Q&A on Executive Order 79
Gov’t insists on increased mining revenue share
Antimining advocates cheer new Aquino policy, but…
Philippine mining move fails to quell policy uncertainty
MANILA, Philippines - The long-awaited executive order (EO) outlining the Aquino government's mining policy is finally out. However, the new EO still does not allow for new mining agreements, pending legislation on revenue sharing between the government and mining companies.
"Basically, the EO intends to increase the revenue of government from mining, intends to improve environmental standards and tries to put consistency in national and local laws pertaining to mining. The EO also establishes the Mineral Industry Coordinating Council," Environment Secretary Ramon Paje said, in a press conference on Monday.
EO 79, released on Monday, says new legislation on revenue sharing should be passed before new mining agreements can be signed. "No new mineral agreements shall be entered into until a legislation rationalizing existing revenue sharing schemes and mechanisms shall have taken effect," the EO states.
Explaining this provision, Paje said: "Some people will be happy, some will be affected but there will be no new mining agreements that can be signed by the DENR before new legislation on revenues would be passed. We have to wait for new legislation pertaining to revenues before we can sign new agreements on mining. But it also respects existing mining contracts."
However, the DENR may grant and issue exploration permits under existing laws, rules and guidelines.
"The EO says exploration can continue, other activities pertaining to mining development can continue except that we cannot sign new mineral contracts or mining agreements... (The moratorium) also stopped exploration and stopped issuance of ECCs and stopped processing of mining feasibility, but now all of those can continue except signing of new agreements," Paje said.
Under the EO, it states: "The grantees of such permits shall have the rights under the said laws over the approved exploration area and shall be given the right of first option to develop and utilize minerals in their respective exploration area upon the approval of the declaration of mining project feasibility and the effectivity of the said legislation."
Last week, President Aquino told Reuters that the lifting of the 18-month moratorium on new mining projects in the country is unlikely to be lifted after the issuance of the EO, since the government wants lawmakers to first pass new legislation seeking more state revenues from mining to offset environmental risks.
"That's why the President said 'put a brake, stop issuing new mining contracts, if we cannot get the best or optimal revenue for the government.' That's the main reason ... Hopefully the revenue legislation would cover the current mining operations nationwide,"
The administration wants Congress to pass the imposition of a 5% royalty fee on mining companies who operate in mineral reservations. However, this higher royalty fee would only be applied on future projects, not on existing projects.
"If you follow the best practices from abroad, it would range around 5 to 7% royalty fee. Even Australia is charging 18% for specific minerals, which don't require much processing like coal and iron ore," Paje said.
The government also wants to increase occupational fees for mining companies. "We are targetting approximately P760 million, if we require occupational fees to be charged upon filing of the mining claim. As of now, the mining companies pay occupational fees once the mineral production sharing agreements are approved," Paje said.
The government is also eyeing revenues in the form of mine wastes and mill tailings. The EO states that all valuable metals in abandoned ores and mines wastes and mill tailings from defunct mining operations now belong to the state and can be utilized through competitive bidding.
"This would run to the billions, around P50 billion, for abandoned tailings and stockpiles but this is a one-shot income," Paje said.
'All existing contracts will be respected'
Paje said he does not believe the new EO would have an adverse effect on the mining industry.
"As of now, the EO says it will respect existing contracts. There are more than 300 existing contracts and only 33 operations, so we are barely utilizing 10%. I don't think it will affect the mining industry. It will affect a few, those who are in the final stage of exploration actvities," he said.
Under the EO, all existing mining contracts, agreements and concessions approved before the effectivity of the order will be respected.
However, a multi-stakeholder team led by the DENR, will conduct a review of the performance of all existing mining operations "for possible renegotiation of the terms and conditions of the same, which shall in all cases be mutually acceptable to the government and mining contractor."
About $12 billion worth of new projects planned in the next five years will be affected by the new policy, including the $5.9 billion Tampakan copper-gold project in southern Philippines by global miner Xstrata Plc and Australia's Indophil Resources NL.
Asked about the Tampakan project, Paje said "it is an existing contract and definitely it will be respected."
The South Cotobato provincial government has issued an ordinance banning open pit mining, which will be utilized at the Tampakan site. "This is being respected at such time as the provision on open pit mining is declared invalid or contrary to national policies by compentent bodies," Paje asid.
