Mining Philippines News - Chamber of Mines

Mining
Philippines News
Volume 2013 / Issue 3
Quarterly Newsletter of Chamber of Mines of the Philippines
Mining Philippines 2013
a resounding success
In This Issue
Mining Philippines
3
COMP places ads detailing government
share, environment impact, inclusive
growth
15
MGB opposes single tax scheme
for mining
SMI announces downsizing
17
18
Economic effects of mining is
exponential, says
top economist Villegas
18
Diwata: Women in Mining
celebrate anniversary
Showing the resilience of the local
minerals development industry
despite numerous internal and
external challenges, the Mining
Philippines 2013 (MP 2013)
Conference and Exhibition proved
to be another resounding success
as it unfolded from September
10 to 12 at the Sofitel Philippine
Plaza Manila Hotel.
Senate President Franklin M. Drilon
Mitch Hooke visits PH,
was the guest of honor and keynote
guests at Mining Luncheon
19
23
speaker at the conference, which
carried the theme “Moving Forward:
Intex spends over P140M for
Harnessing Opportunities.” The exhibit
environmental protection
24
featured 63 of the country’s top mining
firms, suppliers, business groups and
Draft mining bill among
associations focused on the industry.
DENR updates on
EO 79 implementation
26
Letters to the Editor
26
The 11th edition of Mining Philippines
served as a springboard for discussions
The premier annual event of the
on the industry’s future with a powerful
Philippine mining industry drew 1,423
lineup of speakers and topics, led
Guest Column: Dr. Raul Fabella:
total participants, up 7 percent from
by Drilon, Chamber of Mines of the
Parable of the Talents
2012 figures, and saw over twice as many
Philippines (COMP) President Benjamin
visitors to its exhibit at the Sofitel’s Luzon
Philip G. Romualdez and Chairman
and Visayas ballrooms compared to last
Artemio F. Disini. (See related stories in
year.
the following pages – Editor)
to page 2
30
2
2
Mining Philippines
2013 a resounding
success
from page 1
Except
for
some
hitches
in
the exhibitors this year were equipment
registration process on MP 2013’s manufacturers
and
suppliers,
opening day, some delegates and underscoring the multiplier effect of
on Twitter), reported the conference’s
proceedings in real time on Twitter,
Facebook, and Storify.com.
participants praised the organizing the mining industry. Other exhibitors
COMP for “a very, very organized include 16 service providers, 11 mining
The social media team used the
Mining Conference and the timely, well- companies, three organizations and one
hashtag #FwdMiningPH in its Twitter
placed discussion topics,” according to publication.
posts to denote its coverage of Mining
Manolo Labor, official spokesperson of
Philippines. It became a “trending topic”
Sagittarius Mines Inc. (SMI).
on Twitter in the Philippines on Sept.
12—becoming popular enough that
Delegates were also treated to Sofitel’s
the anti-mining “No 2 Mining Palawan”
delectable meals and superb service,
Twitter account took note of it and
as well as several forms of artistic and
reminded its followers to “use the social
musical
media more to spread our advocacy.”
entertainment
during
the
opening ceremonies, the welcome
cocktails on the evening of Sept. 10, the
gala night on Sept. 11, and the farewell
cocktails on Sept. 12.
Also making up the total participants
in MP 2013, apart from the 834 exhibit
By the numbers
visitors, were:
As an event, Mining Philippines saw
- 193 conference delegates
modest growth despite the current
- 54 speakers, discussants and session
stagnation in investment of the local
chairs
industry. It showed most in the total
- 24 sponsors’ delegates
number of visitors to the exhibition
- 259 exhibitors’ representatives
– 834, a 156% increase over the 2012
- 50 journalists and media, and
figure.
- 9 members of the diplomatic corps.
Mining Philippines 2013 also attracted
16 paying sponsors and seven media
partners, up from three the previous
Before the end of the conference, COMP
year. Half of the paying sponsors were
also unveiled a new corporate audio
also exhibitors.
video presentation (AVP), featuring
two miners in Benguet and Palawan
For the first time, COMP also went “live”
who related how being employed in
with Mining Philippines on social media.
the mining industry has improved their
A team of 12 geology and mining
lives and how mining operations have
The exhibition itself gathered 18 new
students from the University of the
improved their homes and communities.
exhibitors, as well as 37 returning
Philippines, led by SMI’s Arnold Romero
COMP
exhibitors. Over half (32) of the
(“Pinoy Minero” or @RsponsibleMiner
Minds to develop the AVP.
commissioned
Independent
3
A Sustainable and Equitable Mining Industry
(Keynote Speech of Senate President Franklin M. Drilon
Mining Philippines 2013 Conference and Exhibition)
Mr. Benjamin Philip Romualdez,
officers and
members of
the Chamber of Mines of the
Philippines, distinguished guests,
friends, ladies and gentlemen,
good morning.
mineral wealth is estimated at more
Damage is irreparable in most cases.
than $840 billion. And yet, the industry’s
contribution to the economy is small.
Hence, we appeal to the industry
In 2012, mining’s share in the GDP is
players to observe and apply the best
merely 0.7 percent.
practices. This 3-day mining conference
is an opportune time for the mining
Given our rich mineral resources, the
industry to compare best practices,
Today, I am greatly honored for this
mining industry, if properly developed,
share new techniques and showcase
opportunity to meet and exchange
can be one of the drivers of economic
new technologies and processes.
ideas with the movers and shakers of the
growth.
mining industry. I truly appreciate your
We cannot risk the future of our children
efforts to promote the mining industry’s
We acknowledge that the industry
and the generations that come after
potential to become a major contributor
is high risk and capital intensive. We
them. We have seen mining disasters
to the Philippine economy.
understand that investors fear that the
of epic proportions in many parts of
economic returns may not be enough
the world where environmental and
This is an auspicious venue for the
to recover the costs. Likewise, we
social costs outweighed the economic
industry’s best minds to discuss and
understand that the gestation period
benefits. We do not want that to happen
generate ideas on how to meet the
for large scale investments normally
in our own backyard. We are responsible
many challenges of the mining industry,
exceeds 10 to 15 years if a full exploration
for these resources. It is our duty to leave
as well as how to strike a balance
program has to be undertaken.
these in good hands so that succeeding
between maximizing revenues and
generations will be able to enjoy them.
preventing any catastrophe that would
Be assured that we are taking note of all
compromise the future of the younger
the issues and concerns of the industry
While we support the development
generation, and the generations yet
players.
of the mining industry, we must take
unborn.
measures to ensure that social and
Having said that, I am certain that all of
environmental costs will not outweigh
conference
us, you in the mining industry and we in
the economic benefits.
theme, “Moving Forward: Harnessing
government, are all concerned with the
Opportunities”. Indeed, the economic
protection of the environment and our
Ladies and gentlemen, the road to
opportunities in the mining industry are
people’s welfare.
mining development must be paved,
I
took
note
of
your
as abundant as our mineral deposits. This
not just with good intentions, but
mineral wealth is attributed to our being
The Philippines is not a stranger to
also with serious reforms. At this
geographically located, fortunately or
mining accidents resulting in severe
point, we must explore all possible
unfortunately, in the ring of fire.
environmental damage that displaced
and feasible ways to level the playing
people and deeply affected the life of
field. It is imperative that we practice
Having nine million hectares with high
the local community. The social and
transparency. More so, because of our
mineral potential, the Philippines is now
environmental costs are quite high.
participation in the Extractive Industry
ranked top five in the world for overall
It will take generations to fix polluted
Transparency Initiative.
mineral reserves, second in gold, and
rivers, devastated mangroves, coral
third in copper resources. The untapped
reefs, agricultural land and many more.
to page 4
4
4
A Sustainable and
Equitable Mining
Industry
from page 3
leveling the playing field by cooperating
should
with the government in checking
sustainably, to protect the interest of
abuses in the system of incentives and
future generations. It is worth noting
tax holidays. It is sad to note that some
that every cubic meter of ore that is
mining companies have managed to
mined today, would mean depriving the
I submit some specific proposals for
get away from their tax obligations by
future generation of a cubic meter of
your industry’s consideration.
devising schemes, such as locating their
ore. The government is taking a leap of
mineral processing plants in Ecozones
faith in entrusting these limited assets to
to avail of tax holidays.
entrepreneurial hands.
marked. This is an important step to
Moreover, mine life must be part of
Ladies and gentlemen, the Filipino
prevent investors from being misled in
the criteria that will be observed in
people must therefore have their fair
investing in areas where mining is not
the registration process. We all know
share of the country’s wealth. Their share
allowed. This would also spare the local
that mining projects can be registered
comes in the form of taxes and royalties.
community from unnecessary hassle.
to avail of an income tax holiday from
But how fair is fair?
First, the areas where mining is
be
utilized
properly
and
allowed must be clearly identified and
four to seven years under the Omnibus
Second, to ensure that only the best
Investment Code. Hence, a mine which
Let me assure you that your Senate
practices are being observed, the grant
has a life of say, seven years, can operate
will be a listening Senate. That is our
of mining rights should be limited to
without paying income tax for its entire
assurance.
those that have zealously complied with
duration.
the pertinent requirements. By the same
We will exert effort to determine what is
token, those that have been involved in
Taxes, in whatever form, are always met
fair for your industry and our people. We
environmental incidents and have not
with deep resentment and cynicism
will do our best, as your representatives,
implemented the required remediation
especially these days. In life, my dear
to determine which tax regime is fair
measures shall be disqualified.
friends, there are only two things that
and would work best for the industry
we cannot avoid, death and taxes.
and our people.
environmental catastrophe, I join the
Let me make my position clear. The
Ladies and gentlemen, there are many
call to ban the use of mercury in small
people, through taxes, royalties and
challenges in the mining industry. But I
scale mining.
other fees, must have their fair share
am certain that if we have a continuous
from any economic activity done in
dialogue among the industry players,
Fourth, we must eliminate speculations
the country, especially if it involves the
stakeholders and the government, we
by cancelling non-moving applications
extraction of our natural resources;
can find a common ground to address
and non-performing mining contract
finite resources; limited non-renewable
these tricky mining issues. We are all
and permit holders. This would put the
resources. The Filipino people are
after the same goal: that of having
industry in the hands of the real miners.
entitled to their rightful share in what
a sustainable and equitable mining
the industry would earn from these
industry.
Third, to prevent both human and
Fifth, we must earnestly go after the
finite resources. Like any industry, the
illegal miners by creating a Task Force
mining industry must do its share in
Let me conclude by wishing all of you a
on Illegal Mining composed of our law
national development. More so, because
productive and meaningful conference.
enforcement agencies.
it is extracting our natural wealth.
I wish you all, especially the foreign
delegates and investors, a pleasant and
Sixth, small scale mining should be
While we recognize the high economic
memorable stay in our country. May
rationalized by declaring a People’s
risk involved in mining as against the
you all bring to your respective home
Small-Scale Mining Areas or Minahang
success rate, we must remember that
countries fond memories, and consider
Bayan.
the minerals are owned by the Filipino
the Philippines again in your future
people, and not by those who have
travels. Thank you very much.
Seventh, the industry must do its share in
mining licenses. Our natural resources
5
Welcome remarks for Mining Philippines 2013
Benjamin Philip G. Romualdez
President, Chamber of Mines of the Philippines
Senate President Franklin M.
