Business groups reject mining policy changes

CANBERRA — Businessmen yesterday called on the Aquino government to hold off from tightening regulations on mining, rejecting a plan by the Environment department to declare mines as “mineral reservations” to hike tax revenues.

Four business groups submitted a consolidated position paper in a dialogue at the Philippines-Australia Ministerial Meeting here, urging the Aquino administration to issue a “clear statement on how the country intends to intensify the mining industry’s growth.”

There should be a “stable investment environment without any additional tax imposition,” the Australia-New Zealand Chamber of Commerce of the Philippines, Philippine Chamber of Commerce and Industry, Australia-Philippines Business Council and the Chamber of Mines of the Philippines said.

They said the Aquino government should reconsider the plan to declare current mining operations and those in the advanced stages of development as mineral reservations, which would allow the collection of a 5% royalty on top of a 2% excise tax. The Environment department has estimated the tax take at P7 billion annually with an additional 21 sites turned into reservations. There are only nine mineral reservations in the country.

Under the Philippine Mining Act of 1995, the president, upon the recommendation of the Environment secretary and the director of the Mines and Geosciences Bureau, may establish mineral reservations “when national interest so requires, such as when there is a need to preserve strategic raw material for industries critical to national development, or certain minerals for scientific, cultural ecological value.”

“The mining industry is very young. We’d like the government to ease off a little bit and allow the industry to go forward,” said Gavan Collery, Indophil Resources NL vice-president for corporate affairs, in an interview. Indophil Resources owns a minority stake in the Tampakan copper-gold project in Mindanao, which has been hit by a South Cotabato provincial ordinance banning open-pit mining.

The statement said such provincial ordinances had dampened international business confidence in the Philippines and led to the shelving of expenditure flows to many projects. “The Philippine government has to act decisively on this matter to bring an end to provincial ordinances that defy national law,” it added.

Businessmen urged the government to take measures to control small-scale mining and clarify indigenous peoples’ rights, noting that ancestral domain claims under the Indigenous Peoples’ Rights Act of 1997 have overlapped with existing permits. The government should establish a time frame on granting ancestral domain claims and set parameters on who are to be considered indigenous peoples, they said.

They also endorsed a program under the Medium Term Philippine Development Plan to stamp out graft and improve transparency in the issuance of mining permits and tax payments.

On Tuesday in Sydney, investors in the $5.9-billion Tampakan copper-gold project said they would keep their schedule of starting mine development next year and commercial operations by 2016 despite delays caused by a local ordinance banning open pit mining.

Andrew Pickford, general manager for the Tampakan project of main shareholder Xstrata Copper, said at the sidelines of the Australia-Philippines Business Council meeting that his firm expected the Aquino administration to resolve the issue ahead of a decision by the mining consortium on the project next year.

At the forum in the Westin Sydney hotel, hosted by the business council and Xstrata Copper, Trade Secretary Gregory L. Domingo said President Benigno S. C. Aquino III had vowed to directly tackle the Tampakan dispute.

Sagitarrius Mines, Inc. (SMI) the consortium behind the Tmpakan copper-gold project, has began forwarding to South Cotabato officials an environment impact study said to be the key to overturning the mining ban.

Mr. Pickford said consultations would take three to six months, after which SMI will lodge an application to get an environmental compliance certificate. SMI hopes to get a declaration of mining feasibility from the national government after that, he said.

Indophil Resources, which holds a 37.5% stake in the mine, said it would stay put in the meantime after San Miguel Corp. decided to let go of an exclusive period to launch a takeover bid.

“We have raised funds up to 2012. Indophil is there to maintain its position in the project up to development stage,” Indophil Resources’ Mr. Collery said.

The $5.9-billion Tampakan copper-gold project, said to cover the largest undeveloped copper-gold deposit in Southeast Asia, has been described as having the potential to be the largest mine in the Philippines and the fifth-largest copper mine in the world by 2016.

It is likewise projected to add 1% to GDP yearly after 2016. –FELIPE F. SALVOSA II, Research Head, BUsinessworld