The EO also tackles the issue on the consistency of local ordinances with the constitution and national laws. The Department of Interior and Local Government (DILG) and LGUs are directed to make sure the latter's powers and functions are consistent and conform with the National Government's policies.
A Mining Industry Coordinating Council (MICC), an intra-agency forum, was created to implement the provisions of the EO, conduct a review of all existing mining laws and regulations, among others. The members include the Climate Change Adaptation and Mitigation and Economic Development Cabinet Clusters, as well as the Justice Secretary, National Commission on Indigenous Peoples and president of the Union of Local Authorities of the Philippines.
'More no-go zones'
The EO also expands the areas that are closed to mining to include prime agricultural lands and fishery zones; tourism development areas identified under the National Tourism Development Plan; and other critical areas and island ecosystems identified by the DENR.
On the issue of small-scale mining, the EO stated that pursuant to RA 7076 (People's Small Scale Mining Act of 1991), small-scale mining operations are only allowed in areas declared as "Minahang Bayan."
"Small-scale mining shall not be applicable for metallic minerals except gold, silver and chromite," the EO stated.
The use of mercury is also prohibited in small-scale mining.
The Philippines sits on an estimated $1 trillion worth of untapped mineral resources - mostly gold, nickel and copper.
******************
Here's a list of Frequently Asked Questions (FAQs) on President Aquino's mining policy, Executive Order 79, released by the Office of Executive Secretary Paquito Ochoa. ABS-CBNnews.com is publishing these FAQs to help inform the public about the new policy.
--------------------------------------------------------------------------------------------------
What are the benefits of Executive Order 79?
The Executive Order:
· Sets the policy framework that will guide government and other stakeholders in the implementation and operationalization of mining laws, rules and regulations. It also provides concrete steps and solutions to major issues and concerns of the mining sector.
· Sets the direction and lays the foundation for the implementation of responsible mining policies.
· Aims to improve environmental mining standards and increase revenues to promote sustainable economic development and social growth, both at the national and local levels.
What was the process in involved in the drafting of Executive Order 79?
In October 2011, a mining study group was constituted, which included the Executive Secretary and several members of the Climate Change Adaptation and Mitigation Cabinet Cluster.
Input from different stakeholders were obtained, including those from the following: mining companies and allied industries and services; environmental CSO/NGOs; church groups (e.g., CBCP, Association of Major Religious Superiors of the Philippines); members of the academe; LGUs (e.g., major LGU leagues and other local government officials); different government agencies concerned with mining (i.e., through the Climate Change Adaptation and Mitigation and Economic Development Cabinet Clusters.)
Numerous studies, positions papers and commentaries were also secured and considered by the Study Group and the Cabinet Clusters. All the recommendations and input received were considered in the drafting of the provisions of EO 79.
Does the EO call for a ban or moratorium on mining?
No. Existing mining operations and those with approved contracts before the effectivity of the EO will not be affected, and the government will respect the agreements it has entered into, provided that they comply with existing laws and rules and the new mandates and directives of the EO and mining policies, and that these existing mines are not in areas expressly prohibited by existing laws, in which case appropriate action for violators will be undertaken.
EO NO. 79 identifies specific zones closed to mining applications, either for contracts, concessions or agreements. These include:
· Areas in the National Tourism Development Plan
· Critical areas and island eco-systems
· Prime agricultural lands covered by RA 6657
· Strategic agriculture and fisheries development zones and fisheries development zones and fish refuge and sanctuaries declared as such by the Department of Agriculture
· Areas already identified under the existing laws on mining, agrarian and protected areas, as well as in sites that may be determined by the Department of Environment and natural Resources (DENR)
Under the EO, no new mining operations will be approved in Palawan, consistent with the following:
· Existing laws such as RA 7942 (Mining Act) and RA 7586 (NIPAS Act)
· Critical areas, island ecosystems, and impact areas of mining that will be declared by the DENR based on existing laws, rules and regulations
· The ecological uniqueness of Palawan’s flora and fauna and the need to protect the same is recognized
· RA 7611 or the Strategic Environmental Plan for Palawan calls for the protection of Palawan’s environment and natural resources
· Recognition of its potential for other forms of investments (eco-tourism such as the Puerto Princesa Underground River)
While existing mining operations will be allowed to continue, the government will be suspending the granting of new mineral agreements until existing mining laws are amended.