Drilon, members of the diplomatic
corps, honored guests, my fellow
miners, ladies and gentlemen,
good morning.
mining really means to our country.
under the 1995 Mining Act. To Senate
We will show you with data, credible
President Drilon, all the delegates of
research, science, and the real experts,
Mining Philippines and all our friends in
the real picture of the industry and the
media, thank you for coming so that we
huge implications this government’s
may help set the record straight.
policy decisions will have to the nation’s
A popular saying – better known as the
economy now and many years or even
To the innocent ear, simply increasing
“Chinese curse” – goes: “May you live
generations from now.
the two-percent excise tax may sound
in interesting times.” These are indeed
plausible. But in truth, the excise tax
interesting times, for we have so many
For my part, I want to touch on several
is but one component out of around
things going on around us that it is a
things that are important to the mining
12 taxes on mining; it certainly does
minor miracle that we are gathered
industry, and yet misunderstood by
not show the complete picture. This
here today, and I am here to formally
many. They are:
single tax – out of the 12 or so separate
welcome you, dear delegates and
1)
The industry’s fiscal regime
taxes that each mining company has to
friends, to our Mining Philippines 2013
2)
Our revenue sharing with the
pay under the Mining Act -- has been
Conference and Exhibition.
government
3)
Before we go any further, we at the
taken out of context and used by anti-
Our present situation and the
mining “NGOs” irresponsibly to vilify the
industry’s prospects going forward.
industry.
the Honorable Senate President Drilon
Let me reiterate what we at the
The truth is, our government receives
for taking time out from this very
Chamber have been saying over the
OVER HALF of the total value of a mining
important week to join us today. We are
last few months: large-scale responsible
project based on the internationally
honored by his presence, and we feel he
minerals
companies
accepted AETR or the Average Effective
is the right man to have with us today.
contribute far more to inclusive growth
Tax Rate. It is a formula that determines
Apart from being a leading light in the
and sustainable development than
the government’s share throughout
Senate, in his Party, and truly deserving
what has been said in the media by
the entire life cycle of a mining project,
of President Aquino’s confidence.
anti-mining groups. Our companies are
from the time that the contractor starts
responsible stewards of the environment
to invest funds in the project to the very
Given your unique position, Mr. Senate
and perfectly in tune with the cry of the
end of the mine life.
President, we pray that you can lead
times. We want transparency so that we
your august chamber in a development
can prove that our industry has always
The International Monetary Fund or IMF
oriented discussion on mining. When it
been and is more than willing to give
used the AETR to evaluate the Philippine
is time to deliberate on the industry’s
government its fair share from mining
mining industry in a study last year. The
future, you will be in a most influential
revenues. We are after all, the original
study showed that, and I quote,
position to do would be truly best for our
PPPs, we are partners with government.
Chamber of Mines would like to thank
development
people, our economy, and our country.
“For profitable projects, the Philippine
One of the burning issues against the
government’s average effective take
Over the next three days of our
industry is the incorrect idea about the
or share amounts to nearly SIXTY PER
conference and exhibition, ladies and
two-percent excise tax that all mining
CENT (60%) of the project’s pre-tax
gentlemen, we will show you what
companies must pay the government
to page 6
6
6
Welcome remarks for
Mining Philippines
2013
from page 5
revenue sharing schemes two years ago,
trigger such a discussion. We invite
metals prices were significantly higher,
you and your staff to sit in our plenary
and that government did appear to be
sessions and discussions, so we can show
on the losing end of this sharing.
you our concerns. Our wish is for your
good office to lead the right discussions
cash flows—significantly higher than
That is no longer the case today, ladies
South Africa, the US, Chile, Australia,
and gentlemen. The “party’s over”, and
and Peru—all large mining countries.”
the volatility clouding the industry
To recall what I said in last year’s
Mr. Gerry Brimo, my colleague in the
worldwide is evident in these reports:
conference, we noted that about 16
Chamber from Nickel Asia, will explain
on revenue sharing for mining.
billion dollars in mining investments
this in deeper detail later. But in a
1) Global gold exploration activities
that were supposed to happen during
nutshell, the country’s current MPSA
have dropped by a huge 55% since 2010,
this administration will not happen.
tax regime is at par with the rest of the
according to research firm IntierraRMG
Let me tell you now that investments
mining world today, while under an
in its State of the Market: Exploration
in the next three years will certainly,
FTAA regime, the Philippines becomes
Edition report.
dramatically go down. We warned
a less attractive alternative for mining
investors.
2) The global mining outlook is
“deeply troubled” as profits decline, cost
government of that in 2012, and sadly it
is happening.
pressures increase and planned capital
We have a feeling that government has
expenditures weaken, according to the
Why are investors staying away? To be
only looked at mining’s earnings from
PricewaterhouseCoopers tenth annual
frank, it is because of proposals like the
year to year and only sees a rise in profits,
global report titled Mine: A Confidence
one being floated recently – a 10 percent
which makes it keen to tax the industry
Crisis.
gross (or 50 percent net) excise tax on
more. This tack is patently unfair to us,
mining. This regime will simply kill the
because it fails to consider years when
It is under this cloud that significant
mining industry, not only as expressed
mining companies don’t make money
mining projects worldwide are being
by us but by the Joint Foreign Chambers
–the AETR formula considers all the
reviewed – and we have one of the
and other Philippine business groups.
realities of mining including the “down”
biggest in the world in the Tampakan
If this proposal is allowed to prosper,
years.
Gold and Copper Project in Mindanao,
it would certainly push the Philippine
under one of our members, Sagittarius
mining
Looking at the profits alone also
Mines Inc. or SMI. A real example on
uncompetitive position. As a recent
conveniently ignores the reality that
why we appeal to the government to
visitor to the country -- my good friend
mining companies are the ones that
look at our industry not just year-by-year
Mitch Hooke, CEO of the Minerals
risk the multibillion capital required to
but on a long-term reality based model.
Council of Australia – said, that kind of
develop the country’s mineral resources.
industry
into
a
most
tax regime is so high “it would put us on
We take the risk of exploration, build the
Adding to the uncertainties of our
top of Mount Everest”, and we would all
roads, power plants, water supply …
industry is that the Mining Act is again
die of hypothermia.
build a whole town from nothing and
under being subjected to review. If you
develop it to first class municipalities
have glimpsed at the oral arguments
If the argument used by some of our
with no expense to government. Oh,
at the Supreme Court, mining has
critics that the Philippine mining tax
plus don’t forget all the permits and
become an emotional argument by
regime is truly unfair and biased in
taxes.
anti-mining groups – when it should
favour of foreign investors is true, then
be a sober, intellectual discussion that
we should be swimming in billions of
and
seeks to strengthen and further develop
dollar of investments – which would
delays in government’s formulation of
our natural assets rather than further
lead to thousands of new jobs, new
its fiscal regime for mining, there may be
damaging our competitiveness with
roads
a silver lining. When we – government,
changing rules and unstable policy
socio-economic benefits to millions
the Chamber of Mines and other
regimes. This is where we hope your
of Filipinos prospering in a dynamic
stakeholders – began to review the
presence, Mr. Senate President, can
to page 7
In these protracted discussions
and
infrastructure,
resulting
7
Welcome remarks for
Mining Philippines
2013
scale mining companies are the biggest
interesting times since … well as far as I
reforesters. We plant more trees every
can remember. To be fair, there is already
year than any of our critics combined can
a good momentum. Our country has the
in their lifetime.
mineral wealth potential. We have the
from page 6
science, the technology, the capital and
economy. That’s what will happen in a
We will show you how we contribute
most important, the responsible miners
competitive environment.
billions of pesos yearly to environmental
to turn rocks to riches.
protection and enhancement programs.
Thank you and enjoy the conference.
Obviously that is not the case for
us. None of the world’s top mining
We will show you how we have enriched
companies are operating in the
and continue to enrich the lives of
Philippines right now. The decision
thousands of families by providing free
of one big player, Glencore Xtrata,
health and education.
Mining Philippines Newsletter
to reduce its footing in the country
through SMI and Tampakan due to
We will show you how we build whole
regulatory uncertainty is proof that
communities in the middle of nowhere.
we do not have the right investment
Places that government will never go to
environment. There are just too many
if not for mining.
conflicts to deal with.
We will show you how we build Quality
What are examples of these conflicts?
infrastructure such as roads, schools,
• The lack of governance in some
churches, hospitals, water supply, power
parts of the country lead to illegal
supply, every conceivable need of the
small-scale mining. We seem to have
stakeholders.
no political will to stop this harmful
practice to our environment, but there
We will show you how we give hundreds
apparently is an abundance of will
of thousands of Filipinos the opportunity
to legislate more taxes on legitimate
to work for above-average wages, and
mining companies.
their families’ capital for business and
• The industry is faced with the
livelihood programs.
the Executive branch of government
We will show you how we are partners
– remember the “10/50” proposal I
with indigenous peoples and our host
mentioned earlier?
mining communities to give them a
investments, a shrinking investment
better standard of living they otherwise
would not receive in if not for mining.
environment, decreasing metals prices
and other external concerns.
We do all of these and not because of
regulation
but
because
responsible
Yet we are still here in this conference.
mining is good for everyone. This way
The Chamber and our members will
everybody wins. We want to do this,
show you what responsible corporate
we want to do more and we are ready.
citizenship is and how the industry is
All we need is a clear, consistent, and
committed to be a long term nation
competitive policy.
building partner.
Mr. Senate President, we hope that you
We will show you that contrary to the
can help us become a game changing
environmental critics, legitimate large-
industry. We
have
ARTEMIO F. DISINI
Chairman
BENJAMIN PHILIP G. ROMUALDEZ
President
NELIA C. HALCON
Executive Vice President
RONALD REX RECIDORO
Vice President for Legal and Policy
Newsletter Staff:
JIMBO OWEN B. GULE
Communications Manager
COMP Communications Committee
Roy Antonio, Manolo Labor,, Arnold
Romero (Sagittarius Mines, Inc.); John
Ridsdel, Kaycee Crisostomo (TVI
Philippines); Rochelle Hilario, Atty.
Francis Ballesteros (Philex Mining),;
Michael Garcia, Rhea Roxas (Atlas
Consolidated); Chito Gozar, Marie Joy
Josue (OceanaGold Philippines); JB
Baylon (Nickel Asia Corp.)
REVJON OBLEA
Design & Layout
prospect of more taxes as voiced by
• The global slowdown in mining
Official Quarterly Publication of the
Chamber of Mines of the Philippines
been
living
in
For questions, comments, suggestions, and
article or photo contributions, please email
[email protected], or contact
(02) 635-4123 to 24, (02) 635-4159, and (02)
635-4160 (fax).
8
8
Closing remarks for Mining Philippines 2013
Prof. Artemio F. Disini
Chairman, Chamber of Mines of the Philippines
Members of the diplomatic
corps, officials of government,
our speakers and discussants,
honored delegates and guests,
ladies and gentlemen, good
evening.
responsible mining as a game changing
Industry Coordinating Council (MICC)
economic partner for all Filipinos and
to determine the nature of equitable
yes, a partner of the environment. So, to
sharing going forward. The Chamber has
enumerate the lessons:
always believed that a stable regulatory
regime is the foundation upon which to
NUMBER ONE: WE DISCUSSED THE
build confidence in investment stability
URGENCY
in the Philippines and allay international
FOR
AN
EQUITABLE,
We have come to the conclusion of
COMPETITIVE FISCAL REGIME. To be
fears of economic risk.
our Mining Philippines Conference
equitable, the new fiscal regime needs
and Exhibition, and on behalf of my
to be fair to both government and
NUMBER
colleagues on the Board of Directors and
mining contractors. To be competitive,
TRANSPARENCY. At the very start of the
the officers, staff, and members of the
it needs to offer a fair rate on the
conference, we said that transparency
Chamber of Mines of the Philippines, we
investment when compared to regimes
is essential to establish the benefits
thank each sponsor, delegate, exhibitor,
of other countries like Indonesia, Chile,
of responsible minerals development.
worker and visitor who has made this
and South Africa, while considering
We should adopt international best
event a success. Please join me in giving
the country’s level of investment risk,
practices like the EITI and the Global
them – all of us, really – a well-deserved
infrastructure, security, and industry
Reporting Initiative to promote good
round of applause.
support.
governance and integrity.
… and let me digress by thanking too
Stability and consistency in both
Transparency in the industry lends to
the men and women of our venue host,
national and local government policy
better government policy, removes
Sofitel Philippine Plaza Hotel, for taking
on mining are also essential if the
the cloud of uncertainty, and lends to
great care of us.
Philippines wants to attract significant
sober, intellectual discussions that can
investments in the industry. The best
strengthen and further develop our
But truthfully, we can’t pat ourselves
indicators of our competitiveness are
natural assets. It allows us to show what
on the back just yet. If there’s anything
easy to monitor: sizable domestic and
responsible corporate citizenship is and
we’ve learned over the last three days,
foreign investments and a flourishing
how the industry is committed to be a
it’s that the road ahead of us will be long,
mining industry indicate a competitive
long term nation building partner.
arduous and very interesting.
tax regime.
