Mining sector in crucial meet ahead of new gov’t mining policyBy...

Mining sector in crucial meet ahead of new gov’t mining policy
By Edwin Espejo Mar 02, 2012 8:40AM UTC
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Industry leaders as well as various stakeholders will hold a crucial conference today and along with key government officials at the Manila Intercontinental Hotel as the Philippines moves to release its new policy on mining sector.

The much delayed new government policy has created jitters and uncertainty to investors and the industry.

The mining sector is openly opposed to a proposed hike in mining royalty fees under the reported new executive order which “will convert current mining operations into mining reservations” in order to collect a 5 percent royalty on gross output on top of corporate and other taxes already being imposed by the government.

The Chamber of Mines of the Philippines said the move is “confiscatory and is tantamount to expropriation or nationalization of the mining industry.”

But in a rappler.com report, Finance Secretary Cesar Purisima said the government’s previous mining policy did not present “a true win-win situation” since “the government actually was not able to get its fair share from mining activities.”

Last year, “Total collections from the mining industry amounted to just a little over P2 billion, but total revenues reached P1.2 trillion,” according to Purisima.

In a press statement, however, the mine chamber claimed that the government already gets 60 per cent of mine income before income tax under the present industry set up.

“With government’s share at an average of 60% of net income before tax, it appears that even without the proposed increase in taxes, the Philippine government is already getting its fair share in the profits from mining projects,” the mining chamber argued.

It added that “those operating in mineral reservations are also subject to the payment of an additional royalty equivalent to 5% of the actual market value of the minerals produced.”

The chamber of mines is headed by Benjamin Philip Romualdez.

Taking cue from mining-rich Australia, Purisima said the ongoing policy review will also take into consideration environmental issues with the government studying different models, including possible imposition of mineral resources rent as well as carbon tax.

Purisima nevertheless allayed fears coming from the mining industry sector.

“Since our effort is to make sure that we define this [rules] better, we implement this better, and that we clarify various rules that were vague and were conflicting, then after this process, I believe, that the regulatory environment will be better for mining investors,” he told rappler.com on Thursday.

Environmental groups have repeatedly expressed alarms over the impact of mining operations in the light of growing concerns over global climate change.

One of the biggest mining projects in the country, the Tampakan copper and Gold Project owned by Sagittarius Mines Incorporated (SMI), hit a major snag in January after it was denied the mandated environmental clearance certificate (ECC) following the passage of the South Cotabato Provincial Environment Code which prohibits open pit mining in the province.

SMI, a subsidiary of Swiss-based Xstrata Plc, has since appealed the rejection.

The US$5.9 billion SMI mining project has a reported ore deposit totaling total 2.94 billion tons at 0.51% copper at a 0.2% copper cut-off grade, from 2.49 billion tons at 0.6% copper at a 0.3 copper cut-off grade.

Three Catholic dioceses covered by the mining operation are however strongly opposed to the project.

The Tampakan Copper and Gold Project covers more than 20,000 hectares of agricultural and forested lands straddling four towns in the shared boundaries of Tampakan in South Cotabato, Columbio in Sultan Kudarat, Kiblawan in Daval del Sur and Malungon in Sarangani.