Are mining contracts good for 50 or 25 years?

MANILA, Philippines – Will the mining contracts still have a 50-year maximum term?

In a statement on Thursday, September 27, the mining industry association said the recent revisions to the implementing rules and regulations (IRR) of the government’s mining policy are “ambiguous.” They are asking for “further clarification.”

Among other contentious provisions of the IRR, the one that made uncertain the renewal of the second 25-year term after the mining firms’ initial 25-year contract has worried mining firms.

But Malacañang said on the same day that the IRR revisions already announced on September 24 are final.

“We have already changed the IRR…The MICC believes these [amendments] are provisions that best express the sentiments of all the stakeholders,” Presidential Spokesman Edwin Lacierda said in a press briefing on September 27.

He said it is important for the government to still have a say on whether to renew or not the second 25-year term of a mining contract.

“You (mining companies) could not have an automatic renewal, precisely because, if there are certain deficiencies that you have incurred and you fail to correct those deficiencies, how can you be expected to be granted an automatic renewal?”

“Once deficiencies are corrected then…that particular right can be renewed. But, certainly, we have to looked into [it] if there were deficiencies committed. If there are none, then there should be no cause for concern for the mining companies,” Lacierda said.

The revised rules are expected to be published next week and will need to be enforced 15 days after.

Ambiguous revisions?

Mining companies are unclear on what the revised IRR means for them and how their business will be impacted. The Chamber of Mines of the Philippines (COMP) asked for clarification regarding the revisions.

“We are addressing a letter to the MICC requesting clarification of, and voicing some concerns with, the language reported in the media concerning the revised IRR. We seek clarification in order to appease investor apprehensions and, ultimately, to attract quality investments. It is our objective that the laws, rules and regulations governing the minerals sector are consistent and free from ambiguity,” said COMP in a statement issued on September 27.

The chamber earlier threatened to take legal action against the government to protect the right to renew 25 year contracts to the maximum 50 years guaranteed under existing laws.

The industry group stressed that they want to help ensure reforms are “effectively implemented and all laws are fully and consistently applied.”

The right to renew expired the next 25-year term in their mining contract is provided under the same terms is guaranteed under the 1995 Mining Act, the mining firms said. This total 50-year term is considered fundamental to the way many mining companies plan their mines, investments and operating cash flows.

“This is the fundamental (right) of the mining company — the contract, the mining contract. It is as sacred as that,” said Philex director Marilyn Victorio-Aquino earlier to Rappler.

Changing the rules of the game?

Mining industry leaders like, Manuel V. Pangilinan, blasted the government for the uncertainties these new rules are bringing into the business environment.

On Wednesday, September 26, President Aquino directly refuted that charge and said he wasn’t changing the rules in the middle of the game, but was only trying to impose clear and fair rules on mining investments.

“At the end of the day, we assure you: the rules will be clear. Our administration will not drop our investors in the middle of a maze of moving walls. Let me assure you that through the level playing field we are instituting, success will come to anyone who pursues it the tried-and-tested way: with patience, integrity, hard work, and innovation,” said President Aquino.

The president stressed that government tried to remove ambiguities from the IRR to provide a more predictable business environment for mining companies.

“We are also working on legislation that will balance the benefits, which will allow the state a fairer share of the revenues from mining. We understand the concerns of mining companies, but as President, it is my duty to remind everyone that these minerals are property of the Filipino people; the state must receive fair compensation from companies that profit from these resources, so that we may then channel any gains made from them to projects that will directly benefit the Filipino people,” he said.

Despite anger at the perceived shortening of their contracts, COMP still said that it would be willing to work with the government.

“We will continue to work with President Aquino and his government, as well as the legislature to achieve a more prosperous and harmonious Philippines,” it added in its September 27 statement. – Rappler.com

Read the Blog on the 2012 Mining Conference for a blow-by-blow account of issues being discussed.

For more about mining debates, view Rappler’s #WhyMining microsite.

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

How does mining affect you? Are you pro or against mining? Engage, discuss & take a stand! Visit Rappler’s #WhyMining microsite for the latest stories on issues affecting the mining sector. Join the conversation by emailing whymining@rappler.com your views on the issue.

For other views on mining, read:

Yes to Mining	No to Mining
Correcting lies and disinformation by Gerard H. Brimo	Stand for the environment by Regina Lopez
How can mining work for Philippines? by Manuel V. Pangilinan	Mining is a social justice issue by Christain Monsod

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Are mining contracts good for 50 or 25 years?

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