TWO:
WE
DISCUSSED
And to echo what our keynote speaker,
To travel this road, it’s important to carry
That said, crafting a competitive tax
the honorable Senate President Franklin
with us the lessons of the past three
regime is not that simple; there is a
M. Drilon, said on Tuesday, and I quote:
days so that all of us will be guided by
whole range of ideas that need to be
“The road to mining development must
the critical messages that we all have
discussed, and it’s a continuing effort
be paved, not just with good intentions,
to echo to our stakeholders and most
where studies and models need to be
but also with serious reforms. At this
specially, our government leaders. We
done.
point, we must explore all possible
were blessed by the presence of the best
and feasible ways to level the playing
minds of the industry who were able to
Whatever the government position is,
field. It is imperative that we practice
demonstrate the enormous potential of
we are still working with the Mining
transparency.”
to page 9
9
Closing remarks for
Mining Philippines
2013
from page 8
NUMBER
THREE:
mining, and the large-scale mining
new technologies and processes that
industry is ready and committed to be
help protect and nurture nature.
a long term partner in nation building.
While we try to cover all these bases,
NUMBER FOUR: WE DISCUSSED HOW
we
have
agreed
industry
DISCUSSED
CRITICAL IT WOULD BE TO CRAFT
to
AND
SOCIAL
THE RIGHT POLICY AND THE NEED TO
and frequency the true benefits of
RESPONSIBILITY. The inconsistencies
COMMUNICATE EFFECTIVELY.
As we
responsible minerals development to
of our government’s mining policy has
personally discussed with the media
the Filipino public and the government
sadly resulted in the dramatic decrease
two days ago, it’s not about agreeing to
leadership.
in investments. One of our speakers,
a magic number as an excise tax figure
former Environment Secretary Horacio
for mining that will solve all of our
Our annual conference is one such
Ramos, hit the nail on the head when he
problems. The plenary sessions we held
platform, but in the days, weeks and
said that since the issuance of Executive
today show the many facets and the
months ahead we will also need to put
Order No. 79, the industry has been in a
whole gamut of issues that need to be
forward our messages through both
virtual standstill.
resolved first to create the right mining
traditional and online or social media. To
policy.
help win public opinion for our industry,
Therefore, in the following weeks
in
an
WE
CONSISTENCY
communicate
as
greater
detail
we need all of your support, and I thank
and months, we will work with the
We need to look at the present mining
once again Mr. Mick Wilkes of Oceana
government to establish a fiscal regime
taxation and see how that will put us
Gold for making the call to support the
for mining that is clear, internationally
in a competitive position in the global
Chamber and make mining strong.
competitive, equitable and progressive.
market.
We will do this to remove the
Let me close by saying that not all
uncertainties and delays in mining
We need to effectively communicate
is bleak with the Philippine mining
project developments that could really
the great value of a strong mining
industry. Our country is still blessed with
help our nation move forward.
industry, its multiplier effect, and that
nearly a trillion dollars’ worth of mineral
mining operations actually provide not
deposits. We are still in a position to
And we need to do this quickly, because
only for our host mining communities
take advantage of constant, if not rising,
as Horace Ramos said, “we do not want
but to the whole country.
demand for our nickel, gold, copper, and
to see the time when we have the best
even rare elements like scandium.
mining policies, yet have no industry
Mr. Peter Wallace gave his usual
to speak of” because investors have
forthright opinion in his column and I
We have the science, the technology,
decided to stay away for good.
quote: “About P370 billion -- that’s how
the capital and most important, the
much the Philippines will lose this year
responsible miners to turn our rocks into
Still, the investors who have decided
and over the next four years because
currency that will be invested in much
to stay have shown us that indeed,
of government’s aversion to mining.
needed infrastructure, schools, hospitals,
responsible
That amount would pay for health and
water,
education three times over.”
communities that will benefit millions of
mining
is
good
for
everyone, not just ourselves. We only
have to look at the examples of Oceana
electricity,
and
prosperous
Filipinos for many generations.
Gold in Didipio, Atlas Consolidated
And even as we craft these policies,
in Cebu, and even Sagittarius Mines
we should not forget our greater
We hold out hope not just for ourselves
in Tampakan – who continue to
responsibility
the
but for the people we ultimately serve
generously spend tons of dollars in
environment, to keep in mind what
– the Filipino people who truly own the
their communities, patiently waiting
Senate President Drilon said of the
mineral resources we develop.
for the day when they can finally
purpose of our Mining Philippines
start producing their first ounce of
Conference: to compare best practices,
Thank you, ladies and gentlemen, and
ore. Everybody wins with responsible
share new techniques, and showcase
we hope to see you all again next year!
as
stewards
of
10
10
Philippine membership to EITI
will ensure reforms
Atty. Alessandra Ordenes,
National Coordinator of the
Philippines EITI Secretariat
The global Extractive Industry
Transparency
Initiative
(EITI) is a forward step in
combatting corruption and the
misappropriation of funds, so
that the wealth generated by
mining firms can serve as an
engine of economic growth
and contribute to sustainable
development and the reduction
of poverty, a World Bank official
said at the Mining Philippines
2013 Conference in Manila.
“The new EITI standards are streamlined,
the data obtained will satisfy the EITI
structured around the EI value chain
requirement.
to permit multi-stakeholder groups
to be better informed. With EITI, it can
“They
have
a
requirement
of
and will deliver efficient and effective
disaggregation; what they want is that
management of the mining sector,” he
it should be for a per benefit stream, per
added.
project, per company reporting. There is
a standard,” she said.
With the ongoing reforms being
implemented
sharing
Ordenes said the Philippine group will
mining
come up with a draft and publication
companies, an EITI process should ease
of their EITI validation report by July of
perceptions of the lack of economic
2016.
between
in
revenue
government
and
contributions of the sector.
“Adopt
international
and
best
policy
and
The private sector has long initiated
finalized, because we are still in the
competitiveness will help gain the
the Philippines’ membership into the
process of looking at the data from the
Philippines in International markets.
EITI, led by the Chamber of Mines of the
BIR (Bureau of the Internal Revenue)
This will also ensure the protection of
Philippines (COMP) as early as 2005.
and the MGB (Mines and Geosciences
practices.
The
good
“We are not sure yet when this will
environment by adopting technology
Bureau),” she said.
and scientific methods as well as
According to the Chamber, transparency
indigenous best practices,” said Dr.
should remove the cloud of doubt
Ordenes also clarified the misconception
Michael Stanley, The World Bank’s Lead
against mining, which has been paying
of the confidentiality provisions of the
Mining Expert in Asia for Oil, Gas, &
an average of P10 billion in taxes yearly
National Internal Revenue Code. “There
Mining Development.
from 2007 to 2011.
is a provision on the NIRC on the revenue
disclosure of the taxpayers; right now,
The EITI is a global transparency
The EITI aims to reconcile tax and royalty
the MSG (Multi Stakeholder Group) is
standard that ensures disclosure of
payments reported.
looking into the matter in principle. The
government revenues from natural
industries have agreed to come up with
resources. The Philippines was recently
On other hand, Atty. Alessandra Ordenes,
a waiver of the confidentiality but that is
admitted as an EITI candidate in May
National Coordinator of the Philippines
still being drafted, so nothing is final yet,
2013.
EITI Secretariat, revealed that the new
it is still being discussed by the member.”
EITI rules require revalidation only every
The EITI will not violate Philippine
after three years instead of five.
Constitution and the professional law on
A
country
that
implements
the
EITI standard will ensure greater
accounting, as it will allow foreigners to
transparency of the payments to the
However,
Ordenes
(picture
above)
government from oil, gas and mining
admits one of the challenges facing
companies, Stanley said.
EITI implementation is not just the
collection of data but making sure
conduct audit of tax in the Philippines,
Ordenes explained.
“That is actually a misconception,
to page 11
11
Uncertain mining policy can cause
demise of the industry
Engr. Horacio C. Ramos
President, Clariden Holdings
The government started mining
industry reforms with the
issuance of Executive Order No.
79 in September 2012, aimed at
increasing the government share
in mining revenues.
“There will be uncertainties and delays
companies could hardly make a profit,
in mining project developments. Hope
Ramos said.
we don’t see the time when we have
the best mining policies, yet have no
It is unfortunate, he added, that many
industry to speak of,” he said.
perceive that the government only
gets two percent of the gross value of
“Many are opining that the FTAA fiscal
minerals in the form of excise tax, plus
Since then, however, uncertainties have
regime is a sell-out, unfair to the country.
corporate taxes under the currently
hounded the industry and have already
Yet no company granted with an FTAA
implemented MPSA regime.
caused investors’ departure from the
is operating, which can tell us if this
country, according to Engr. Horacio C.
sharing scheme is faulty. Shouldn’t we
“In reality, this (particularly MPSA)
Ramos, president of Clariden Holdings,
allow it first to be implemented before
includes all other direct and indirect
a San Miguel Corp. subsidiary that is
thinking of changing the framework?”
taxes that (all) end up in government
buying into metallic mining properties.
he said.
coffers—the total tax take,” said Ramos.
“The government must move fast. Since
The lone operating FTAA contractor in
Ramos, also a former Mines and
the issuance of Executive Order No. 79,
the country, Oceana Gold Philippines,
Geosciences Bureau director, supported
the Philippine mining industry has been
opened its Didipio gold-copper mine in
the Chamber of Mines of the Philippines’
in virtual standstill. Unless the situation
Nueva Vizcaya just last April.
proposal for a simplified fiscal regime
is stabilized, there will be uncertainties,”
that is equitable and competitive.
said Ramos, a former Department of
There
Environment and Natural Resources
recommendations
(DENR) secretary, who spoke at the
to come up with a revenue sharing
Mining Philippines 2013 Conference
scheme that considers the low times of
and Exhibition.
mining when metal prices are low and
Philippine
membership to EITI
will ensure reforms
from page 10
because it is the independent reconciler
have
been
for
strong
government
countries are compliant.
by a multi-stakeholder group composed
of representatives of the government,
EITI emerged as a global agreement
which are the Department of Energy,
announced at the 2002 World Summit
Department of Environment and Natural
for
Resources,
Sustainable
Development
in
Johannesburg.
who will conduct the audit and will be
of
Interior
and Local Government, Department
of Finance and the Union of Local
done through a local auditing firm,” she
“This will increase the integrity of
said.
information and provide a level playing
field for industry players,” she said.
There are presently 37 countries
implementing EITI rules of which 21
Department
Authorities of the Philippines.
COMP, the Petroleum Association of
the Philippines and Bantay Kita are also
In the Philippines, the EITI is governed
members.
12
12
Mining investors seek stable
business environment
Mick Wilkes
Managing Director and CEO
Oceana Gold Philippines Inc. (OGPI)
Mining investors expect a stable
environment that could make
operations more predictable
and enable the influx of more
investments that can make
mining contribute more to
GDP (gross domestic product)
growth.
Kasibu, Nueva Vizcaya. It projects an
“You may get a greater percentage of
$8.5-billion benefit to the Philippine
nothing because they’re changing the
economy in terms of its multiplier effect
rules. It’s a very sensitive thing. The
behind its estimated $3.3-billion export
model that we used for funding may no
revenue.
longer be viable,” Boswell added.
“Mining by itself is capital intensive. You
Even Filipino mining firms are concerned
have to put in a lot of money to find it
by the ongoing fiscal review.
(resources). If you’re lucky enough to
Government
contractors
including
find it, you’ve got to have hundreds
Clariden Holdings, a unit under San
New Zealand-based Oceana Gold, MRL
of millions if not billions of dollars to
Miguel Corp. that is buying into metallic
Gold, and Atlas Consolidated Mining
develop it,” Wilkes said. “To make that
mining properties, cannot immediately
Corp. expressed interest to see a stable
decision to invest that money, you need
pursue acquisition plans due to the
fiscal regime in the country.
certainty that the tax regime will not
moratorium on new mining permit
change. It’s very important.”
issuances.
operating Financial and Technical
Meanwhile, MRL Gold Inc., a subsidiary
“We’re having problems with rights
Assistance
of the Singaporean Red Mountain
because new issuances for MPSA
not
company, has two mineral production
had been stopped.
midstream,
sharing agreement (MPSA) contracts
is not only MPSA. The NCIP (National
according to Mick Wilkes, Oceana
to develop a gold project in Lobo,
Commission on Indigenous People)
Gold Philippines Inc. (OGPI) managing
Batangas.
followed suit. They’re not giving free
Oceana Gold, the country’s only
contractor,
suddenly
Agreement
hopes
rules
change
(FTAA)
will
director and CEO (picture above).
The other thing
and prior informed consent to new
While MRL Gold believes it may not be
applications,” said Clariden president
“The FTAA is a contract between
affected by the ongoing government
Engr. Horacio Ramos.
