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Moratorium on mining projects lifted

A view of nickel ore stockpiles at DMCI Mining Corp.’s mine in Sta. Cruz, Zambales, Feb. 7, 2017. — REUTERS/ERIK DE CASTRO

By Kyle Aristophere T. Atienza, Reporter

PHILIPPINE President Rodrigo R. Duterte finally lifted the nine-year moratorium on new mineral agreements, in a bid to boost revenues as the country recovers from the pandemic.

Executive Order (EO) No. 130, signed by Mr. Duterte on April 14, allows the government to enter into new mineral agreements and review existing mining deals for possible renegotiation.

“The DENR (Department of Environment and Natural Resources) shall formulate the terms and conditions in the new mineral agreements that will maximize government revenues and share from production, including the possibility of declaring these areas as mineral reservations to obtain appropriate royalties,” the order stated.

The DENR was also tasked to review existing mining contracts and possibly work out new terms that will be “mutually acceptable to the government and the mining contractor.”

The Finance department and DENR were ordered to implement measures to “rationalize existing revenue-sharing schemes and mechanisms.”

The DENR was also directed to strictly implement mine safety and environmental policies.

The new EO amends the one made by then-President Benigno S. Aquino III in 2012 which prohibited the grant of new mining deals in several protected areas, while awaiting the passage of a law that would increase the government’s share in mining revenues.

Republic Act No. 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) Act doubled the excise tax on minerals, mineral products and quarry resources to 4%, starting 2018.

The country has tapped less than 5% of its mineral resources endowment to date, the EO stated, emphasizing the mining sector can support the government’s infrastructure projects and create jobs.

“We welcome the lifting of the moratorium on new mining projects — in place for nearly nine years — in this time of great national difficulty as a result of the COVID-19 pandemic,” the Chamber of Mines of the Philippines (CMP) said in a statement.

The CMP said mining projects will provide much-needed government revenues, in the form of taxes and royalty fees. The new order will also help attract local and foreign investments in the sector.

Astro C. del Castillo, First Grade Finance, Inc. managing director, said EO 130 will entice local and foreign investors to take a serious look at the country’s mineral industry again.

“The mining industry and the financial capital markets have been waiting for this. It is a win-win formula amongst the government, the private sector, and the mining industry and environmental advocates,” he said in a mobile phone interview.

Mr. Del Castillo said this will also help bring back confidence in the financial capital markets, especially in the minerals industry.

“We’ll see a knee-jerk reaction from mining stocks as a reaction to this news, causing a spillover tomorrow and the coming days. Eventually the market will correct itself and people will be focused on the fundamentals of the listed mining companies and if they can take advantage of the good news,” he added.

NO IMMEDIATE IMPACT?
Wilfredo G. Moncano, acting director of the Mines and Geosciences Bureau, said in a Viber message these mining projects will help “generate economic activities, revenues, employment, services, taxes, and other indirect economic activities in remote areas in the country.”

However, he noted mining’s contribution to the country’s growth output would not be that huge as firms will be just starting the development of projects this year.

“The gestation time of mining projects before it takes commercial extraction takes between a year to five years depending on the size of the project and if there are complementary mineral processing plants constructed,” Mr. Moncano said.

John Paul R. Rivera, an economist at the Asian Institute of Management, said the reopening of the mining sector will certainly contribute to economic growth “but will not give as much given the industry’s previous performance.”

“Historically, the mining/extractive sector makes a relatively small contribution to the Philippine economy roughly around 1% of GDP or approximately 5% of exports,” he said.

The contribution of the mineral industry would remain small if the country is unable to tap its other mineral resources such as gold, copper, nickel, among others, Mr. Rivera said.

He said growing concern over mining’s environmental impact will make it more challenging for the industry, especially amid the so-called climate crisis.

“Lifting the moratorium on mining without domestic industries to process and use the minerals will just mean that the most significant value-added from our finite mineral resources will keep going to foreign firms, industries and economies,” Ibon Foundation Executive Director Sonny A. Africa said in a Facebook messenger chat. “While the cost is great the real economic gains are negligible.”

Mr. Africa said mining and quarrying even before the pandemic only employed around 190,000 in 2019, “not even a half a percentage point of total employment.”

“The refusal to really reform economic policies combined with the pandemic will just mean that people will remain worse off than before the pandemic for many years to come,” Mr. Africa said.

Kalikasan People’s Network (Kalikasan) said the new order will result in a “boom of environmental violations.”

“We cannot allow this deluge of destructive mines while our communities are still reeling from the converging pandemic and climate crises,” Kalikasan Chairperson Leon Dulce said in a Facebook messenger chat.

Mr. Dulce said the new order will just operate on “outdated” provisions that allow companies “to skimp on rehabilitation, polluter taxation, and waste management.”

“Mining companies need only to pay P50 per ton of waste disposed of in unauthorized areas, and only P0.05 for every ton of mine waste and P0.10 for mine tailings in terms of compensation for resulting damages.”

“This recent backtracking of the President and his administration on mining proves that indeed his past pronouncements and postures as pro-environment has finally confirmed much of our perspective that they were nothing but lip service,” Antonio Les Marchand, advocacy officer of Mission for People’s Initiatives, Inc., said in a Facebook messenger chat.

Mr. Marchand said the order would only result in more serious threats to local communities, citing instances where several foreign mining firms were able to evade accountability.

Mr. Marchand called on the government to be transparent and disclose the results of the amendment of the moratorium on new mining agreements.

Anti-mining group Alyansa Tigil Mina (ATM) said in a statement Thursday that the decision to lift the moratorium on mineral agreement is treachery against future Filipino generations.

“Lifting the mining moratorium exposes Mr. Duterte’s support for mining projects that will impact our water, food supply, forest, biodiversity, indigenous communities, and fragile island ecosystems,” the group said.

“We will mobilize all our members to intensify and broaden the resistance against mining, especially those who will benefit from this new policy.  And we will defy this callous government that keeps turning a blind eye against mining-affected communities and environmental defenders,” it added. — with Revin Mikhael D. Ochave

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