Mineral Agreements, as provided for in the Mining Act of 1995, are any of the following: a) Mineral Production Sharing Agreement (MPSA); b) Joint Venture Agreement (JVA); and, c) Co-Production Agreement (CPA). The Mining Act also provides for Financial and Technical Assistance Agreements (FTAA) that the government may enter into. These agreements usually include a permit to explore for mineral deposits as part of the provisions and privileges granted in the contract in preparation for possible mining operations.
Amendments to mining laws will allow for the rationalization of existing revenue-and benefit-sharing schemes and incentives given to mining companies to ensure that the country benefits from the rich mineral resources in its territory. The additional revenues will allow government to have additional funding for other social services such as education and health, in addition to having funds for measures to mitigate the impact of mining on the environment.
While the granting of mineral agreements has been suspended, Exploration Permits may still be granted by the DENR.
An Exploration Permit is an authority granted by the DENR-MGB to allow a person or entity to conduct exploration for minerals in a specified area. This is limited to exploration works only and does not include authority to conduct actual mining or extraction of minerals. However, those who are granted Exploration Permits and who actually discover minerals shall be given preferential option in the grant of a mineral agreement should they wish to pursue the same.
Why can’t the government enter into new mineral agreements since amendments to the existing mining laws have yet to be legislated?
Entering into mineral agreements now in the absence of amendments to mining laws will bind the government to possible 25- to 50-year terms that will not give us maximum benefits from the mineral resources. This will allow future administrations and future generations to realize the full benefits of mineral resource utilization and not be bound by decisions and agreements made in the past.
What will happen to existing and pending applications for mineral agreements?
Pending applications for mineral agreements will not be granted and approved by the DENR-MGB. These may, however, be converted into Exploration Permit applications to allow them to conduct initial exploratory work.
Why did the law impose only a 2% excise tax on mining?
The 2% excise tax on mining, implemented through a revision of the National Internal Revenue Code, was meant to spur and attract mining investments in the country at a time when mineral prices were down and the industry was at a stand-still. The current rate needs to be reviewed to allow the government to maximize returns from mining, and legislation should explore the possibility of providing flexibility in the imposition of excise tax rates through a progressive tax system similar to what is implemented in other mining countries.
What is the impact of the new EO on current government mining revenues?
Current revenues from mining will be maintained since the EO allows existing mines and operations to continue. In fact, because of other revenue-raising measures in the EO and directives, mining revenues should increase despite the deferment on the grant of new agreements as provided for in the EO.
Is there already a draft bill/legislation on these revenue measures?
The DOF has been crafting the proposed legislation to rationalize the revenue and benefit sharing-schemes and incentives given to mining companies. The DOF is also considering inputs from an IMF Technical Assistance Study and mission on mining taxes and fees in the Philippines. Once finished, the Administration plans to prioritize the passage of this legislative measure.
What measures were put in place to address the country's economic or revenue-related concerns?
· Establishment of Mineral Reservations for strategic mineral reserves to be able to collect 5% additional royalties, or higher (Sec 5, EO)
· Opening of mining areas through competitive public bidding (Sec. 6, EO)
· Disposition of abandoned ores and valuable metals in mine wastes and mill tailings (Sec. 7, EO)
· Value-adding activities and development of downstream industries (Sec. 8, EO)
· Demand operational and financial reports from both large- and small-scale miners at all stages of the mining cycle (Directives to MICC)
· Conduct of verification at the national, regional and local levels of taxes and fees payable and monitoring of all entry and exit points of minerals in the country (Directives to MICC)
· Fast-track release and access of LGUs to their share from mining revenues (Directives to MICC)
· Updating of mineral commodity profile and database on new products, markets and available technologies (Directives to MICC)
· Conduct a study on existing mechanisms for benefit sharing and review of existing taxes, fees and incentives receive by mining companies (Directives to MICC)
· Study the terms and conditions of service contracts entered into by the Department of Energy (DOE) for energy resources for possible application for mining agreements (Directives to MICC)
· Study the imposition of higher export fees for metallic and non-metallic minerals in the country (Directives to MICC)
· Consider tapping 3rd party international auditors to validate the volume and value of mineral exports from the Philippines (Directives to Good Governance Cluster)
· Increase mine wastes and tailings and occupation fees and impose processing fees for all mining applications (Directives to DENR)
· Provide benchmarks for the valuation of minerals based on prevailing international minerals market prices (Directives to DENR)
· Prepare and maintain revenue baseline data and properly account for all taxes and fees generated from mining (Directives to BIR)
What specific legislative measures will the government pursue in light of the EO?
