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Cautious steps to unleash a trillion-dollar potential

Not long ago, the local mining industry was besieged in practical disarray in the wake of the former Department of Environment and Natural Resources secretary’s unabashedly anti-mining stance. At one-point entire operations and pending projects, including the livelihood of thousands, were on standstill, if not altogether compromised, awaiting a decisive move from government and policymakers to resolve a long drawn impasse that has stymied the Philippine mining industry.

As it is, the country’s mineral wealth—estimated by some to be worth more than a trillion dollars—sits underground largely untapped. While other nations with a similar mineral profile such as Australia and even Indonesia have taken strides to take advantage of such wealth, the Philippines has, for the most part, been unable to do the same, mired in prolonged legal and regulatory confusion that Lopez’s crusade only exacerbated.

Months after that unfortunate episode, there appears to be a sliver of clarity policy-wise. Incumbent DENR Secretary Roy Cimatu recently announced plans to possibly amend the controversial Executive Order 79 and DENR Memorandum Order 2016-1, a move that some industry observers say crucially signals the government’s new direction in terms of fixing and clarifying, once and for all, its fiscal regime in mining.

This comes in the heels of a crucial vote by the inter-agency Mining Industry Coordinating Council to officially lift the ban on open-pit mining. Open-pit mining, of course, is a globally accepted method of extracting minerals from the earth and yet demonized and portrayed as heinously destructive and therefore unacceptable.

If the moves push through, the paradigm shift can contribute to unleashing the still untapped potential of the country’s mineral wealth—all in the context of responsible mining.

EO 79 and DMO 2016-01 effectively banned any new mining projects all over the country, consequently causing the slowdown of the mining sector. EO 79, issued by former president Benigno Aquino III, effectively implemented a moratorium on mining projects until a law that rationalizes revenue sharing schemes and mechanisms have been put in place.

Some say the much-maligned Tax Reform for Acceleration and Inclusion (TRAIN) Law, is at least partly responsible for record inflation since its implementation early this year, in fact effectively legislated a new revenue scheme by doubling the excise tax imposed on mining. It’s important to note that the mining sector had long been advocating a sharing scheme that prioritizes local government units, in particular the host communities, over the current process in which everything is remitted to the national coffers and takes at least two years before hosting local governments get their share.

Similarly, DENR’s Mines and Geosciences Bureau had earlier proposed a per-commodity basis tax increase in the sector, which Department of Finance Carlos Dominguez said “makes sense.”

“The government is firm in its policy that the utilization or the country’s mineral resources should be allowed when the proposed mining operation is technically feasible, environmentally compliant, socially acceptable, and financially viable,” MGB said.

Lawmakers are considering the inclusion of the fiscal regime on the mining industry in the package two of the government’s comprehensive tax reform package.

Meanwhile, DMO 2016-01, issued two years ago before Secretary Cimatu was appointed, imposes a moratorium on the acceptance, processing, and approval of mining applications and new mining projects for all metallic and non-metallic minerals. Its implementation put on hold then ongoing feasibility studies of big-ticket projects, namely the Silangan Copper-Gold Project in Surigao del Norte and the Nickel and Chromite Mining Project in Zambales.

Industry observers have long noted that similar crusades against responsible large-scale miners are broadly misguided. Mining corporations are in the forefront of self-regulation and stewardship because of the country’s stringent environmental laws and their voluntary submission to international benchmarks. Case studies of successful rehabilitation, for instance, of open-pit mines abound in Zamboanga del Norte, Surigao del Norte, and Palawan.

This, in addition to a clear and comprehensive natural resources roadmap, had always been in the agenda of the sector. Such clamor for clarity stems from a desire to ensure both the strict compliance to environmental regulations and the strategic harnessing of mineral resources.

Clearly then, there is a pressing need to remove all the legal and regulatory impediments that prevent the jump-starting of a new era for the sector, one that could unleash a wave of mega investments, paving the way for a long-term cycle en route to national industrialization and inclusive growth. Also, in the context of the Duterte administration’s ambitious Build Build Build program, not prioritizing the mineral sector is a profound oversight, a missed opportunity of gargantuan proportions, to the tune of a trillion dollars.

Topics: Department of Environment and Natural Resources , Carlos Dominguez , Mining Industry Coordinating Council , Rodrigo Duterte , Mining , Tax Reform for Acceleration and Inclusion Law
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