Chamber bucks mineral reservations plan of gov't

MANILA, Philippines - The Chamber of Mines of the Philippines (COMP) is opposing the government’s plan to declare as mineral reservations all areas being mined, citing that the proposal would hurt the industry and that large-scale miners are already giving a fair share to the government.

The COMP also said revenue generation cannot be a legal basis to declare mineral reservations.

COMP president Benjamin Romualdez said in a press conference on Friday that the government’s plan to collect more from the government through the declaration of all mining areas as mineral reservation – which would require miners to pay a five percent royalty on top of the two percent excise tax from the gross sales of production in the site, is unnecessary as the miners are already sharing them its revenues with the government.

“We are sharing revenues as mandated and provided under the law,” he said.

He said that contrary to the statement of Finance Secretary Cesar Purisima that the government only received P2 billion worth of revenues from the mining industry last year, the industry has been paying an average of P10 billion worth of taxes per year since 2007.

He said that in 2010, the industry’s total payments in terms of taxes, royalties and fees amounted to nearly P14 billion.

Rocky Dimaculangan, COMP vice president for communications said in the same event that the government gets much more than just a two percent excise tax from miners, with contractors paying other fees and taxes such as corporate income tax, customs duties on importations, value-added tax, capital gains tax, documentary stamp tax, and withholding tax on its income and other transactions.

“Government takes its share from the gross proceeds of mineral sales, regardless of whether the company makes a net profit from its operations or not,” he said, noting that the government does not contribute to the operating costs nor assumes risks associated to the project.

 “With this, the government is already getting its fair share in the profits from mining projects,” he said.

The government, Romualdez said, is not only getting its fair share of the mining revenues but also had the highest total share in mining revenues in the world based on the model for mining revenues being used.

“It is a bit strange if the Philippine government is not yet satisfied when it is already the one that gets the highest share in the world, that it wants the Philippines to pay more… It seems to me there is a confusion on the policy as to whether or not the Philippines wants to be competitive or wants to be even higher than itself that is already the highest in the world,” he said.

Dimaculangan said the proposal to impose an additional five percent royalty would not only hurt the industry but would likewise be contrary to the country’s policy of creating conditions conducive to growth.

“Such game-changing policies would undermine investor confidence in the stability of government policies and would increase the perceptions of political risks in the Philippines,” he said.

He said that mining areas cannot be declared as mineral reservations on the basis of government getting more revenues since the Mining Act provides that the power to establish mineral reservations could only be exercised “when there is a need to preserve strategic raw materials for industries critical to national development or certain minerals for scientific, cultural or ecological value.”

Former Mines and Geosciences Bureau director Horacio Ramos said that declaring mineral reservations may also be faced with legal difficulties since the contracts signed by miners with the government did not state that the five percent royalty would have to be paid.

“It may not be legally feasible,” he said.

He added that government’s share in revenues is not being captured as a whole as taxes from small-scale mining operations are not being collected and as the country is granting incentives for miners.

He said that once the incentives are satisfied, the government would be able to get more revenues from mining.

Romualdez said that the government should also look into the regulation of small-scale mining operations if it wants to get more revenues from mining.

“The government just needs to implement the 1995 Mining Law to everybody even, small-scale mining operations,” he said.