The following steps will be studied and undertaken for inclusion in the legislative measures:
· Rationalization of revenue-sharing schemes and mechanisms and incentives given to mining companies
· Bigger LGU shares from mineral resource utilization and providing better mechanisms for the faster release of their share
· Stiffer penalties for mining-related offenses
· Possible inclusion of medium-scale mining among the categories of mining
· Stronger regulatory rules over traders and middlemen to improve mineral production monitoring and collection of taxes and fees from mining
What measures were put in place to address the impact of mining on the environment?
· Stricter enforcement of environmental laws and rules, and holding violators accountable (EO and Directives to DENR)
· Identifying additional areas closed to mining
· Review of the performance of mining operations and cleansing of non-moving mining rights holders (Sec. 3, EO)
· Assess and improve small-scale mining conditions (i.e., establish minahang bayan, enforce compliance with environmental impact assessment requirements, limit mining to specific metallic minerals, prohibit the use of mercury) (Sec. 11, EO)
· Use of integrated maps and Programmatic Environmental Impact Assessment (Sec. 16 and 17, EO)
· Proper accounting of Environmental Protection and Enhancement Programs (EPEP) of mining companies (Directives to DENR)
· Use of geo hazard and multi-hazard maps and climate change forecasts in determining “go” and “no-go” areas (Directives to DENR)
· Explore use of mandatory and compulsory insurance coverage for mining affected areas and adoption of Comprehensive Environmental Response, Compensation and Liability Act of the USA (Directives to MICC)
· Resource accounting or full-cost benefit analysis (Directives to MICC)
What are the benefits of opening areas with known and verified mineral resources and reserves for mining through competitive bidding?
The public bidding of the granting of mining rights and tenements over areas with known and verified mineral resources and reserves will allow the government to negotiate for better terms in mineral agreements and allow it and the public to maximize potential benefits from mining. In addition, public bidding will ensure transparency and allow the State to deal with legitimate and serious mining investors and developers.
The specific parameters for the public bidding will be provided for in the IRR, taking into consideration existing best practices in current government bidding procedures and the principles of transparency and accountability.
The old procedure was simply done on a first-come, first-served basis, in that whoever applies or files first for an application for a mineral agreement or mining tenement; then he or she will exclude all others from that area applied for. This procedure allowed speculators to flourish, giving authority to sit and do nothing with their applications to the detriment of those who seriously want to pursue mining operations, and of the government for lost revenues and benefits for the people.
Are indigenous people’s rights vis-a-vis mining protected by the EO?
Yes. The EO reiterates the State policy on the recognition of IP rights (Whereas clause, EO) and the NCIP has drafted and issued its revised guidelines for the FPIC process. Close coordination with the NCIP will be undertaken to ensure its proper conduct and implementation for the benefit of all concerned stakeholders. In addition to this, the NCIP, DSWD and the DENR are directed to ensure that the social preparation for IPs to be affected by mining will be conducted (Directives to DENR, DSWD, and NCIP).
Complete cultural mapping to identify IP areas will also be undertaken to complete the ancestral domain delineation process.
Aside from tackling issues related to large-scale mining, does the EO address the concerns of small-scale mining?
Yes. Several measures were undertaken to address the issues concerning small-scale mining. These are:
· Reiteration of RA 7076 as the governing law in small-scale mining
· The constitution and operationalization of the P/CMRBs to ensure the proper management and regulation of small-scale mining operations
· The establishment of Minahang Bayan to provide specific and exclusive areas for small-scale mining to avoid overlaps and conflicts with other mining rights and tenements holders
· Small-scale mining of metallic minerals shall be limited to gold, silver and chromite since these are the most suitable for artisanal methods, which do not use equipment, machinery and explosives (the definition of small-scale mining per RA 7076 refers to mining activities which “do not use explosives or heavy mining equipment”)
· To help small-scale miners and to recognize them as a formal sector; training and capacity-building measures in the form of technical assistance will be conducted by concerned agencies.