Oceana Gold as contractor and the
review on revenue sharing, it may not
government. We invested on the basis
pursue mine development if rules are
Foreign investors are “imperative” to
of that tax regime which is on the high
changed to its disadvantage.
mining development, added Ramos,
side. We’re hoping to get a comfortable
a former environment secretary and
return from Didipio even though the
“If
tax is high. That’s the contract that
development and get it into production
we entered into,” said Wilkes on the
under the current fiscal regime, then
sidelines of the Mining Philippines
we’ll start to work on the financial
“Mining is highly capital intensive.
2013 Conference and Exhibition.
models. Then we go to the banks and
The money you can utilize to explore
say, ‘This is the fiscal regime, you lend
development is normally not in the
OGPI, which launched commercial
us the money.’ If government changes it,
Philippines. You access it abroad, so you
operation on April 1 this year, has
we may not get the funding,” said MRL
need foreign banks,” he said.
poured in close to $500 million into
Gold Inc. Philippines Manager Geoff
the copper-gold project in Didipio,
Boswell.
we
are
allowed
to
pursue
director of the Mines and Geosciences
Bureau.
to page 13
13
Philippine mining fiscal regime
not globally competitive
Justin Hillier
Executive Vice President
Sagittarius Mines Inc.
The government must craft
a simplified fiscal regime
for mining that would be
internationally
competitive,
equitable and progressive,
according to the Chamber of
Mines of the Philippines (COMP).
because of its rich mineral deposits,
proceeds between government and
the current mining fiscal regime is not
investors;
globally competitive compared to other
countries, said Hillier (picture above).
• delivers a higher and steady revenue
stream to government;
• is progressive; and
“The Philippines should be competitive.
• is streamlined, enabling government
If we can end up somewhere, in terms
to collect revenues in an efficient and
of government share, like Chile has
transparent manner.
Justin Hillier, Executive Vice President
in its mining projects, that would be a
of Sagittarius Mines Inc., representing
reasonable outcome for the Philippines
The
the position of COMP in a presentation
as it will attract more investments in
two different sets of taxes for mining
at
mining,” he said.
companies depending on their contract
the
Mining
Philippines
2013
Conference and Exhibition in Manila,
Philippines
currently
imposes
with the government. The contracts
said the country’s current fiscal regime
Other criteria that need to be taken into
are either for a Financial or Technical
is not at all competitive.
consideration in developing a single
Assistance Agreement (FTAA) or a
fiscal regime for mining, Hillier said, is
Mineral Production Sharing Agreement
one
(MPSA).
Though it may be an attractive
destination
for
mining
investors
Mining investors
seek stable business
environment
from page 12
to page 14
• that ensures an equitable share of
is the adoption of a “big brother, small
is on hold while the fiscal regime
brother” tie-up.
review is ongoing, said Atlas Executive
Vice President Adrian Ramos. Costs
“Foreign groups should joint venture
of projects that can be easily put to
with Filipino companies as big brother
production are also more prohibitive.
Assuming Philippine companies have
on 50-50 sharing or whatever system
capital, they still could not carry out
there can be, defining the role of each.
“We’re evaluating most copper and
many big projects, Ramos added.
One can take care of the operations, the
gold (prospects). But most MPSAs are
other takes care of the social, political
quite expensive,” Ramos said.
“Filipino companies with capital like San
tasks,” he said.
Miguel can get foreign loans. But that’s
Jose P. Leviste, OGPI chairman, quoted
not all. What about technology? Who
Meanwhile, Atlas Consolidated Mining
a Department of Finance statement
among us, despite being big like Philex
has also been eyeing new projects to
that given more investment in mining,
or Atlas, can operate a big mine like
make its operations sustainable even
the Philippines can hit an additional
Tampakan? None. It has to be foreign
after the exhaustion of its Carmen
two percent growth in gross domestic
firms with technical experience.”
copper mine in Cebu.
product even on top of the 7.8 percent
growth registered by the country in
Ramos said the best approach to a
But it could not pour in investments in
foreign partnership policy on mining
exploration since new permit approval
the first quarter of 2013.
14
14
Philippine mining
fiscal regime not
globally competitive
from page 13
In his presentation, Hillier compared compared
to
developed
countries
the country’s mining fiscal regime with like Canada. Risks are higher in less
that of Chile, Peru, Canada, South Africa, developed countries and investments
Australia, Indonesia and Papua New in infrastructure like power and roads
Guinea using the Average Effective Tax are higher.
Rate (AETR) and Internal Rate of Return
Taxes for the FTAA and MPSA are both
(IRR).
Using a model of a copper mine that
high, as cited by the International
He said despite the tax holidays, mining has a $3.1-billion value of resources on
Monetary Fund report which puts the
companies operating in the Philippines the ground, this mine would generate
government’s take in the total cost of
pay taxes more than the other countries an internal rate of return (IRR) of 11.9
the mining project at above 50 percent,
noted above in comparison. This tends percent under the tax regime of Canada,
Hillier noted.
to discourage investors, he said, citing a developed country, Hillier explained.
reasons why other countries have But in Papua New Guinea, which is a
In order for the Philippines’ mining fiscal
attracted more mining investments than developing country where risks for
regime to move forward, Hillier said
the Philippines.
investors are higher, the IRR—a figure
that apart from being internationally
used to measure and compare the
competitive, it should also “encourage
“Compared
to
other
international profitability of investments—is higher
investments in the Philippines mineral
regimes, the regime in the Philippines at 14.9 percent. Using the same model
resources industry and enable the
is very complex in terms of number of copper mine under the Philippine FTAA,
country to realize its resources potential.” different taxes and royalties that the the IRR is even lower at 11.5 percent,
“It should also achieve an equitable share
mine needs to administer and also for Hillier added.
of proceeds between government and
the government to administer. If we can
investors, which delivers a higher and
bring that back to a small number, I think Meanwhile, Dr. Allan Trench, managing
steady revenue stream to government,” that will be beneficial,” said Hillier.
consultant of the CRU Group, said the
he added.
Philippines should follow the example
“There is an ongoing discussion between of Chile in its attractive mining policy for
“It should also be streamlined, enabling
the Chamber and the representatives investors, as it is rated No. 1 by investors
government to collect revenues in an
of the Mining Industry Coordinating based on a recent Fraser Institute survey
efficient and transparent manner,” Hillier
Council (MICC) in charge of putting that considers three criteria, including
said.
together the new fiscal regime under mineral potential and mining fiscal
the EO (Executive Order) 79. And as part policy.
“In terms of having one versus two
of that, the COMP has put forward its
regimes, there are variations in each
recommendation and argument which “Chile’s investment policy is five to six
regime; the reason of bringing it back to
is sort out today and what it believes times more attractive than any place
one regime is simplicity. So when foreign
what the share should be,” he said.
investors come in the country, whether
in the world, including the Philippines,
even if the Philippines also has huge
there is 39 percent of the project or 41
Hillier noted that mining investors really mineral potential,” said Trench.
percent of the project, it is all about one
expect a higher rate of return in less
regime,” he explained.
developed countries like the Philippines
15
WB’s Stanley: Economic linkages,
multiplier effect of mineral
development sector can sustain
bigger growth
The
government
should
maximize “economic linkages”
from mining so it will contribute
to national development even
when the Philippines finally
comes out with a stable and
competitive tax regime.
Michael Stanley
Lead Expert, Sustainable Energy,
Oil, Gas, & Mining Department
World Bank Group
comparison to other countries. However,
The resource curse or “Paradox of
having affirmed that the AETR system is
Plenty” concept refers to conclusions
of international standard, Stanley said
that countries rich in natural resources,
the Philippines should concentrate on
like minerals or oil and gas, are inclined
using mining operations to create a
to be less economically developed, as
domino effect in rural economic activity.
these depend on highly-volatile foreign
revenue sources. The concept is largely
“What government should focus on is
associated with oil-producing countries
A framework called Average Effective
on a more robust curve ... It actually
in the Middle East, including Iraq, Iran,
Tax Rate (AETR), which compares
becomes a better curve than the mine
Saudi Arabia, and Kuwait.
taxation between mining countries,
(tax) curve itself. Revenue comes not
has indicated that the Philippines has
only from the mine itself but from other
The Philippines, under the AETR “apples
among the world’s highest tax rates
services it creates,” Stanley said.
to apples” comparison system, has
for mining based on an International
Monetary Fund (IMF) report.
been tagged as having among the
Stanley (picture aboved) assured that
highest mining tax charges, particularly
the Philippines can avoid the feared
standing at around 60 percent of the
Michael Stanley, the World Bank
“resource curse” concept by ensuring
total value of a mine project for the
Group’s
that
MPSA or mineral production sharing
Mining
Expert,
affirmed
revenues
from
mining
are
during the Mining Philippines 2013
managed and used properly for rural
Conference that the use of the
development.
AETR as a tax comparison system
agreement contract.
Local mining tax impositions could go as
between countries is “internationally
“Resource curse countries are those that
high as 80 percent for the FTAA contract
acceptable.”
fail to use (resource revenues) from the
or financial and technical assistance
mines that leads to the curse, as these
agreement that was designed to attract
AETR is a way of measuring if a country
countries have the fewest economic
foreign investors to Philippine mining.
has a high or low tax imposition in
linkages,” he said.
COMP sends letter to MICC detailing WB, IFC,
AIM findings on mining tax
In an effort to better frame
the current discussions on
the mining fiscal regime, the
Chamber of Mines of the
Philippines (COMP) has written
President Benigno Aquino III
through the Mining Industry
Coordinating Council (MICC),
detailing recent findings by
experts who appeared at
the Mining Philippines 2013
Conference and Exhibition.
addressed to President Aquino through
MICC
co-chairman
and
Finance
Secretary Cesar V. Purisima.
COMP President Benjamin Philip G.
Romualdez and board director Gerard H.
The letter, sent September 25, was
to page 16
16
16
COMP sends letter to
MICC detailing WB,
IFC, AIM findings on
mining tax
from page 15
collectively, the experts’ findings “are structure, which will allow government
significant and we feel should be taken a larger take when mineral prices are
into consideration by government.”
high, will go a long way to achieving the
industry’s growth, they added.
“We fully understand the desire for
government to optimize benefits from The COMP officials stressed that the
the extraction of the country’s mineral Chamber is “happy to continue its
Brimo detailed the research findings of
resources, but we strongly feel that the dialogue with the MICC on a new tax
experts from the International Monetary
mining fiscal policy reform should be structure” despite several tax proposals
Fund (IMF) and the Asian Institute
studied well and deliberated carefully,” already being prepared by the Council.
of Management (AIM) Policy Center
the COMP officials said.
“We
and statements from officials of the
have
noted
government’s
World Bank and International Finance
“Our apprehension is that government perspectives on our industry and are
Corporation (IFC) during the Mining
seems to be engrossed at arriving at a keenly aware of the need to balance
Philippines 2013 Conference.
tax take on gross revenues that could environmental and social concerns with
be regressive and make the industry mineral resource development,” the
“It is our hope that by updating you of
uncompetitive,” they added.
letter began.
these findings by experts… regarding
the country’s fiscal regime for mining,
Romualdez and Brimo pointed out that “We also appreciate the fact that
we would be able to frame the fiscal
government’s tax take can substantially government, as mentioned by Senate
regime discussion in a different light
increase “not from those operating President (Franklin) Drilon (who was the
and give a global perspective on how
and paying substantial taxes, but from keynote speaker of Mining Philippines
mining is viewed by economists as a key
having the right policies that encourages 2013), considers responsible minerals
factor in growing a nation’s economy,”
the growth of a responsible, large-scale development as a growth driver of the
the letter to the President said.
mining industry.”
economy, and we are committed to live
up to that expectation.”
Romualdez and Brimo said that taken
A competitive and progressive fiscal
COMP places ads to support positions
on Mining Act, revenue sharing
To support its positions on the
constitutionality of the Mining
Act in the Supreme Court and the
discussions on mining revenue
sharing with the government,
the Chamber of Mines of the
Philippines (COMP) drafted and
placed advertisements in several
newspapers and magazines
starting in August.
