Gov’t urged to lift suspension on new mining deals

The head of the country’s biggest mining group on Wednesday called on the government to lift the suspension on new mineral agreements and the use of open pits in mining to spur economic growth.

Chamber of Mines of the Philippines (COMP) chair Gerard Brimo stressed in a webinar hosted by Arangkada Philippines that the industry was largely unaffected by the lockdowns imposed globally, which would allow it to contribute to the economy’s recovery once policies were changed.

“I think it is a growing realization in the government [that] we need to do something to keep the economy moving again. The way to do that is to fix the policies to grow the industry,” he said.

Citing data from the Bangko Sentral ng Pilipinas, Brimo noted that the value of the country’s mineral exports for the first half of the year declined by only 2 percent due largely to rising gold prices. Between January and June, mineral exports were valued at $2.42 billion compared with $2.47 billion in the same period last year.

The mining industry could have contributed more if not for the moratorium on new mineral agreements as well as the ban on the use of open pits to extract ores, Brimo said.

“For such a highly mineralized country, the large-scale metallic mining sector does not substantially contribute to the national economy. The industry has been stymied by policy problems, resulting in no new investments and therefore no growth,” he added.

It was in 2012 when former President Benigno Aquino III issued Executive Order No. 79, which effectively banned the issuance of new Mining Production Sharing Agreements (MPSAs) until a new revenue-sharing scheme has taken effect.

Meanwhile, the ban on open-pit mining was put in place in 2017 by the late Environment Secretary Regina Lopez and was affirmed by President Duterte himself.

There are three open-pit mining projects on hold while 15 new mining projects are in line to be issued mining permits once policies are relaxed.

Brimo said that allowing those three open-pit mine sites to operate would already raise the industry’s exports and gross domestic product contributions to 9 percent and 1.5 percent from 6.4 percent and 0.8 percent, respectively, from additional export receipts, tax revenues and social programs.

The Mining Industry Coordinating Council—headed by Environment Secretary Roy Cimatu and Finance Secretary Carlos Dominguez III—has deferred lifting the ban on new MPSAs and open pits, stating that the new tax scheme for mining under the Tax Reform for Acceleration and Inclusion (TRAIN) Act was not enough to satisfy the conditions under EO 79.

Under the TRAIN law, mining firms were slapped a higher excise tax of 4 percent from 2 percent. Civil society group Alyansa Tigil Mina said there must be a new fiscal regime to accommodate the request of large-scale miners, which must include “new rules on royalties, a tax on super profit or windfall profits, increased social-development funds and increased rehabilitation and decommissioning funds.”

But COMP said these “misguided” tax schemes would eventually lead to the downfall of the industry as taxes would eat up most of the companies’ profits and would make the local mining industry less attractive to potential investors.