How does the EO reconcile the roles of the national government and LGUs with regard to mining?
· The National Government shall coordinate and cooperate with the LGUs in ensuring the proper implementation of mining related laws, rules and regulations, especially as regards small-scale mining
*************************************************
Gov’t insists on increased mining revenue share
MALACAÑANG has stressed the need to increase the government’s share of mining revenues in an executive order (EO) released yesterday.
Among others, no new mining permits will be issued until Congress approves an appropriate law, Environment Secretary Ramon Jesus P. Paje told reporters, under EO 79 that also calls for a review of existing mining contracts for possible renegotiation.
Potential and future mining areas will also be declared as mineral reservations, which will allow the government to levy royalties in addition to existing taxes.
Areas with known and verified reserves will now be auctioned off, the EO states.
Additional revenues are also being eyed from abandoned ore and mine tailings -- which will become the property of the state once a mining contract expires -- from which further minerals may possibly be extracted.
The Palace order, signed by President Benigno S. C. Aquino III last Friday, in addition details measures to protect the environment, among them bans on mineral extraction in tourism development areas, prime farm land and other sites as may be identified, and limits to small-scale mining.
Mr. Paje said he would ask Mr. Aquino to certify bills amending Republic Act 7942 or the Mining Act of 1995.
The “DoF (Department of Finance) is conducting the necessary studies for the legislation,” he added, noting that revenue sharing practices of other countries will be considered.
LEGISLATORS NONCOMMITTAL
Legislators, however, were noncommittal. The 15th Congress starts its third and final session later this month and re-electionist legislators are expected to be sidetracked by next year’s mid-term polls.
“The pending bill rationalizing the profits/sharing from mining activity has to be scheduled for hearing,” Senate President Juan Ponce Enrile said in a text message.
House Speaker Feliciano R. Belmonte, Jr. said he had yet to study the Palace order but added he would “support the president’s programs”.
Industry concerns that the new mining policy would be made retroactive were assuaged, with the EO stating that existing contracts would remain valid. Any changes arising from the mandated reviews -- to be conducted by the Environment department -- “shall in all cases be mutually acceptable,” it adds.
Mr. Paje, however, raised the possibility that legislators could opt to include existing arrangements under a new revenue law.
“If Congress decides that they want these contracts covered by the new scheme, then they will be included,” he said.
The issue of local ordinances running counter to national laws, meanwhile, was also addressed in the Palace order, with the Local Governments department tasked to ensure conformity.
It was silent on existing bans such as that on open-pit mining in South Cotabato, which Mr. Paje said should now be resolved via legal means.
“[The] South Cotabato [law] is a valid ordinance until such time provisions banning open pit mining is declared invalid or contrary to national law by competent courts,” he said.
The EO also calls for the development of “value-adding activities and downstream industries” for strategic minerals, and orders the creation of the Mining Industry Coordinating Council (MICC) -- to be composed of the Cabinet’s Climate Change Adaptation and Mitigation and Economic Development clusters -- that will draft a plan to implement EO 79 and other industry reforms.
INDUSTRY WELCOMES ORDER
The Chamber of Mines of the Philippines (COMP) said it welcomed the new policy as it would help settle investor concerns.
“We appreciate the position recognizing existing operating permits. COMP is committed to cooperate with the executive and legislative branches in developing a rational revenue sharing scheme,” the group said in a statement.
“COMP looks forward to the continuation of the consultative process with the Mining Industry Coordinating Council. We view the thorough and deliberate process begun... as an effective way to elicit the participation and draw out the concerns of stakeholders in the difficult task of balancing interests,” it added.
“The mining policy is a signal to all investors of government’s desire to establish a consistent and stable business environment founded on a level playing field.”
Michael T. Toledo, Philex Mining Corp. senior vice-president for corporate affairs, said “we now have the predictability and certainty as far as specific provisions is concerned. The policy makes the position of the government clear and this is what we need as a business -- to know exactly where the government is going.”
“While not everyone will be happy, as with any other policy change, at least we have laid down the parameters,” he added.
With respect to the government’s mining investments target, Mr. Paje said that the department remained confident of being able to meet its $2.27-billion goal for 2012 despite the continued moratorium on new projects.
“There are existing contracts in the pipeline, as well as ongoing exploration projects, which will continue to run despite the moratorium,” he said.
