$12-B mining projects on hold amid revenue-sharing issues
MANILA, Philippines – The Chamber of Mines of the Philippines said Tuesday, September 10, the government will miss its mining investment target of $16 billion by 2016 as investors put projects on hold pending the passage of a new revenue-sharing scheme.
During the 2013 Mining Conference, the chamber's president Benjamin Romualdez said: "about $16 billion in mining investments that were supposed to happen during this administration will not happen. Let me tell you now that investments in the next 3 years will certainly, dramatically go down."
On the sidelines of the conference, Romualdez, who is also president of Benguet Mining Corp., told reporters that out of the $16 billion, 8 projects worth $12 billion are on hold.
Investors on wait-and-see mode
Why are investors staying away?
Romualdez said: "To be frank, it is because of proposals like the one being floated recently – a 10% gross (or 50% net) excise tax on mining. This regime will simply kill the mining industry."
Romualdez added that "if this proposal is allowed to prosper, it would certainly push the Philippine mining industry into a most uncompetitive position."
Senate President Franklin Drilon, the keynote speaker in the conference, vowed Congress will determine a "fair" and "equitable" revenue-sharing arrangement between government and the industry.
Citing mining's "high" social and environmental costs, he said the state must have a fair share in mining revenues.
"People must therefore have their fair share of the country's worth in the form of taxes and royalties and I underscore fair and equitable," he said. "We will exert every effort to determine what is fair to your industry and what is fair to your people."
Romualdez, however, insisted that the current tax regime "is on par with the rest of the mining world today."
"Truth is, our government receives over half of the total value of a mining project based on the internationally accepted AETR or the Average Effective Tax Rate," he noted.
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Illegal mining, low metal prices
Additionally, other issues compound investors' way of doing business here, said Romualdez.
He said the mining industry is faced with illegal small-scale mining activities.
"The government does not have the present political will to deal with these issues because it is perceiving that it is not receiving enough."
He added the global outlook is "deeply troubled" due to plunging metal prices.
Romualdez appealed to government to look at the "down years" of the industry, not only its earnings.
He called on Congress to craft "a clear, consistent and competitive policy." – with reports from Shadz Loresco/Rappler.com