Inquirer, Philippine Star, Manila Bulletin, The first newspaper ad, titled “Green
Manila Standard Today, Business World Mining:
and Business Mirror. The ads carried the Act
How
the
protects
our
1995
Mining
environment,”
tag line “We think, we care, we invest details what mining companies do
and we act.”
before
constructing
a
mine
site,
during operations and after mine
In addition, COMP sealed a 10-issue decommissioning, along with beforeadvertising contract with the Philippine and-after pictures of mine sites such as
Rotary Magazine, the official monthly Sibutad in Zamboanga del Norte and
magazine of the Rotary Club in the Rio Tuba in Palawan.
Philippines, starting with its September
Through the COMP Communications
2013 issue and carrying the same ad This ad drew interest even from anti-
Committee, full-page ads were crafted
material run in the newspapers.
and placed with the Philippine Daily
mining groups. COMP learned that
to page 16
17
MGB opposes “10-50” single
tax scheme for mining
The
Mining
Industry
Coordinating Council (MICC)
may scrap the proposed unified
tax collection scheme for the
mining industry in a bill it drafted
following a concern raised by
the Mines and Geosciences
Bureau (MGB).
MGB Director Leo Jasareno wrote
areas,” Jasareno said.
Nestor Arcansalin, director of the
Resource Base Industries Department of
Paje said MGB’s proposal will still go
the Board of Investments, saying the tax
through deliberations by MICC.
scheme being eyed will result in lower
government share in mining revenues.
MICC is an inter-agency body created
by virtue of Executive Order No. 79 – the
“For instance, in the case of the gross
Aquino administration’s mining policy.
production value of mining for the year
The council is tasked to formulate a fair
Under the draft bill titled “Philippine
2011, which is P163.2 billion, the total
revenue-sharing arrangement between
Mining Revenue Sharing Arrangement
taxes paid by mining contractors during
government and mining firms.
Act of 2013,” MICC seeks a government
the same year amounted to P22.2
share of 10% of gross production value
billion. This is equivalent to 13.6% of
“Whatever we submit to the President
of mining projects or 50% of gross
gross production value,” he explained.
and to Congress should be better than
income, whichever is higher.
the existing revenue-sharing scheme,”
“If this is the case, we are instead
Environment
Secretary
Paje stressed.
Ramon
proposing to just implement the
Paje said the MGB raised a concern
present fiscal tax regime but less the
“And
regarding the proposal and submitted
incentives plus 5% of the gross sales
resources. We should be able to get an
its own recommendation to the
as royalty payment, applicable to both
equitable share from it,” he added.
council.
mineral and non-mineral reservation
COMP places ads to
support positions on
Mining Act, revenue
sharing
natural
resources
are
finite
The second ad bore the headline “What
development for future generations,
a vibrant and responsible minerals
through a stable platform for responsible
development industry can do for the
minerals development in the country.”
Philippines.” Using check boxes, the ad
provide the country a higher GDP (gross
Magazine, meanwhile, are found in the
domestic product), more jobs, more
inside-front cover until its June 2014
lawyer Christian Monsod asked the
government revenues, helps poverty
edition. Digital copies of the ads will be
Mines and Geosciences Bureau (MGB)
alleviation, and environment protection
posted on www.chamberofmines.com.
if the facts detailed in the Green Mining
leading to inclusive growth.
ph.
ad were accurate, and reportedly asked
the bureau for more data on the Mining
These benefits, the second ad stressed,
Act’s environmental provisions.
“will lead to a continuous and sustained
in
Rotary
COMP’s
from page 15
ads
Philippine
indicated that the mining industry can
18
18
SMI revising approach on Tampakan Project
(Note: This is the full, unedited version of Sagittarius Mines Inc.’s press release on
12 August 2013. This can also be found online at www.smi.com.ph)
SMI will be taking a new
approach to the Tampakan
Copper-Gold Project as part
of an effort to place particular
focus on a number of the key
challenges facing the Project.
facing the Tampakan Project include the
address these challenges.
resolution of the South Cotabato openpit mining ban, the definition of the
“This plan will reduce current activity
pathways to project approvals from all
levels and expenditure on the Project,
levels of government, and the gaining
and regrettably this reduced activity
of consent and the resettlement of
and expenditure will result in staff
impacted communities,” Hillier said.
downsizing and a reduction in the
SMI Executive Vice-President, Justin
utilization of contractors.
Hillier, said that after consideration
“With
of a range of options presented by
unresolved, it has not proved possible
“This decision has not been taken lightly;
SMI management, shareholders have
to make adequate progress toward
however, we expect it will take some
endorsed a revised approach for the
our Project goals and, without a
time to resolve these complex matters
Project, with a renewed focus on
fundamental
effectively before the Project can again
enhancing collaboration with National
progress is unlikely to improve in the
Government
other
foreseeable future. Therefore, it is timely
stakeholders, to resolve the challenges
for a change of approach to give the
“We will continue to support our host
facing the Project.
Project every opportunity to progress in
communities through our committed
a reasonable timeframe,” he said.
development programs.
carried out a review of the Project
“Today we have commenced a revised
“The Tampakan deposit is a world-class
including an assessment of progress
work plan that tightens our focus
resource, and SMI remains committed
to date, ongoing and emerging
on resolving these issues. We look
to working with our key stakeholders
challenges, and the current approach
forward to working with the National
to resolving the current challenges
to advancing the Project.
Government
facing the Project, and realizing its full
“The outstanding issues and challenges
Industry
partners
and
these
challenges
change
in
as
yet
approach,
resume a path toward development.
“Over the past few months SMI has
Economic effects of mining
is exponential, says top
economist Villegas
through
Coordinating
the
Mining
Council
to
potential.”
Dr. Bernardo M. Villegas
Co-founder of the Center for Research and
Communication (CRC) and Vice President of the
University of Asia and the Pacific (UA&P)
There is no doubt that the
Philippine mining industry
makes a significant contribution
to the economy -- reaching
P299.5 billion or 3.3 percent of
gross domestic product or GDP
in 2011 – through its multiplier
effects and not just through tax
revenues or export earnings, the
co-founder of one of the country’s
top economic think tanks said.
In
a
briefing
organized
by
the
Chamber of Mines of the Philippines
to page 20
19
COMP’s BOD commends SMI’s Mark Williams
Mark Williams
former General Manager
Sagittarius Mines Inc.
The Board of Directors (BOD)
of the Chamber of Mines of the
Philippines (COMP) has given
Mark Williams, former general
manager of Sagittarius Mines
Inc. (SMI), a commendation in
recognition and appreciation of
his distinguished service to the
association.
Williams left SMI after the revised
September 30 after serving as its GM
approach of its parent company,
for six years, led the committee “with
Glencore Xstrata, toward its operation
great professionalism, dedication, and
of the Tampakan Copper-Gold Project
distinction.”
in South Cotabato. The downsizing saw
SMI’s workforce cut by 90 percent and
“Mark Williams graciously volunteered
its operating budget by 75 percent.
his time and expertise to the Committee,
providing
Williams
on
the
represented
COMP
and
insights,
perspective, and guidance throughout
since
the organization and implementation
In a resolution on August 27, the COMP
March 2013 co-chaired the special
process,” the Board commendation
BOD “acknowledged and expressed its
Communications
read. “The Committee’s plans and
strong appreciation” to Williams “for his
comprised
outstanding service to the Chamber
communications professionals tasked
of Mines and notable contribution to
to organize, develop, and implement
the Chamber’s mission of promoting
a communications program for the
Williams and his family headed back
responsible minerals development in
Chamber.
to their native Australia after his SMI
of
Board,
Sagittarius
invaluable
Committee
member-companies’
the Philippines.”
recommendations
will
assist
the
Chamber greatly in fulfilling its mission.”
assignment.
The BOD said Williams, who left SMI on
Diwata’s first anniversary highlights women
in mining profession
Women have reached great
heights in the Philippine mining
industry, as emphasized by
the four speakers featured in a
special edition of the “Bulong
Pulungan sa Sofitel”media forum
to celebrate the first anniversary
of the DIWATA – Women in
Resource Development Inc. last
July.
Redempta
Pena
Baluda,
Eliza
R.
A native of Baguio City and a former
Laudencia, Maria Ines Rosana Dacanay
foreign affairs secretary, Albert stressed
Balangue-Tarriela and Rodalee E. Ofiaza
that to check poverty in the Philippines,
noted the benefits of mining and the
“we should create wealth by using our
challenges of a career in mining in
natural resources,” echoing what South
the forum also attended by DIWATA’s
African President Nelson Mandela told
president Atty. Patricia Bunye and
her in a conference.
chairperson-founder Ambassador Delia
Albert.
Albert said that as an organization,
to page 22
20
20
Economic effects
of mining is
exponential, says top
economist Villegas
increase of 2.6 pesos through all these
Speaking of the “common good,”
multiplier effects of the industry,” he
Villegas said that is “not just tax revenues
said.
or export earnings but employment
generation, the nurturing of small and
Using 2011 data, “which was incidentally
medium scale industries through the
a good year for mining” and when metals
multiplier effects, the stimulation of
prices in the world market reached a
consumption in the communities where
(COMP), Dr. Bernardo M. Villegas, co-
peak, mining exports reached P115.2
various establishments, whatever they
founder of the Center for Research
billion, said Villegas, who stressed he
are, are located.”
and Communication (CRC) and vice
“has been really following the mining
president of the University of Asia and
industry at least since the 1970s.”
Mining can help stimulate all of that,
the Pacific (UA&P), said their studies
“The total output multiplier effect
Villegas said, through its multiplier
indicate that through inter-industry
was P299.52 billion,” he said. “So you
effect on the following:
linkages, “the mining industry has major
multiply P115 billion by 2.6 and you get
• Household income and consumption
impacts on employment, income and
P299.52 billion, which is 3.3 percent of
(multiplier of 0.32 according to the CRC/
consumption that go much beyond the
GDP in 2011. And 3.3 percent of GDP is
UA&P study; the additional household
taxes paid by the mining enterprises.”
not an insignificant amount. This was in
income induced in the economy by
2011 when metal prices were definitely
mining exports in 2011 reached P36.9
higher than they are now.”
billion);
from page 18
“I would like to reiterate that we
cannot judge the mining industry
• Employment (mining added 6.3
just on the basis of the taxes that they
Villegas also explained mining’s impact
percent to the total national labor
pay. That’s a very small percentage
using
force, or 179,158 additional direct and
of the contribution of the mining
approach” that
industry to the common good,” said
Benigno Aquino III used to highlight the
• Compensation received by mining
Villegas, who received his Ph.D. from
effect on the country of the business
workers (P6.8 billion in 2011, leading to
Harvard University and specializes in
process outsourcing (BPO) industry
P10.8 billion in induced spending); and
development
during his State of the Nation Address in
• Fiscal spending (P10.4 billion total
economics,
business
economics and social economics.
the
same
he
“commonsensical
said
President
July 2012.
indirect jobs in ’11);
taxes paid by the mining industry in
2011, leading to an additional output of
Villegas cited the study of UA&P’s Dr.
Quoting the President’s SONA last year,
Cid Terosa, who is “the most focused on
Villegas said that “in addition to directly
the mining industry” and who used the
employing 1.3 million workers by 2016,
“Only by considering all of these
tools of Input-Output or Inter-Industry
the BPO sector will actually generate an
multiplier effects can we arrive at the
Analysis. These measure the favorable
additional estimated 3.2 million jobs.”
significance of the mining industry,”
impacts of the industry on the total
P37.4 billion).
said Villegas, the author of several
GDP, on total investment, on household
“So the BPOs have inter-industry linkages
economics textbooks widely used
income,
with some of these industries mentioned
throughout Philippine schools and
by the President – taxi drivers, baristas,
universities.
and
consumer
spending,
Villegas said.
restaurants, name it,” said Villegas, who
Through this analysis, Villegas said
has been special economics adviser to
“That’s why we cannot capture the
the total output multiplier of the PH
five Philippine presidents and numerous
significance of any industry, whether
mining industry is 2.6. “This means that
legislators and local officials. “In the
mining or not, until we take a look at
2.6 pesos additional input is created in
same way, the mining industry has inter-
its fiscal multiplier, its employment
the economy every time final demand,
industry linkages with all types of public
multiplier, its household consumption
such as export demand, by the mining
utilities, all types of consumer goods
multiplier, and so on. That’s the only
industry increases by 1 peso. So with
industries that sell consumer goods to
way to be able to say whether or not
a 1-peso increase in the demand for
the households, and so on.”
an industry is making a significant
mining industry, there is an additional
to page 21
21
Economic effect
of mining is
exponential, says top
economist Villegas
specializes in development economics,
its regional impact; you have to take the
business
two together.”
economics
and
social
economics.