EO 79 does allow the Environment department to continue issuing exploration permits.
Mining investments amounted to only $618.5 million last year, less than half the government’s goal of $1.44 billion due to deferred projects and the moratorium on permits.
Sagittarius Mines, Inc. (SMI), whose $5.9-billion Tampakan copper-gold project is threatened by the South Cotabato ban on open-pit mining, said it also welcomed the new policy.
“[W]e welcome the recognition of the need for consistency between national laws and local ordinances. We look forward to partnering with the national and local governments and our host communities to progress the Tampakan project and achieve our shared goals for southern Mindanao -- namely a vibrant, multi-faceted economy that provides sustainable opportunities for all,” said John B. Arnaldo, SMI corporate communications manager, in an e-mail. --
****************************
Antimining advocates cheer new Aquino policy, but…
Ardent antimining advocate Gina Lopez cheered President Benigno Aquino for making a stand to protect the environment by explicitly identifying in Executive Order No. 79 the areas banned from mining.
However, Lopez said the President must address how existing mining contracts not affected by the order would be treated “especially if they ran smack in the middle of a tourism area or agricultural land.”
“Whose interests will prevail—the miners or the farmers?” asked Lopez in a phone interview.
Environment Secretary Ramon Paje said there were no existing mining operations in the 78 tourism areas although there were applications.
Antimining activists, particularly in Palawan and Romblon provinces, and an alliance of mining-affected communities and civil society organizations covering 30 provinces in the country welcomed the EO “with some reservations.”
Even Albay Governor Joey Salceda, who earlier warned that 40 governors would go to court to question the much-awaited EO, said “the final shape and complexion of the mining EO has taken a very constructive approach toward the LGU’s (local government unit’s) role.”
He said the EO hardly had a trace of the erstwhile adversarial tone of the draft.
Salceda said the EO showed the President had explored “the outer boundary of executive discretion” but noted that the limits imposed by laws, especially Republic Act No. 7942, preempted the kind of reforms that could make him change his position against mining per se. “The EO is good but mining is bad,” he said.
While the new policy guidelines stated that there would be no new mining permits to be granted “in island ecosystems” until a law amending the Mining Act was in place, the Palawan NGO Network Inc. (PNNI) urged Malacañang to clarify the order pertaining to applications of large-scale mining firms in Palawan.
The PNNI, along with other antimining groups, is seeking a complete mining ban in Palawan, citing its delicate ecosystems and biodiversity.
“There is a gray area in the guidelines pertaining to existing applications of large-scale mining companies in southern Palawan, Elizabeth Maclang of PNNI said.
She said PNNI would like the EO to categorically state Palawan’s closure to mining, in consonance with the order’s stated policy to exempt important island ecosystems.
The EO, the PNNI said, was not clear on mining companies which were previously awarded MPSAs and similar legal concessions by the DENR.
Antimining advocates in provinces, particularly the Alyansa Tigil Mina (ATM) challenged the effectiveness of the EO to address environment degradation.
Rodney Galicha, coordinator of the ATM, said the provisions in the new mining policy failed to address issues concerning environment degradation, human rights and protection of indigenous peoples’ rights as the new policy would only cover new mining applications.
In Romblon, Ronelio Fabriquer, a bishop of the Philippine Independent Church and convenor of the Romblon Ecumenical Forum Against Mining, said the new policy would weaken existing local ordinances.
Romblon, for instance, has been implementing its own indefinite ban on all forms of metallic mining and declared the entire province a mining-free zone.
John Heredia, spokesperson of the Capiz Environmental Protection Alliance, also feared that the EO could lead to the revocation of ordinances passed by towns and provinces against mining.
“There is a provincial ban on large-scale mining in Capiz but there is none at the national level. Does this mean that the province has to revoke the ordinance?” Heredia said.
The Capiz provincial board passed an ordinance which imposed a 50-year moratorium on large-scale mining in the province. The ordinance was considered the first of its kind in the country.
Eleven provinces have passed ordinances declaring a moratorium on large-scale mining. These include the provinces of Capiz, Guimaras, Negros Occidental, Samar, Eastern Samar and Northern Samar.
Guimaras Gov. Felipe Nava who is on an official trip abroad said officials of the province would study the implications of the order on an ordinance banning large-scale mining in the island-province.
