Philippines - Lifting Ban On New Mining Deals.
Legal News & Analysis - Asia Pacific - Philippines - Energy & Project Finance
20 May 2021
Last 14 April 2021, President Rodrigo Duterte signed Executive Order (EO) No. 130, amending Section 4 of EO No. 79 s. 2012 that prohibits the signing of new mineral agreements until a new law changing revenue sharing schemes takes effect.
To recall, EO No. 79 was signed by Former President Benigno Aquino III in 2012 to institutionalize and implement reforms in the Philippine mining sector and provide policies and guidelines to ensure environmental protection and responsible mining in the utilization of mineral resources.
Almost a decade after, the hit of the COVID-19 pandemic to the national economy pressed President Duterte, who initially frowned mining at the start of his Presidency, to recognize the economic potential of the mining industry in boosting the country’s revenues.
After realizing that the Philippines, an archipelago rich in minerals like gold, silver, copper, nickel, chromite, and complex ores, has only tapped less than five percent of its mineral resources, EO No. 130 was issued to optimize the mining industry as one of the initiatives of the government in heightening the country’s economic recovery effort amid the unprecedented global pandemic.
EO No. 130 lifted the nine-year moratorium on mineral agreements, consequently allowing the government, through the the Department of Environment and Natural Resources (DENR), to enter into mineral agreements, subject to compliance with the Republic Act (RA) No. 7942 or the Philippine Mining Act of 1995 and other applicable laws, rules, and regulations.
EO No. 130 assured that during the 9-year ban, the DENR has thoroughly reviewed the regulatory framework of the mining industry and has adopted additional rules, regulations and policies that provide for and enhance environmental safeguards ensuring compliance by mining companies with laws on environmental protection.
Moving forward, EO No. 130 mandates the DENR to formulate terms and conditions in the new mineral agreements to maximize government revenues from mining operations. It is also calls the said agency to review existing mining agreements for possible renegotiation of the proposed terms and conditions, which shall be mutually acceptable to the government and the mining contractor.
Establishing the existence of a law changing revenue sharing schemes, EO No. 130 cites RA No. 10693 or the Tax Reform for Acceleration and Inclusive (TRAIN) Act, signed by President Duterte in 2017, which doubled the rate of excise tax on minerals, mineral products, and quarry resources from two percent to four percent.
EO No. 130 hopes that the revenues to be received from the mining industry, such as taxes, royalties, and fees, can usher significant economic benefits to the country, support various government projects, develop other industries, and provide employment opportunities in remote rural areas where there are mining activities. To rationalize existing revenue sharing schemes and mechanism, the EO orders the Department of Finance to work with the DENR, and implement measures.
To balance the need for environmental protection, EO No. 130 mandates the DENR to “strictly implement” environmental policies and rules, and measures recommended by the the Mining Industry Coordinating Council relating to all mining operations.
Indeed, it is everyone’s hope that the economic ends of the EO be achieved but without creating a negative effect on Philippine ecology and the indigenous community in the periphery.
First published on The Daily Tribune.
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