. Consider covering existing fiscal schemes utilized for energy-related extractive industries regulated by the Department of Energy.

4. The CMP agrees that the government should develop, with the participation of the private sector and the academe, a road map for the establishment of the value-adding and/or downstream processing of minerals in the country.

There must be careful consideration of critical factors, such as:

a. Global economic conditions; and

b. Overall competitiveness.

5. The CMP agrees that the government should ensure interagency coordination relative to government share in mining revenues, and hasten LGU access to their share in mining revenues (similar to PEZA share).

a. Need for further inter-agency/national-local coordination to clarify sharing of mining revenues of contractors that cross municipal/provincial boundaries.

b. Support mining contractors in proposing local tax-sharing agreements among host LGUs.

c. Government must provide safeguards to make sharing agreements stable in the absence of legislation to prevent uncertainty and conflict in the distribution of local taxes.

6. On the review of existing taxes, fees and incentives being given to mining companies (Review the Omnibus Investment Code/IPP) and leveraging employment/jobs generation:

a. A rationalization of incentives granted to all industries and not just mining to strengthen the government’s overall economic agenda.

b. Respect rights already vested either by law or contract.

c. Review of Building Code and Fire Safety Code, among others, to determine their impact on the peculiarities of mining development and construction, which are different from real estate developers and other industries.

7. The CMP encourages the government to tap third-party international auditors to validate the volume and value of mineral exports in the Philippines taking into consideration not only the volume and value but also the grade of mineral exports.

8. Amending the provisions of the Philippine Mining Act on incentives for the mining industry will stop the growth of the mining industry.

a. Do forward-looking fiscal changes through other mechanisms such as:

i. Amendment of the National Internal Revenue Code; and

ii. Issuance of DENR administrative orders and executive orders.

Agenda 6: Deliver efficient and effective management of the mining sector, both large- and small-scale.

1. Large-scale mining industry is already highly regulated and welcomes effective governance and reform strategies that promote responsible mining.

2. Strict regulation of small-scale mines should remain with the national government.

3. It is highly recommended that a moratorium be imposed on the issuance by LGUs of small-scale mining permits (SSMPs) until the issue on the primacy of national laws over local issuances is resolved and appropriate measures are enacted.

The Philippines has vast mineral reserves just waiting for us to get our act together. If we learn to responsibly harvest our enormous natural wealth, as NSCB Secretary Romulo A. Virola said, “we could completely eradicate poverty in the Philippines.”

This prospect puts all of us in an exciting and yet complicated situation.

The history of what we consider the world’s greatest economies went through centuries of difficult phases, including bloody revolutions with epic consequences to their people that eventually forged a strong national identity that endures through the ages.

Some outside observers would point out that Filipinos did not go through a comparable formation. Hence, there is a lack of unity and binding spirit toward a united vision.

But why should we accept that? In our own terms, we are now poised to reach our tipping point toward prosperity and in a relatively short timeline.

Responsible mining

Responsible mining is indeed a new concept for critics who, not to their fault, are not practitioners and expectedly uneducated in the technically complicated, risky and multidimensional challenges that are special to mining.

The stereotype image of the mining industry, no thanks to Hollywood, is that of dirty miners hidden in a mysteriously secret underground world digging for precious rocks that make them rich.

The truth is responsible mining, as a vital industry that feeds the existence of the high-tech and connected economies of the world we now live in, is real and is successfully practiced in the Philippines.

The industry is now ready to step forward with its technical expertise to institute reforms in partnership with the government and all stakeholders.

Let us continue to communicate and learn to collaborate based on sound science and technologies that will ensure our safety and lead to prosperity.

Click here for Part 1

(This article reflects the personal opinion of the author and does not reflect the official stand of the Management Association of the Philippines. The author is senior vice president for corporate affairs of Philex Mining Corp. Feedback at [email protected]. For previous articles, visit <map.org.ph>.)