Danilo Lagos, who chairs the Save Isla Homonhon Movement, said the EO would not solve the group’s campaign against mining.
“We are strictly opposing any mining operations, particularly on Homonhon Island. That executive order also allows mining activities. To us, it is no different from any law allowing mining activity like that of the Mining Act of 1995,” Lagos said.
His group has been opposing the exploration for nickel by Emir Resources Corp. on Homonhon Island, off Guiuan, Eastern Samar, because its mining claim includes the only secondary school on the island, farmlands and the island’s source of potable water.
Ifugao Representative Teodoro Baguilat Jr., chairman of the House committee on national cultural communities, welcomed the EO because it identified indigenous Filipinos as a stakeholder in the mining sector.
But Beverly Longid, president of the party-list group Katribu, said the directive offered “no considerations for IP (indigenous people’s) rights,” when the President’s order asserted national laws over local measures that ban open-pit mines or which define their territory’s environmental code.
Longid said that aside from specific provisions benefiting IPs, many of these local laws shield IP communities from the impact of large-scale mining.
Errol Gatumbato, vice president and managing director of the Philippine Biodiversity Conservation Foundation Inc., said the temporary ban on mining permits was good since it would give the ecosystem a rest from exploitation.
**********************************
Philippine mining move fails to quell policy uncertainty
Reuters
MELBOURNE/MANILA - Optimism in the mining sector over steps by the Philippine government toward lifting an 18-month moratorium on all mining projects swiftly faded on Tuesday on uncertainty over Manila's plan to raise royalty rates.
Shares in Australia's Indophil Resources, which is involved in the $5.9 billion Tampakan copper and gold project, initially surged after an executive order by President Benigno Aquino that could end a two-year freeze on the project.
Indophil is working with global miner Xstrata to develop the Tampakan mine, a huge project that has been held up by a ban on open-pit mining in the province of South Cotabato and a national moratorium on all mining projects.
The mine is expected to produce an average of 375,000 tonnes of copper and 360,000 ounces of gold over its 17-year life.
Aquino took the first step to lifting that moratorium, issuing a new mining policy this week that, among other rules, requires local mining regulations to be consistent with national laws and respects existing agreements.
"The most important thing from an Indophil perspective is that all existing agreements will be honored. So our fiscal regime is in place," Indophil's spokesman, Gavan Collery, said by telephone from Manila.
However, the Philippine government said on Monday it would not grant permits for new mining projects until Congress approved a plan to hike royalties on mines to around 5-7 percent.
Indophil's shares initially jumped as much as 11 percent to a one-month high of A$0.39, before shedding those gains to trade unchanged at A$0.35 in a slightly softer broader market on uncertainty over the fiscal regime.
Sagitarrius Mines, the joint venture vehicle for Xstrata, Indophil and local investors, has estimated it would pay total tax and royalties of about $7.2 billion over the life of the mine.
At present, the government collects a royalty of 5 percent of gross revenue from 11 of the 33 operating mines which are within the so-called mineral reservation sites.
To increase its share of mining revenue, Manila wants all 33 mines and future projects to be covered by a royalty of 5-7 percent on top of an existing excise tax of 2 percent.
However, the International Monetary Fund has recommended that the Philippines should merge its 2 percent excise tax and the 5 percent royalty into one 7 percent royalty, Philippine finance undersecretary Jun Paul said.
"We need to be competitive against the rest of the world, but at the same time we need to get a fair share of mining revenues, considering the environmental concerns involved," Paul told Reuters.
Under the new mining policy, a committee co-chaired by the Finance Secretary is tasked to come up with a proposal within two months on mining sector reforms, including mining revenues.
While Environment Secretary Ramon Paje has said the government wants to impose a 5-7 percent royalty on top of a 2 percent excise tax on all mining projects, Paul said this needs to be discussed further by the committee.
The committee will also take up the IMF's recommendation as well as the bill filed by Senator Ralph Recto last year to increase the excise tax to 7 percent from 2 percent to raise around P3.3 billion ($79 million) in additional revenue annually.
Chances are slim the royalty legislation will be passed this year, as Congress, in recess now, will have roughly four months left to pass pending priority bills such as a "sin tax" on tobacco and alcohol, new fiscal incentives and the 2013 national budget before the year ends.
