Mining ban expanded

MANILA, Philippines – Mining will be banned in protected areas and in tourism sites – including Palawan and Boracay – while no new permits for mining operations will be issued until Congress passes a new revenue sharing scheme that is more advantageous to the government.

The new mining policy is contained in Executive Order 79 signed by President Aquino on July 6.

Environment and Natural Resources Secretary Ramon Paje told a press briefing yesterday that existing contracts would be honored, although under the EO, his department would review existing mining contracts and agreements for possible renegotiation of the terms and conditions, which “should be mutually acceptable to the government and the mining contractor.”

Paje also said the contract for the controversial mining operations in Rapu Rapu in Albay would be respected.

“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,” Paje said.

He said that under Section 1, a total mining ban will be implemented in at least 78 ecotourism sites in the National Tourism Development Plan (NTDP), including Palawan and Boracay. Other ecotourism sites being eyed for inclusion in the mining ban are in Cebu, Iloilo, Davao and Subic in Zambales and Clark in Pampanga.

The NTDP, according to Tourism Secretary Ramon Jimenez, is the product of a thorough inventory of tourist attractions in the Philippines.

“It divides the county into 20 strategic thematic tourism destination clusters covering 78 tourism development areas that will be the focus for massive development in four years,” Jimenez said.

Other areas closed to mining operations are those under Section 19 of the Mining Act of 1995 or Republic Act 7942, including military and other government reservations or those covered by the National Integrated Protected Area System (NIPAS) under Republic Act 7586.

No mining operations will be allowed in prime agricultural lands, in addition to lands covered by Republic Act 6657 or the Comprehensive Agrarian Reform Law of 1988.

“We call them the ‘no-go’ zones. Before this EO, the no-go zones were confined inside the protected areas. In addition to the protected areas as provided for in Republic Act 7942 and the NIPAS Law 7586, there were three more added by the President, one of which is the tourism destinations as provided for in the NTDP,” Paje said.

“I think based on the DOT submission, there were 78 sites identified by the DOT in the NTDP as ‘no-go zones.’ This, in effect, will be completely banned for mining activities. The other one is prime agricultural lands and fishery zones. It will be completely banned for mining activities. And the other one is, of course, other areas or island ecosystems as may be declared by the Department of Environment and Natural Resources,” he added.

“Mining contracts, agreements, and concessions approved before the effectivity of this order shall continue to be valid, binding, and enforceable so long as they strictly comply with existing laws, rules, and regulations and the terms and conditions of the grant thereof. For this purpose, review and monitoring of such compliance shall be undertaken periodically,” the EO read.

“And, of course, with this, the local ordinances cannot be against national policies. But if there are already issued local ordinances like the one in South Cotabato, our take on that is that it remains valid because there is a process in invalidating it. It remains valid until it is invalidated by competent authorities or through the courts,” Paje emphasized.

Under Section 6 of the EO, opening of mining areas will be done through competitive public bidding and no longer on a first-come, first-served basis.

“The grant of mining rights and mining tenements over areas with known and verified mineral resources and reserves, including those owned by the government and all expired tenements, shall be undertaken through competitive public bidding,” the EO stated.

“The Mines and Geosciences Bureau (MGB) shall prepare the necessary competitive bid packages and formulate the proper guidelines and procedures to conduct the same, which shall include ensuring that the social acceptability of the proposed project has been secured,” it said.

Bigger revenue

On provisions in the EO for bigger government revenue share, Paje said the instruction of the President was to study the “international practice, the best practices.”

“In fact, I was informed that the Department of Finance has already started the study. And, if you will follow practices from abroad, it would range from around five percent to around seven percent royalty. I think Australia is even charging 18 percent royalty for specific minerals which would not require so much processing like coal and iron ore. So it varies. But, on the average, we’re looking at around five to seven percent royalty based on gross,” he said.

Paje said the new law, once passed, should cover even existing mining contracts where the government was getting minimal benefits.

“That is precisely what we would like to correct here and, in fact, that is one of the reasons why the President said ‘put a break, stop issuing new mining contracts if we cannot get the best or the optimal revenue for government.’ And hopefully the legislation that we will be getting from Congress will somehow cover the ongoing or current mining operations nationwide,” he said

Paje said the new policy should not turn off investors because “we are telling them that you are paying this much in Australia, in Canada, in Chile, in Brazil, why are you not willing to pay that in the Philippines? The answer basically is that your law says two percent. So that I believe should be understood.”

“Before a mining company could actually start operating on the ground, it takes around five years – from exploration, declaration of mining feasibility, up to operation. It takes around five years and I’m quite optimistic it will not take five years to pass this legislation for this particular purpose,” he said.

Based on the EO, the government is also seeking higher occupational fees for mining companies.

“We are targeting 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 mine 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.

At present, there are more than 300 contracts and only 33 actual operations.

“So we are barely utilizing 10 percent. I don’t think it will affect the mining industry. It will affect a few, those who are in the final stage of exploration activities,” he said.

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.

The EO, under Section 9, also calls for the creation of the Mining Industry Coordinating Council (MICC) consisting of the Climate Change Adaptation and Mitigation and Economic Development Cabinet clusters.

The MICC shall be headed by the chairs of the two clusters and shall have the following additional members: secretary of the Department of Justice (DOJ), chair of the National Commission on Indigenous Peoples (NCIP) and president of the Union of Local Authorities of the Philippines (ULAP).

Small-scale mining

The EO also includes guidelines for small-scale mining, which shall comply with RA 7076, or the People’s Small-Scale Mining Act of 1991, and the Environmental Impact Statement System requirements under Presidential Decree 1586. Small-scale mining operations should be undertaken only within the declared People’s Small-Scale Mining Areas or Minahang Bayan.

The EO also states that small-scale mining shall not be applicable for metallic minerals except gold, silver, and chromite, as provided for in RA 7076. The use of mercury in small-scale mining shall be strictly prohibited.

In addition, training and capacity building measures in the form of technical assistance for small-scale mining cooperatives and associations shall be conducted by concerned government agencies.

“LGUs shall confine themselves only to the imposition of reasonable limitations on mining activities conducted within their respective territorial jurisdictions that are consistent with national laws and regulations,” the EO said.

“Concerned government agencies, in particular the DENR, the Department of Budget and Management (DBM), and the Department of Finance (DOF), are hereby directed to ensure the timely release of the share of LGUs in the National Wealth pursuant to Section 289 of RA 7160, or the Local Government Code of 1991. These agencies are likewise directed to study the possibility of increasing LGUs’ share as well as granting them direct access similar to existing arrangements with the Philippine Export Zone Authority (PEZA),” the EO read.

Meanwhile, at least 72 Catholic bishops have expressed their support for the passage of the proposed Alternative Minerals Management Bill (AMMB) that would identify “no mining zones.”

“When the bishops decide on matters such as this, we do not consider the political winability. What we consider is if it is right or wrong, moral or immoral. So regardless of how they would accept our position, that depends on the persons’ conscience. But if they accept or reject it, if we win or lose, it does not matter to us because we would always stand by what is right and what is moral, regardless of political acceptability,” CBCP vice president Lingayen-Dagupan Archbishop Socrates Villegas said.

Manila Auxiliary Bishop Broderick Pabillo, for his part, said they have yet to study EO 79 before making comments.

The bishops were holding their 105th Plenary Assembly yesterday. –Aurea Calica (The Philippine Star) with Evelyn Macairan