Showdown on mining

Edwin Espejo
Advocates and critics of mining hold a crucial conference before gov't releases its new mining policy

MANILA, Philippines – Industry leaders, various sectors, and government officials will hold a crucial conference on Friday, March 2, as the Philippines moves to release its new policy on the mining sector.

The Conference on Mining’s Impact on Philippine Economy and Ecology comes amid a draft new mining policy that was controversial for allegedly requiring a review of resource contracts, tighter rules and cutting tax breaks. (Rappler will be covering the conference live.)

It also comes at the end of the People’s Action Week Against Mining, a series of conferences by various advocates against destructive mining.  

The much-delayed new government policy has created jitters and uncertainty within the industry.

The mining sector is openly opposed to a proposed hike in mining royalty fees under a proposed new executive order which “will convert current mining operations into mining reservations” to collect a 5% royalty on gross output on top of corporate and other taxes already being imposed by the government.

The government has posptoned its earlier plan to issue this week its new executive order on mining.

The Chamber of Mines of the Philippines said the move is “confiscatory and is tantamount to expropriation or nationalization of the mining industry.”

Finance Secretary Cesar Purisima has said that the government’s previous mining policy did not present “a true win-win situation” since “the government actually was not able to get its fair share from mining activities.”

Last year, “Total collections from the mining industry amounted to just a little over P2 billion, but total revenues reached P1.2 trillion,” according to Purisima.

In a press statement, however, the mine chamber claimed that the government already gets 60% of mine income before income tax.

“With government’s share at an average of 60% of net income before tax, it appears that even without the proposed increase in taxes, the Philippine government is already getting its fair share in the profits from mining projects,” the mining chamber argued.

It added that “those operating in mineral reservations are also subject to the payment of an additional royalty equivalent to 5% of the actual market value of the minerals produced.”

The chamber of mines is headed by Benjamin Philip Romualdez.

Lessons from Australia

Taking cue from mining-rich Australia, Purisima said the ongoing policy review will also take into consideration environmental issues. The government is studying different models, including possible imposition of mineral resources rent as well as carbon tax, he has said.

Purisima nevertheless allayed fears coming from the mining industry sector.

“Since our effort is to make sure that we define this [rules] better, we implement this better, and that we clarify various rules that were vague and were conflicting, then after this process, I believe, that the regulatory environment will be better for mining investors,” he told reporters on Thursday, February 29.

Environmental groups have repeatedly expressed alarms over the impact of mining operations in the light of growing concerns over global climate change.

One of the biggest mining projects in the country, the Tampakan copper and Gold Project owned by Sagittarius Mines Incorporated (SMI), hit a major snag in January after it was denied the mandated environmental clearance certificate (ECC) following the passage of the South Cotabato Provincial Environment Code which prohibits open pit mining in the province.

SMI, a subsidiary of Swiss-based Xstrata Plc, has appealed the ruling.

The US$5.9-B SMI mining project has a reported ore deposit totaling total 2.94 billion tons at 0.51% copper at a 0.2% copper cut-off grade, from 2.49 billion tons at 0.6% copper at a 0.3 copper cut-off grade.

Three Catholic dioceses covered by the project are strongly opposed to the project.

The Tampakan Copper and Gold Project covers more than 20,000 hectares of agricultural and forested lands straddling four towns in the shared boundaries of Tampakan in South Cotabato, Columbio in Sultan Kudarat, Kiblawan in Daval del Sur and Malungon in Sarangani. – Rappler.com

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

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