News article from by Czeriza Valencia

The news is about the players of the mining industry welcoming the much-awaited EO on mining policy which was signed last July 9, 2012. Private Companies and some representatives said that they are all willing to cooperate with the government in developing a national revenue sharing scheme. They were looking forward to the new policy with regard to the conflicting interests of the different stakeholders, encourage investments, and foster sustainable development for the country. 

Under the EO, the government imposes a moratorium on the approval of new mineral agreements. Smale scale mining activities will also be limited to areas declared as "Minahan ng Bayan" which also limiting the areas where there are nickel operations. With regards to the environmental concerns, the EO bans the use of mercury in small scale mining which is part of the "Minahan ng Bayan" areas. A mining Industry Coordinating Council (MICC) is created to implement the EO and other reforms in the industry. They will be the ones who will be conducting talks with stakeholders as well as reviewing all the existing mining-related laws and rules. This council will co-chaired by the chairpersons of the Climate Change Adaptation and Mitigation and the Economic Development clusters of the Cabinet. Other members will include the Justice Secretary, the chairperson of the National Commission on Indigenous Peoples (NCIP) and the president of the Union of Local Authorities of the Philippines (ULAP). Also, the EO says that all mining contracts before the EO was released are considered valid. 

What does this mining got to do with the Philippine Economy? 

This EO is expected to increase the investments and government earnings as well as cater the environmental issues imposing more restrictions to protect the environment and local communities. The total contribution of Mining Industry since 2005 accounted for less than 1% of GDP. From 2005 up to 2009, the mining contribution increased to 1%. On average from 2000 to 2009 accounts for 0.91% of the Philippine GDP (MGB, Mining Industry Statistics released on February 10, 2010). Another significant contribution of the industry is in the Philippine exports. The export shares of metallic and non-metallic minerals have increased from 1.7% of the total exports in 2000, to 2% in 2004, to 4.5% in 2006 and over 5% by 2007. On the average, from 2000-2009, mineral exports accounted for approximately 3% of total Philippine exports. 

The EO received positive and negative comments from the mining companies, local representatives and governors, CBCP and environmental advocates. Mining companies and other government sectors approved this, but the CBCP, environmentalists and other local governors are not satisfied with the EO. Some governors are pushing on a new mining law which will be called "People's Mining Bill". One of the aspects of this bill is that the tax rate will increase from 2% to 10% 
Before the actual EO 79 was released, the initial amount of tax in mining is said to be about 2%. The total operating and related expenses of the mining companies amounts to about 50% of the total value of the minerals leaving only 48% of the earnings for the companies as their profit after deducting 2% tax. 
Focusing on increasing the amount of tax in mining from 2% to 10%, a lot can already be said. Although the government will get higher revenue, there are a lot of other concerns. Increasing the tax rate may be approved by the mining industry, but foreign companies may pull out their investments in the mining industry of the country since they feel that they will be better off if they just invest in another industry. One has to remember that the mining industry, while it is capital intensive, has a very high degree of risk. The government must also take into account the communities that are greatly affected by the mining operations. Just compensation is expected by those who are affected by mining activities. 
With EO 79, a new mining policy has been effectively put into place by a president who clearly means business. The challenge now, as always, whenever our country enacts or adopts progressive legislation and policies, is the implementation. 

Cabangbang, Grace Key
De Luna, Francis Noah
Rimando, Larissa
Yroen Guaya Melgar
7/19/2012 09:58:27 am

Here's a copy of the original EO, just in case anyone is interested. :)

I think we have to wait for the release of the IRR from the DENR for us to get the more tangible effects of this EO, don't we? :] That is aside from the new legislation on mining revenue and taxes. It should supposedly be released 60 days after the EO so better hang around for it. :))

7/19/2012 01:09:24 pm

When is the expected release of the DENR IRR? How many foreign mining companies are there in the Philippines?

Yroen Guaya Melgar
7/19/2012 06:47:25 pm

The IRR should supposedly be released 60 days after the EO. :) It was stated in the executive order 79, section 19.


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