Gov’t wants more from mining

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Finance Secretary Cesar Purisima wants the government to get a bigger share of profits from mining operations in the country

MANILA, Philippines – Government is eyeing a larger revenue share from those mining the country’s natural assets, taking cue from a current financial arrangement on a natural gas project in Palawan.

“What we want is the government to get a better share from mining,” said Finance Secretary Cesar Purisima at the sidelines of the Yearend Philippine Economic briefing on March 6.

His ideal revenue sharing model is the one used for the Malampaya Deep Water Gas-to-Power Project, which sources natural gas from the sea floor off the island of Palawan.

The Malampaya project is spearheaded by The Department of Energy and operated by Shell Philippines Exploration B.V. (SPEX) on behalf of joint venture partners Chevron Malampaya LLC and the PNOC Exploration Corporation.

Under the agreed upon service contract, the private consortium keeps 70% of production profit, until the private groups recover their investments. The remaining 30% is split 60/40 with the government getting the larger percentage. 

After the contractors pay off their investments, the 30% share increases, allowing government to collect more from the project. 

The Malampaya consortium paid the government over $1.1 billion in 2011.

The current setup

Mining firms that are majority foreign owned operate under a FTAA (Financial or technical assistance agreement) that requires them to turn over 50% of their revenues to the government.

However, the vast majority of mining firms in the country hold MPSAs (Mineral production sharing agreements) that only mandate that 2% excise taxes are paid to the government. 

“What we’ve gotten in the past is too little. And yet these are our assets,” said Purisima. 

He added, “We’re not favoring anyone except the country. What we really want is more share for the government so that mining will have to be done more responsibly,” Purisima said.

The President is preparing to issue a new Executive Order on mining and is in the process of speaking with stakeholders in the mining industry to determine the best course of action. –

For the existing mining contracts in the Philippines, view this #WhyMining map.

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