By the time the MGP engaged in drilling
“Why are they (urban poor) here?
and ore-refining activities in 2009, the
Because they have nothing to do in
project generated an average of 1,245
the countryside,” Villegas said. “And “If
direct and indirect jobs per month, said
contribution to the economy,” he
we prevent our mineral resources from
Villegas, with around 70 percent of those
added.
being developed, we will see a lot more
employed residents of Masbate. “
from page 20
people in Manila who are squatters,
Primed to develop the
countryside and uplift the
poor
informal settlers, and so that will
A total of 14,227 jobs were created
definitely be a disservice to the country.”
nationally during the MGP’s construction
and development stage, and another
Mining and agriculture is also not an
15,664 during the mining and processing
In the same briefing, Dr. Villegas said
“either-or” situation because most mine
stages, “of which 54 percent were
large-scale
is
sites are in remote areas that are not
employed from the Bicol region – again,
primed to develop the countryside
arable or fit for farming, the economist
more than 50 percent from the region
and should be promoted alongside
added.
itself,” the economist added.
fourths of the country’s poor – or an
“I’m not saying mining should be
The economic activities induced by
estimated 21 million Filipinos -- who
everywhere. But I’m sure it can be
the MGP “are indirectly responsible for
reside in remote and rural areas.
proven by experts that a lot of the areas
creation of economic value through its
where there are mineral ores are not
supply chain -- so this is again a reference
“It is obvious that mineral resources are
agricultural areas. So we should really
to the forward and backward linkages
usually in the boondocks, in the most
promote both agriculture and mining
(created by mining),” Villegas said.
remote areas. And it’s also obvious
operations,” he said.
responsible
mining
agriculture to help uplift the three-
Higher household incomes “directly
that 75 percent of the poor, those who
belong to the so-called base of the
pyramid, are in the countryside and
Masbate Gold Project as an
example
and indirectly resulting from mining
activities”
also
stimulated
further
spending in Masbate and Bicol and
rural areas. So if we are going to benefit
the poor, we must have economic
One example of how responsible
thus
economic
production,” added
activities in the countryside,” Villegas
mining can develop the countryside is
the economist, who has advised five
said.
the Masbate Gold Project (MGP), which
Philippine presidents and numerous
a team from CRC and UA&P studied
local officials.
Villegas said it would be “prejudicing
since April of 2007. By 2011, the MGP’s
the poorest of the poor if we prevented
total economic impact amounted to
Responsible
investment activities” like mining and
P15.8 billion on the national level and
effect, both regionally and nationally,
agriculture in the countryside. He put
P9.96 billion in the Bicol Region to
is supported by the fact that “when
both industries “in the same category
which Masbate province belongs, said
a mining company locates in the
of having a direct contribution to
Villegas.
boondocks, it’s the one that has to build
mining’s
multiplier
the farm-to-market roads, it has to build
addressing our poverty problem.”
“That’s another thing about a mining
water facilities, sometimes it’s the one
In fact, having urban poor—a clear
company: it does make a contribution
who provides electricity – and those
and present concern for Metro Manila
to the nation, it has a national impact.
people (in remote areas), they would
and other cities across the country—
And in addition, it has a regional impact,”
never have those amenities without the
is “really a result of not having done
he said. “Again, you cannot measure the
mining investment,” Villegas said.
enough in the countryside,” added
significance of a mining activity only by
the Harvard-educated professor, who
looking at its national impact or only
22
22
Diwata’s first anniversary highlights
women in mining profession
from page 19
DIWATA wants to promote dialogues
At Philex, Baluda said, she met her
to make people aware of the benefits
husband -- then a nurse for Philex -- and
of responsible mining.
at present all four of their sons hold
various jobs in the mining firm.
Meanwhile, the four Filipina geologists
called themselves “rare gems” and
Laudencia, meanwhile, leans on her 32
stressed that in the Philippines women
years as a geologist as the executive
are top, well-paid executives in mining
director of Geoscience Foundation
corporations. What used to be a
Inc.,
male-dominated profession now sees
mining, environmental hydrogeology,
“about equal in number among men
engineering geology and research.
the course. And when you pass the
and women,” according to Laudencia.
“Geology rocks!” noted the mother of
board exams, you can even get a raise
six.
of at least P10,000.”
which
manages
projects
in
For instance, Baluda is the vice
“Mining impacts everyone,” added
president for exploration of Philex
Balangue-Tarriela,
associate
Ofiaza, the youngest resource person
Mining Corp. She has been with the
professor and the deputy director for
on the Bulong Pulungan panel, finished
company for 28 years, straight after
academic affairs of the National Institute
mining engineering at UP in 1996.
graduating from the University of
of Geological Sciences (NIGS). “The key
She is currently a technical adviser
the Philippines and placing eighth
word is responsible mining. We can
to the president of Sulu Sea Minerals
in the 1976 national licensure board
develop centers for mining awareness
Management Corp.
examination.
and industries in the different regions,
Baluda said she was “luckier than most
an
so people will stop coming to Manila to
“CSR in mining is not new,” said Ofiaza,
look for jobs.”
noting how Baguio its and environs
“flourished” from a tiny hill station for
women working in the cities” for being
able to work with Philex in Benguet
Apart from her geology degree at
American colonists seeking to escape
and has never regretted the decision
UP, Balangue-Tarriela obtained her
the warm lowland, to the city it is now
to stay with the company through
doctorate in Physical Sciences from the
largely because of revenues from the
three decades.
School of Earth Sciences at La Trobe
mining companies.
University in Victoria, Australia, and
her Masters in Energy Technology from
She said mining companies put in
the Asian Institute of Technology in
provisions for “roads, power, water” long
Bangkok.
before they even hope to begin making
profits, and all of these infrastructures
She also noted that a new geology
“have an impact on the surrounding
graduate, even before passing the
communities,” empowering them and
board, “is guaranteed a starting salary of
encouraging the people “to protect the
P50,000, and often, as is the case with
environment.”
some of the women geologists, job
offers come in even before they finish
23
MCA’s Mitch Hooke visits PH, speaks at
Mining Luncheon
Mitchell “Mitch” H. Hooke
President
Minerals Council of Australia
Mitchell “Mitch” H. Hooke,
president of the Minerals
Council of Australia (MCA),
visited the Philippines from
August 11 to 17 to speak at the
Philippine Mining Luncheon
and meet with top government
and industry officials.
he was invited to speak at the 7th
economies” as well as in Australia, where
Asia Pacific Mining Conference and
the industry’s boom “translated into the
Exhibition in Makati City as then-
highest terms of trade in 150 years.”
chairman of the APEC Members of the
Mining Industry Leaders Forum.
Mining
helped
economic
boost
output “by
Australia’s
a
marginal
Hooke is set to step down as president
increase of 15% per year, compared
of the MCA at the end of 2013 after not
with what would have been without the
renewing his contract with the Council,
boom” which in turn, created jobs not
During his visit, Hooke paid courtesy
which he has led since 2002, according
just in mining but across the economy,
calls on Executive Secretary Paquito
to MiningAustralia.com.au. For a time
Hooke said.
Ochoa,
Purisima,
Domingo,
Ramon
Finance
Secretary
Cesar
he was also Chair of the Full Council of
Trade
Secretary
Greg
the International Council of Mining and
It also lifted real household incomes
Metals based in London.
in Australia “by an extraordinary 40%
Environment
Paje
and
Secretary
Australian
by 2011-2012 compared to the start
Ambassador to the Philippines Bill
Message at Luncheon
of the decade, which is massive when
Tweddell.
At the Mining Luncheon organized by the
compared to an increase of only 9% in
Philippine Mining Club, Hooke stressed
the preceding decade,” he added.
Hooke also met with the Board
that the sustainable development of a
of Directors of the Chamber of
nation’s natural resources endowment
“This means Australians’ household
Mines of the Philippines (COMP),
must be pursued for the social and
income is $400 a week better off because
gave a workshop to the COMP
economic development of their people,
of the mining boom,” Hooke said. He
Communications
“and more particularly in lifting their
also noted that their mining industry
people out of poverty.”
also became the biggest employer of
Committee
and
other representatives from COMP
member companies, and visited the
indigenous Australians, providing them
Tampakan Copper-Gold Project site in
He said he “could not fathom how
with “paths to education, training and
South Cotabato through the efforts of
anybody can wittingly or unwittingly
jobs.”
Indophil Resources NL and its officials,
condemn people to a life of wretched
Gavan Collery and Neil Grimes.
poverty for want of enlightenment, for
Turning to the Philippine setting, Hooke
want of the courage to step outside
warned those who “simply would like
He also graced the Wallace Business
one’s comfort zone, and for want of
responsible mining to go away” to “be
Forum Breakfast in Makati City, a
the conviction to learn from others
careful what you wish for” because once
meeting of the Joint Foreign Chambers
who have successfully developed their
the opportunity to develop the industry
(JFC) Mining Committee, and a press
minerals endowment on a platform of
passes, in light of constantly growing
conference with the DIWATA – Women
mutual respect and trust.”
demand for minerals worldwide, “it will
in Resource Development at the Manila
likely be gone at least for the duration of
Polo Club after the Mining Luncheon.
Hooke stressed that responsible mining
It was Hooke’s second time in the
“has made a remarkable contribution
Philippines since June 2007, when
to the transformation of emerging
this generation.”
to page 24
24
24
MCA’s Mitch Hooke
visits PH, speaks at
Mining Luncheon
from page 23
He revealed that in a dinner hosted
by
the
Australian
Embassy,
The danger of missing the boat, he
These factors, if aligned, would help the
clarified, was losing the Philippines’
country “to invest and to grow, and to
potential position as a supplier of
sustainably convert natural endowment
minerals to the world, and especially
into societal capital. At the end of the
of rapidly growing Asia, given its vast
day, this is the very foundation to this
natural reserves that remain largely
industry’s commitment to sustainable
undeveloped.
development, with all 3 pillars –
a
economics, environmental and social
“senior member of the Philippine
“We have witnessed the shift from a
administration” pointed out to him that
growth super-cycle to a growth mega-
the country’s mineral resources “weren’t
cycle and we are now in a ‘new normal’
“Remember, you can’t be in the social
going anywhere, that the country had
– a sustained plateau of development
‘pink’ or the environmental ‘green’ if you
time to contemplate their development,
and growth -- with its inherent volatility,
are not in the economic ‘black’ – and
and that there was a natural inevitability
what I like to refer to as ‘cyclical noise,’”
vice versa,” Hooke ended.
that mining companies would be there
Hooke said.
to develop them.”
-- in balance.”
A copy of Hooke’s speech at the
In closing, he noted that business
Mining Luncheon may be found
“I can’t really dress it up in any other
confidence in the Philippine mining
on the Chamber’s website, www.
way – but in my view, in mining
industry depended “on the composite
chamberofmines.com.ph.
jargon, that is ‘fool’s gold,’” Hooke told
of production costs and productivity, a
the Mining Luncheon, stressing that
nation’s public policies and sovereign
“there is real danger in that sort of
risk, and the relationship between
complacency” which was “not unique
a company and its community –
to the Philippines.”
fundamental to a social licence to
operate.”
Not mining yet, Intex spends over
P140M for environmental protection
Sven Monrad Jensen
Executive Vice President
Intex Resources Philippines Inc.
Still in the exploration stage,
Intex Resources Philippines
Inc. has spent, from 2008 up to
June 2013, over P140 million for
environmental protection and
management initiatives for its
Mindoro Nickel Project (MNP).
drilling activities in portions of its
and exceptionally low environmental
property, which straddles the provinces
impact.
of Oriental Mindoro and Occidental
Mindoro.
Leo Cleto Gamolo, Intex president, says:
“With the end in view of systematically
Through its innovative design and
and effectively mitigating the potential
unique process solutions, the Mindoro
impacts
Nickel Project is expected to set new
and,
A huge portion of these expenses
standards
industry
on both the environment and host
were disbursed in 2008 and 2009 at
with its unprecedented low-carbon
communities, Intex commissioned a
the height of Intex’s exploration and
emissions, independence of fossil fuels,
to page 25
for
the
nickel
of
minerals
subsequently,
exploration
development,
25
Not mining yet,
Intex spends
over P140M for
environmental
protection
total rehabilitation.
