MANILA, Philippines – The Chamber of Mines of the Philippines (COMP) yesterday urged the government to make changes in the country’s mining regime that would benefit both the industry and the country.
Addressing industry stakeholders on the first day of Mining Philippines 2014, COMP president Benjamin Philip Romualdez said the industry recognizes the need to protect the environment and develop communities that host mining operations, but the government must also allow the industry to maximize the use of the country’s natural resources.
“We have seen several bills that seek to amend the existing mining regime. It is our prayer that Congress and the Senate write the best laws to enhance the business of mining to improve the economic conditions of people who rely on resources. While doing this, of course, we must ensure that we are protecting the environment. We must make full use of our resources,” he said.
“The industry views with great optimism the many moves to change some policies, but there are also policies that need not be changed. We trust the House of Representatives and the Senate would put the best interest of nation building and economic development at heart,” added Romualdez, who is also the president and chief executive officer of mining firm Benguet Corp.
Since the issuance of the new mining policy in July 2012, the government and the extractive industry have been striving to find compromise on a number of changes in the country’s mining regime, chief among which is the new revenue-sharing scheme between the government and the industry.
The government ultimately wants to increase its share of revenues from the mining industry, but the latest revenue-sharing proposal laid down by the Mining Industry Coordinating Council is deemed to render the industry uncompetitive and unattractive to investors.
MICC has approved the imposition of either a 10 percent tax on gross revenues or a tax of 55 percent on adjusted mining revenues plus a percentage of windfall profit, whichever would give higher revenues to the government.
Adjusted mining revenues pertain to the difference between gross sales and direct cost (direct mining cost and administrative expenses).
The new revenue sharing scheme would apply to metallic mining projects holding a mineral production sharing agreement (MPSA) and Financial Technical Assistance Agreement. (FTAA).
The draft-revenue sharing bill is still being reviewed by the Office of the President.
Pending the passage of the new revenue sharing bill, no new mineral agreements may be signed with the government although the Mines bureau continues to approve exploration permits.
Miners are also contesting a slew of other changes in the mining regime such as the mapping of the so-called no-go zone areas or areas where mining activities would be restricted or prohibited.
The business sector is not pleased with the results as it renders around 85 percent of the country’s total land area off limits to exploration.
Senator Paolo Benigno “Bam” Aquino also filed late in August a bill that would prohibit exports of mineral ores prior to processing.
The business sector, likewise, met the bull with apprehension as the local mining industry is not considered large enough to attract investments in smelting plants.
Businessman Manuel V. Pangilinan, whose Philex Mining Corporation, processes ore into concentrate, said the government must first encourage growth in the mining industry to encourage investments in the downstream sector.
Senator Grace Poe, who also addressed mining stakeholders during the event, said the government believes in the potential of the mining industry as a great contributor to the economy but called on companies to exercise greater transparency in their operations.
As such, Poe urged more mining firms to join the Philippine Extractive Industries Transparency Initiative (EITI), an international standard for transparency in the reporting of revenues generated from the exploitation of natural resources.
She acknowledge lawmakers need to fastrack the passage of the new revenue-sharing measure to jumpstart investments in the sector.
“The Philippine mining industry needs to move forward. We need to fast-track approval of the new revenue-sharing formula because $12 billion worth of mining projects (are on hold pending approval of the new revenue-sharing framework,” she said.