DOF to LGUs: Study impact of mining closures on revenues

MANILA, Philippines – Finance Secretary Carlos Dominguez III instructed local treasurers to assess the potential impact of mining closures, as the national government tries to get a clearer view of the financial fallout from the decision to shut down 23 mines.

Environment Secretary Gina Lopez earlier ordered the closure of 23 mining operations, along with the suspension of 5 others, after the Department of Environment and Natural Resources (DENR) completed its audit.

Dominguez noted that mining companies account for a hefty part of the tax revenues collected by local governments in municipalities hosting mine sites.

“On the revenue side, our primary concern is the revenues of the municipalities. That’s why we asked the treasurers already to give us a quick-round assessment of how much is going to be lost in revenues,” Dominguez said in a statement on Monday, February 6.

Preliminary data from the Department of Finance (DOF)’s Bureau of Local Government Finance (BLGF) show that at least 10 municipalities and one city would be affected by the mining closures while one city and 4 municipalities would be affected by the suspensions.

BLGF Executive Director Niño Alvina said he has issued a memorandum “directing city and municipal treasurers in all localities hosting mining projects to submit their complete and updated reports by Friday, February 10.”

Back in September 2016, Dominguez issued Department Order 049-2016 instructing local treasurers to include all environment revenues and expenditures in their quarterly and annual financial reports to the DOF. These include payments made by mining companies to LGUs.

The order, the DOF said, lets local treasurers present data quickly, given that they have been forwarding their reports online since 2011 through the web-based Environment and Natural Resources Data Management Tool (ENRDMT).

Cabinet members concerned

Dominguez has already expressed his concerns over the potential negative impact of the DENR’s decision to close the mines, saying it would affect the livelihoods of 1.2 million people.

He noted that in Surigao del Norte alone, one company provides jobs to 10,000 people living in rural communities.

Beyond ordering the LGUs’ assessment, the finance chief said he has called for a meeting of the Mining Industry Coordinating Council (MICC), which he co-chairs.

“We’re just waiting for the response of the other members of the MICC. So we want to have it next week as soon as possible,” Dominguez said.

“The Cabinet members are obviously also very concerned about unemployment and people not having income, so we will put our shoulder to the wheel to address that issue first,” he added.

Dominguez said the Department of Social Welfare and Development (DSWD) will carry out a census to determine the extent of the jobs displacement, while Cabinet Secretary Leoncio Evasco Jr has suggested providing jobs under the government’s National Greening Program.

Dominguez also said Labor Secretary Silvestre Bello III informed him that emergency employment can be provided to displaced workers but only for a temporary time and in limited volume, while Trade Secretary Ramon Lopez said he will pitch in proposals on how to generate jobs in the affected areas.

Socioeconomic Planning Secretary Ernesto Pernia warned over the weekend that the closure of mines could affect the country’s overall growth.

“I don’t think [Lopez] did it arbitrarily but anything like this would need a response like more scientific and data-driven studies,” he told Agence France-Presse. “Obviously it will have an effect on GDP and employment but we don’t have the hard data.”

The Philippines is the world’s biggest nickel exporter, supplying 95% of China’s nickel ore imports in the first half of 2016.

The announcement of the closure of mines was felt in the stock market, with mining and oil stocks plunging by 1.65% or 200.73 points and closing at 11,951.84 on Thursday, February 2, the day the DENR released its audit results.

“The national impact, the impact on the GDP – that, of course, is a concern. But the people’s welfare is our first concern,” said Dominguez. – Rappler.com