These measures
the harmful effects of climate change,
include land, water, air, and noise
maximizing land use, and protecting
pollution control, soil loss and erosion
damaged ecosystems while providing
management,
livelihood
reforestation,
rehabilitation
and
and
environmental
monitoring.
opportunities
to
residents
of the company’s host communities,”
Gamolo stresses. “For the first six months
of June alone, the company has spent over
from page 24
“Intex has also taken an interest in
P2 million for its Livelihood Enhancement
helping
through Agro-Forestry (LEAF) project.”
solve
Mindoro’s
perennial
thorough assessment or baseline study
flooding problems – a major concern
of Mindoro.”
that has antedated our exploration
Initially intended as Intex’s response
activities on the island,” Gamolo adds.
to government’s call for private sector
“The study was conducted by a host of
“Our company commissioned Phillips
participation in the National Greening
Filipino and foreign experts, including
Technical
the
Program, LEAF has, since 2012, been
environmental
botanists,
consulting arm of the FF Cruz Corp.; as
encouraging local farmers to better
mining engineers, environmental project
well as DHI Water and Environment Sdn
utilize their land and establish sustainable
managers, biologists, social scientists,
Bhd, a leading international expert on
income, growing over time as more crops
hydrologists, and agro-foresters, among
water management, to conduct flood a
reach harvesting stage.
others.”
study for the Bucayao, Panggalaan and
engineers,
The baseline study was led by the
Consultants
Corp.,
Mag-asawang Tubig Rivers in Oriental
“Overall, our LEAF partners in the Sablayan
Mindoro.”
Penal Colony in Occidental Mindoro
University of the Philippines Los Baños
and the Mangyans of Victoria, Oriental
Foundation, Inc. for an inventory of
In 2009, Intex constructed Gabion
Mindoro have propagated some 200,000
the island’s flora and fauna.
protection dike structures worth P10
plants,” Gamolo points out. “We have
the
million for the people of Barangay Alcate,
likewise planted more than 45,000 trees
comprehensive social and environmental
Victoria, Oriental Mindoro to avoid
over currently a 60-hectare area.”
studies, which became the cornerstone
further deterioration of the road leading
of MNP’s Environmental Impact Study
to communities in the municipality,
For the National Greening Program itself,
(EIS).
which have been seriously damaged by
Intex has either planted or donated
previous floods.
approximately 144,000 trees in nearly 300
Technologies,
Inc.
Lichtel
undertook
The EIS provides the framework for,
hectares over more than 192,000 hills in
among others, Intex’s Environmental
The company spent an additional
Management Plan, which identifies
P29 million for an in-depth study by
the predicted impacts, the mitigating
independent experts and scientists from
and
the
Golder Associates PTY Ltd to determine
responsible parties that will implement
the real cause of flooding in Mindoro
the mitigating measures, the schedule of
Island. The completed study has since
implementation, and the guarantees or
been turned over to local government
programs that will address the impacts.
officials.
The
“While the government has temporarily
enhancement
environmental
management
measures,
protection
measures
and
encompass
revoked
Intex’s
Environmental
all stages of the mine life, from
Compliance Certificate in 2009 in
exploration
development,
response to unfounded accusations by
commissioning
anti-mining groups, Intex has resolved
operation, and decommissioning and
to continue its efforts to mitigate
construction,
to
Mindoro Island.
26
26
Draft mining bill among DENR
updates on EO 79 implementation
The drafting of a new mining bill
for submission to Congress and
the creation of a mining “no-go
zone map” are some of the recent
actions taken by the government
to implement Executive Order No.
79, according to a recent update
on the Aquino administration’s
mining policy released by the
Department of Environment and
Natural Resources (DENR).
Four other actions the DENR noted are:
“Mindanao, with its high mineral
• Nationwide consultations held
potential, stands to greatly benefit from
to draft a new small-scale mining
the pursuit of responsible mining,” the
guidelines, also to be presented to the
report added.
MICC for approval;
• The targeting of 15 mineral
The report also took note of four
reservations to be identified and
upcoming
assessed within 2013;
three of them run by members of the
•
The creation of regional multi-
(High Pressure Acid Leach) processing
operations, along with the start of
plant of Taganito Mining Corp. in
To be presented to the Mining Industry
the “cleansing process” for approved
Claver, Surigao del Norte, launched in
Coordinating
for
mining tenements by sending “show-
September;
final review and submission to the
cause” letters to those concerned; and
• The Boyongan-Bayugo Copper-Gold
legislature, the draft bill is one of eight
• The creation of a Task Force on Illegal
Project of Philex Mining Corp. in Mainit
actions taken by the DENR to implement
Mining headed by the Department of
EO 79 as of August 2013.
Interior and Local Government (DILG)
• The Kingking Copper-Gold Project of
and the subsequent launching of
Nationwide Development Corp., Russel
operations against illegal mining.
Mining-St. Augustine Gold Mining Corp.
Other actions are the no-go zone map,
of
review
Chamber of Mines of the Philippines:
mining
performance
to
projects,
• The $1.6-billion Sumitomo HPAL
(MICC)
teams
mining
the
Council
sectoral
major
existing
prepared as a “major input” to the
and Placer, Surigao del Norte;
in Pantukan, Compostela Valley; and
Integrated Land Use Map that aims to
“The government is now ensuring that
• The Tampakan Copper-Gold Project
clearly show areas closed to mining;
clear and predictable policies for more
of Sagittarius Mines Inc. in South
the creation of regional one-stop-shops
secured mining investments will be set
Cotabato, Sultan Kudarat and Davao
(OSS) for mining applications; and the
in place under good governance and
del Sur.
country’s participation in the Extractive
the principle of responsible mining,”
Industries Transparency Initiative (EITI).
the DENR presentation said.
Mareng Winnie’s distorted analogy,
nondisclosure
(Note: Below is COMP’s Letter to the Editor replying to the column of Prof. Winnie Monsod in
the Philippine Daily Inquirer’s August 9, 2013 issue, edited by PDI for brevity. To read Monsod’s
column online, go to http://opinion.inquirer.net/58521/worse-than-the-pork-barrel-scam)
We would like to express our by Solita Monsod.
to the current controversy surrounding
deep concern over a column
Congress’ use of their pork barrel funds.
titled “Worse than the pork barrel Monsod compared the revenue-sharing And she claimed that the law cheats the
scam” (Opinion, 8/9/13) written provision of the Philippine Mining Act
to page 27
27
Mareng Winnie’s
distorted analogy,
nondisclosure
distorted analogy, we respect her
Mining Act in the Supreme Court. In
right to free speech. However, to call
fact, Christian Monsod argued for the
the Mining Act a “scam” (that purports
petitioners during oral arguments.
to steal trillions of pesos from the
from page 26
Filipino people) is irresponsible; it is
Solita Monsod’s failure to disclose
people of at least P7 trillion, an amount
statement that belittles the hundreds
this fact taints her objectivity on this
which would take 158 years of pork
of thousands of people who work in the
matter and she should not be allowed
barrel scamming to match.
mining industry; and it implies that the
to use the Inquirer as the mouthpiece
members of the Ninth Congress, former
of her husband or his clients.
The fact is, the Department of Finance
President Fidel V Ramos, and the justices
has engaged the assistance of the
of the Supreme Court in 2005 were all
Further, to say that the Philippine
International Monetary Fund (IMF) to
accomplices in or, at least complicit
Mining Act of 1995 is a scam larger
review the Philippines’ mining fiscal
with, the “scam.”
than the pork barrel issue is a brazen
regime, and the latter has found that
attempt to influence an intended
the current fiscal regime is “tough” on
More importantly, Monsod deliberately
mining companies and less competitive
failed to disclose the fact that her
compared to the fiscal regimes of other
husband, Christian Monsod, is lawyering
major mining countries.
for the petitioners in Hontiveros, et
(Sgd.) ARTEMIO F. DISINI
al. vs. DENR, et al., a case challenging
Chairman
the constitutionality of the Philippine
Chamber of Mines of the Philippines
While we take exception to Monsod’s
audience.
Replying to Winnie Monsod - Again
(Note: Below is COMP’s Letter to the Editor replying to a column by Prof. Winnie Monsod, which
appeared in the Opinion section, Page 4 Section 1, of Business World’s September 23, 2013
issue. To read Monsod’s column online, go to http://www.m.bworldonline.com/m_content.
php?section=Opinion&id=76322)
Dear Messrs. Santos, Belleza,
the Philippines full mineral potential for
Filipinos depend on mining for their
the benefit of the nation is very complex
employment and millions more for
and can easily be misunderstood.
their livelihood.
by Prof. Solita Collas-Monsod in an
In fact, the study that was cited
It’s why we at the Chamber of Mines
article entitled “Old tricks” in her column
was actually refuted in the recently
of the Philippines have stressed that
“Calling a Spade” in your newspaper last
concluded
Philippines
government must put in place a
11 September 2013.
Conference 2013 by the World Bank. The
mining regime that is equitable and
same source she has quoted.
competitive so the benefits of the
We would like to express our grave
concern over certain statements made
Mining
Once again, Prof. Monsod has made
industry can be felt by every Filipino,
misleading generalizations to vilify
We certainly take no satisfaction on the
not just the miners.
the industry, comparing local mining
issue of dwindling investments in the
There has been a de facto moratorium
operations to counterparts abroad out
mining sector, and in our predictions
on
of context, and citing studies made
turning out to be correct owing to a lack
which partly explains why mining’s
by foreign experts when each and
of regulatory clarity and consistency. We
contribution to GDP is only 0.7% in
every mine must be considered in
are the industry most affected by this
2012 from 1.0 percent in the two years
both its local and national context. The
situation. It is not something to crow
before that. But even one percent of
challenge of responsibly developing
about when hundreds of thousands of
to page 28
mining
projects
since
2010,
28
28
Replying to Winnie
Monsod - Again
from page 28
“that go much beyond the taxes paid by
conceivable need of our stakeholders.
the mining enterprises.”
As we stressed in our recent annual
The fact is, mining done responsibly can
conference, we do all of these not
GDP is not insignificant, since it means
become a long-term nation-building
because of government regulation,
other sectors apart from mining would
partner of government. Legitimate
but
have to pick up the slack of producing
large-scale mining companies are the
is good for everyone. This way
billions for the economy.
biggest reforesters in the country.
everybody wins. All we need is a clear,
We contribute billions of pesos yearly
consistent, and competitive policy—a
Also, just because a country like the
to
policy that generations present and
Philippines is rich in natural resources
enhancement programs.
doesn’t mean it has to fall into the so-
Our members continue to enrich
called “resource trap” as implied by the
the lives of thousands of families by
studies cited by Prof. Monsod. A leading
providing free health and education. We
expert in the economics of mining, Dr.
build whole communities in the middle
(Sgd.) ATTY. RONALD S. RECIDORO
Bernardo Villegas, has stated in recent
of nowhere--places that government
Vice President for Legal and Policy
reports that through its multiplier
will never go to if not for mining. We
Chamber of Mines of the Philippines
effect, mining contributes 3.3 percent
build quality infrastructure such as
to GDP and has major impacts on
roads, schools, churches, hospitals,
employment, income and consumption
water supply, and power supply--every
environmental
protection
and
because
responsible
mining
future can benefit from.
Very truly yours,
Incredibly erroneous statements
(Note: Below is COMP’s Letter to the Editor replying to an opinion piece by Cielo Magno of
Bantay Kita, which appeared in the Opinion section, Page 5, Section 1 of Business World’s
September 24, 2013 issue. To read Magno’s article online, go to http://www.bworldonline.com/
content.php?section=Opinion&title=Rebuilding-trust-in-the-mining-industry&id=76482)
We write to correct some incredibly
around the industry – from all sides
erroneous statements in an Opinion
including industry, government, LGUs
article recently published in your
and Civil Society Organizations.
newspaper, by Ms. Cielo Magno,
– is the “just 2%” nonsense.
