Understanding mining: part 1

We have a lengthy and quite comprehensive discussion contributed by a reader, Atty. Deo G. Contreras, Jr., about the state of Philippine mining. We will be featuring it in two parts so as not to miss on any important narration. Please read on.

Series of laws covering mining activities

“The Local Government Code of 1991 and its Implementing Rules and Regulations (IRR) has empowered the provincial governor to issue exclusively mining permits for quarry resources such as marble and limestones and sand and gravel  (non-metallic minerals) not exceeding 20 per permit.

“In 1995 when the Philippine Mining Act was passed by Congress and its IRR issued by the DENR-MGB, the law and its IRR mandated the creation of a Provincial Mining Regulatory Board (PMRB) composed of the DENR-MGB Regional Director as chairman and with the Provincial Governor or City Mayor or their representatives, a representative each from large-scale and small-scale miners and a representative from an NGO.

”The PMRB is empowered to grant mining permits for the exploration, development and utilization of both metallic and non-metallic minerals covering areas not exceeding 20 hectares per permit.

“Presidential Decree 1899 entitled “Small Scale Mining Law” was issued during the martial law regime of President Marcos allowing individuals to apply and obtain for a small scale mining permit from the Bureau of Mines provided that the tonnage capacity is about 104 tons a day or 3,120 tons per month per individual, and that the work is highly artisanal (labor-intensive only) without the use of heavy equipment, explosives and chemicals, and that the activities are monitored by the Bureau of Mines.

“Republic Act 7076 entitled People’s Small-Scale Mining Act passed by Congress in 1991 allows ordinary Filipinos to put up a mining cooperative to engage in small-scale mining in gold-rush areas provided they register their cooperative with the government for proper control and monitoring by the DENR-MGB and that they pay the pertinent taxes and fees for their mining activities.

“Obviously, there is no need to empower the Provincial Government to issue mining permits for small and medium-scale mining.

Problems of governance and implementation

“The problem on the ground is one of governance as hundreds of thousands of illegal small and medium-scale miners, without the required mining permits, proliferate in the mountain areas of Northern and Southern Luzon specially in the Benguet and Bicol regions, and also in most of the regions in mineral-rich Mindanao extracting and selling minerals outside the law and destroying the mountain areas in such regions.

“The question is: What are the national and local government officials doing with all such illegal and environmentally destructive mining activities being perpetrated in their localities?

“Since the advent of the Local Government Code in 1991 and supported by the Philippine Mining Act of 1995, all activities – especially mining from exploration, development until commercial operations – must obtain the endorsement and approval of the local government units and its inhabitants concerned to be able to obtain an exploration permit including permits to develop, operate and transport and sell mineral products.

“The passage of the Indigenous Peoples Rights Act (IPRA) in 1997 further required any mining activity to first obtain the free prior and informed consent (FPIC) of any affected indigenous people (IP), and the conditions of which consent must be written and contained in a Memorandum of Agreement (MOA) and the IP duly assisted also by the representative from the National Commission on Indigenous People (NCIP) who serves as an adviser and guide of the IP in making such agreement or MOA.

More restrictions and people-oriented programs

“Starting in the early 2000, the DENR-MGB started imposing upon mining activities the establishment of a Social Development and Management Program through the establishments of social and developmental activities for hosts and adjoining communities affected by commercial mining operations whereby one percent of the total mining and milling costs shall be monetized and placed in a trust fund for such affected community pursuant to the SDMP as approved by the community and the DENR-MGB.

“As of the year 2010, such SDMP fund was increased by the DENR-MGB to 1.5 percent of the gross or total mining expenditures. In addition, a Community Development Program (CDP) was imposed on Exploration activities in the amount of 10 percent of actual drilling and exploration costs.

“In the case of the IPs, a royalty share of one percent of gross revenue of the sale of minerals is required by the IPRA law and Philippine Mining Act to be given to the IPs in addition to whatever conditions are imposed under the MOA on the mining activity concerned.

“It must be mentioned that the Mining Act and the IPRA and their respective IRRs are replete with people-oriented activities in the partnership and also monitoring by the people concerned of the mining activities such as the creation of multi-partite monitoring groups to safeguard the trust funds for the community and IPs concerned.

“An end-of-mine life program is also imposed by the Mining Act of mining operations together with the provisions of the SDMP to ensure that the mining activities are closed with the necessary funds to last for at least 10 years to protect the environment from destruction.

Investments in processing plants

“Fostering investments in the establishment of domestic processing plants for minerals is a good idea. This can be done provided unsound business practices and irregularities are avoided, and proper technical know-how is adopted.

“Worth mentioning is the experience of the Philippine mining industry during the martial regime of President Marcos when he ordered the construction of a large copper-smelter plant called PASAR in Leyte. All copper-producing companies were forced to supply huge portions, if not all, of their copper production to such a large smelting plant.

“The production capacity of the plant is bigger than what a few mining companies could supply in the late 1970s that the plant practically “died a natural death.” It was run by a coal-fired power plant and was blamed by the local people for polluting their waters.”

More from our reader, Atty. Deo G. Contreras, Jr., in the next column.

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Should you wish to share any insights, write me at Link Edge, 25th Floor, 139 Corporate Center, Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at [email protected]. For a compilation of previous articles, visit www.BizlinksPhilippines.net.