As stated in a 2012 report from the
International
Monetary
Fund,
and
which appeared in your pages last 16
We would also like to point out
confirmed last week by the World
September 2013.
that the PH EITI was initiated by the
Bank and the International Finance
President of the Chamber of Mines,
Corporation, the correct way to look
The title is good: “Rebuilding trust in the
who first proposed the mechanism to
at Government Share is the Average
mining industry,”and for the record, we’d
government as a good governance
Effective Tax Rate or AETR.
like to begin by pointing out that we
policy measure back in 2005.
are working hard with Ms. Magno and
The government share of a resource
her Civil Society Organization, Bantay
The first erroneous contention of
project – any resource project in any
Kita, to do just that, in participating
Ms. Magno’s to deal with – and, to
country – is the total “take” of taxes and
in the multi-sectoral group (MSG) of
be fair, she is a victim of widespread
royalties that flow to the public sector
the Philippine Extractive Industries
misinformation on this point that has
from a project over its entire life. This
Transparency Initiative or PH EITI, which
even reached government circles and
share is taken through many taxes,
will result in greater transparency
has widely been repeated in the media
to page 29
29
Incredibly erroneous
statements
a definitive attempt by Dr. Otto to rank
This therefore means more taxes taken
all mining countries in the world in terms
by government overall, and this is
of their tax take and foreign investor IRR,
evidenced by the transformation of
and for Ms. Magno to assert it as such
not just one, and through other fiscal
communities from fourth-class to first-
is to mislead the public into reaching a
measures. This is Government Take 101.
class municipalities.
different conclusion not intended by the
from page 28
author.
Evaluating the AETR for the Philippine
Dr. Stanley stressed, and we quote, that
mining industry, the IMF concluded
instead of focusing on the “royalties
On the contrary, Dr. Otto’s point in
that the government take in Philippine
curve” or the rise of taxes paid through
introducing Table 5.2 was to show that
mining projects is actually higher than
royalties, “governments need to focus
Papua New Guinea was able to improve
in our comparator countries, and is
on a more robust curve, which is the
its
therefore not competitive. Read: too
economic linkages curve.”
by eliminating certain onerous taxes,
high, and even higher than the 50%
global
competitiveness
ranking
reducing the corporate income tax and
target that has been stated by the
“The more that you embed that mine
withholding tax, and fixing the royalty
President.
in the local community, and have
rate. Dr. Otto’s final sentence on Papua
more regional economic development
New Guinea is most telling: “Had the
mining
around the mine, the more goods and
government not made changes in the
companies under MPSA contracts
services come from small to medium
level of royalties, and in the tax regime
register a 60% AETR--comparable with
enterprises around the mine, so you get
more generally in recent years, the
Indonesia, although slightly lower
a more robust tax take overall. So the
adverse effects on mining would soon
than Peru, Chile, South Africa and
big revenue economic impact from a
have reduced the benefits that the
Canada. The Philippine FTAA regime,
mine is that second curve,” Dr. Stanley
country derives from this important
meanwhile, indicates more than 80%
said.
economic sector.”
2012 study that the regime is “tough”
Meanwhile, we cannot discount the
I personally know Dr. Otto, as he was my
and is not internationally competitive.
veracity of Dr. Otto’s findings in his
professor at the East-West Center and in
study that Ms. Magno quoted. However,
my studies in the United Kingdom, and
The other critical point put forward in
the fiscal regime, the average metals
I doubt he would purposely undermine
a key speech last week at the Mining
price, the average cost of production—
the objectivity of his studies with an
Philippines Conference by Dr. Michael
all of these have changed significantly
irresponsible statement.
Stanley, the mining expert of the World
since Dr. Otto published his study, not
Bank Group, is: “Look at the linkages,
just for the Philippines, but for the other
In this case we are sad to see Ms. Magno
and not just the taxes!”
countries involved in his study as well.
misinform the public by spinning a well-
On
average,
Philippine
AETR, leading the IMF to conclude in its
known authority’s studies to distort the
Setting aside the 5% royalty from the
Reading the material portion of Dr.
author’s findings. While we do share Ms.
gross value of minerals by companies
Otto’s study (where Table 5.2. is shown)
Magno’s sentiment that governance of the
operating
reservations
provides the relevant context for why
mining industry – as in every industry, as
and the 1.5% of the gross value given
the table was included in the first place:
well as government – must be improved,
to indigenous people as royalty, the
it was to illustrate how changes in Papua
we think it’s important to ensure that the
economic linkages of a mine imbedded
New Guinea’s mining fiscal regime
data are correct, and misinformation is
in a community or a remote area
affected their global competitiveness
not rebroadcast to suit political ends. In
bring enormous development in the
for mining investments.
the end, truth will always prevail.
goods and services produced from
Table 5.2, in which the Philippines
(Sgd.) NELIA C. HALCON
small enterprises that thrive to sustain
appears in the second-lowest quartile as
Executive Vice President
the needs of the communities.
Ms. Magno mentions, was therefore not
Chamber of Mines of the Philippines
in
mineral
province or the region, with more
30
30
Buried Talents: The Mining Controversy
By Dr. Raul V. Fabella, UP School of Economics
(NOTE: This article first appeared in Business World on February 20, 2012. It can also be viewed
online at http://www.econ.upd.edu.ph/perse/?p=755)
Few can put it better than William
the Japanese. Meanwhile, a Japanese
The simple reason is that in the exalted
Shakespeare in Julius Caesar: “There is
foreign investment delegation coming
game of extortion, the binding dictum is
a tide in the affairs of men that taken at
to explore the Philippine potential
the Mafia’s: grave threats become stale
a flood leads on to fortune; omitted, all
stayed in Mandarin Hotel. The hotel was
unless carried out once in a while.
their journeys are mired in the shallows
caught in the eye of yet another coup
and in miseries.” I can’t help but
attempt launched by rightist crazies to
Today the nation is rent asunder with
think of the Philippine development
foil the designs of leftist crazies. These
what to do about mining. Some sketchy
experience in Shakespearean terms. For
were going to be their partners? We
details of a proposed EO have emerged
truly, the annals of underdevelopment
were too much at each other’s throat
(PDI, 20 February 2010): sweeping aside
are painted on the tapestry of wasted
for the stability-obsessed Japanese. The
the “first-come first-served” modality
opportunity, not on the canvas of
foreign investment tsunami never even
in favor of public auction, requiring
resource
touched our shores.
total economic valuation, reviewing
scarcity.
Japan,
South
Korea, and now China have overcome
all existing contracts and promoting
resource scarcity to become world
The growth rampage of China and
downstream processing. At the risk
leaders in development. They seized
India has created problems for our
of tripping on inaccurate reportage,
the opportunity offered by galloping
manufacturing sector but has also
it is still best to speak now before it is
demand in the West for products that
opened the window for mineral exports.
finalized.
intensively used their then-cheap labor
Australia, Brazil and Russia have seized
to jumpstart their march. The oil crisis
the day and continue to do so. But the
Let us start with the last one: promotion
in the ‘70s opened the window for gas
Philippines is a mineral-rich country too,
of downstream processing. This looks
savers in the West, and Japan seized
a grace we received from Providence in
innocent enough and why not indeed?
the opportunity to export small cars
exchange for travails of being in the
For who would oppose higher value-
that made sense in a high gas price
Ring of Fire. We could easily join the
added? But if licensing of mineral
environment.
mining-boom club if only we did not let
extraction
our inner demons get in the way. As it
on
Opportunities occur randomly in the
is, we are literally burning our chances.
processing, it becomes an invitation
life of a nation but they are seized
In early October last year (2011), mining
to killing the mining industry. For
only by societies with enough internal
operations of Nickel Asia’s Taganito
example,
coherence and nimbleness to harness
Mining Corp. and the Platinum Group
copper concentrate (smelting) requires
the fleeting current. Those rent by
Metals Corp. in Surigao del Norte were
massive electricity use and involves
indecision and ideological paralysis
attacked and saw their assets burned
very different economics than copper
will suffocate in the dust of those who
by the NPA. The inevitable reason given
extraction. With power costs so high
are not. When the Plaza-Louvre Accord
by the NPA is that they wish to “protect
and unreliable in the Philippines, the
in mid-‘80s forced the Japanese yen to
the people”—all the while robbing
viability of smelting absent subsidies is
appreciate from 240 to 140 yen to a dollar,
them of jobs and livelihood. Still the
a real issue. In Australia, the share of ore
a Japanese foreign investment tsunami
signal to other mining operations is
in iron exports is 100%, since Australians
hit Southeast Asia, which instantly
this: fail to come across and you will
have realized that their competitive
transformed Malaysia and Thailand into
risk an NPA attack. But why would they
advantage is not in steel making. Such
major electronics export platforms for
kill the goose that lays the golden egg?
to page 31
more
projects
is
advanced
advanced
conditioned
downstream
processing
of
31
Buried Talents: The
Mining Controversy
taking calculated risk.
Finally, again who can quarrel with award
We should replicate this in mining. We
by public auction? But isn’t this insistence
could for example create a dedicated
the very reason that the PPP program has
mining regulator for say Tampakan Gold
decisions should be left to firms doing
failed to take off? There is a dearth of bid-
and Copper Mine, which has passed
the market calculus. As an imposition
ready contracts, and somebody has to
all national requirements. This will see
by the state, it is import substitution all
draw up the specifications of the contract
to the proper enforcement of contract
over again.
for it to be bid-ready. Who will do and pay
obligations, the wise deployment of
for the exploration to determine the size,
the sinking fund and the disposal of
Second, the review of all existing
quality and depth of the deposit? How
mining proceeds for worthy projects
mining contracts and incentives if
do you establish the reservation value
through Tampakan’s lifetime. The board
with the view to unilateral alteration
of a prospective area without a proper
of this agency should include adequate
is chilling and dangerous. The latter
exploration and evaluation? Requiring
local representation and hardboiled
spells massive regulatory uncertainty
award by public auction must answer
technocrats. In other words create a new
and paints the Philippines as an
these tough questions.
Tuwid na Pamamalakad in mining via a
from page 25
unreliable counterparty that cannot
learning-by-doing mode. Getting your
abide by contracts. Modifications to
The main message of the proposed
existing contracts should be effected
EO as reported is tougher rules. This is
only after proper negotiation with
understandable. Our past experience with
Even the Gospel’s Parable of the Talent
and with adequate compensation to
mining has been mostly negative and
has only unequivocal contempt for the
adversely affected contract holders.
cautionary. This has everything to do with
timid. A man going on a journey left
New conditions without compensation
our past incapacity to properly regulate
his servants with talents. The first put
should apply only to new entrants.
and enforce rules. But tougher formal rules
his talent to work and made five more;
alone do not make for good governance.
as did the second who made two more.
with
After all, the rulebook “Compliance and
The Gospel states: “But the one who had
“Total Economic Valuation” if this
Beyond: A Guidebook on Corporate Social
received one talent went out and dug a
can be done with dispatch and is
Responsibility for the Philippine Mining
hole in the ground and hid his master’s
based on international best practice.
Industry” of the Philippine Chamber
money in it.” For he was afraid. To the
Controversies
uncertainties
of Mines cannot be described as soft.
returning master he presented one talent
associated with valuing opportunity
Adequate enforcement must complement.
saying
costs and use-option can make decision
On the latter, however, the impending
But answered the master: “Evil and lazy
making catatonic. If there can be no full
EO as reported is eloquently mute. Good
slave! You should have deposited my
certainty even in science, full certainty
governance of mining has resulted in
money with the bankers, and on my
is certainly a fool’s errand in this
good outcomes in other countries. The
return I would have received my money
inherently risky business of mining. But
suggestion that we stop mining because
back with interest! Therefore take the
we can certainly require contingency
we do not have adequate regulatory and
talent from him and give it to the one
funds dedicated to responding to
enforcement capacity today amounts to
who has ten… and throw that worthless
unintended consequences (assuming
saying that we should let our sordid past
slave into the outer darkness, where
they are not raided for other uses). It
hold our future hostage. A better guide
there will be weeping and gnashing of
is however the height of stupidity to
is the experience of water privatization in
teeth’” (Matthew 25:13-30). Weeping and
suggest (as one school of governance
Metro Manila. Water regulation was dismal
gnashing of teeth await the pall-bearers.
effectively did!) that mining should be
or non-existent before water privatization.
May we be these no longer!
suspended until total economic value
But we managed to create an adequate
can be ascertained. That is like saying
regulatory environment and regulator for
(*The author is grateful for comments by
air travel should be stopped because
the Metro Manila service area through the
Prof. Emmanuel de Dios. Errors are the
some airplanes do crash and extinguish
contract itself. This experience is now a
author’s sole responsibility.)
lives. All progress is predicated on
global template.
Third,
nobody
can
and
quarrel
feet wet is the only way to learn to swim.
“See, you have what is yours.”