2. Mining Laws

Mining LawMining Law

Recent Trends in the Mining Recent Trends in the Mining IndustryIndustry

Global Environmental ProblemsGlobal Environmental Problems Stratospheric ozone depletionStratospheric ozone depletion Greenhouse climate changeGreenhouse climate change Biodiversity lossBiodiversity loss Land use competitionLand use competition Bio-fuelsBio-fuels

Recent Trends in the Mining Recent Trends in the Mining IndustryIndustry

ImpactsImpacts Corporate Corporate

consolidationconsolidation Financial market Financial market

pressurepressure International reporting International reporting

standards (JORC)standards (JORC) Demand for Demand for

professionals in the professionals in the resources industryresources industry

Increased focus on Increased focus on sustainabilitysustainability

Create sustainable Create sustainable communitiescommunities

Appropriate Appropriate environmental environmental managementmanagement

Communication with Communication with civil society/NGOscivil society/NGOs

Sound governanceSound governance corporate social corporate social

responsibilityresponsibility

Environmental EconomicsEnvironmental Economics

Mining as a Major IndustryMining as a Major Industry Located in the Pacific "Ring of Fire", Located in the Pacific "Ring of Fire",

the Philippines rank as one of the the Philippines rank as one of the most highly mineralized countries:most highly mineralized countries:- third in gold, fifth in nickel, and - third in gold, fifth in nickel, and sixth in chromitesixth in chromite- untapped mineral wealth estimated - untapped mineral wealth estimated at US$840 billion (NEDA)at US$840 billion (NEDA)

Mining as a Major IndustryMining as a Major Industry Tremendous remaining potential for Tremendous remaining potential for

additional discoveries, since, despite additional discoveries, since, despite it's vast mineral wealth, the it's vast mineral wealth, the Philippines has seen little modern Philippines has seen little modern exploration. exploration.

The Philippines provides a natural The Philippines provides a natural gateway to other Asia Pacific gateway to other Asia Pacific economies, particularly China, with economies, particularly China, with its voracious demand for metals. its voracious demand for metals.

Developments in the Philippine Developments in the Philippine Mining IndustryMining Industry

A change in government policy from A change in government policy from tolerance to active promotion of mining tolerance to active promotion of mining (EO 270, Jan. 2004, setting the National (EO 270, Jan. 2004, setting the National Policy Agenda on Revitalizing Mining in the Policy Agenda on Revitalizing Mining in the Philippines). Philippines).

100% foreign ownership allowed following 100% foreign ownership allowed following the December 2004, Supreme Court the December 2004, Supreme Court decision abolishing all legal obstacles to decision abolishing all legal obstacles to the implementation of the Philippine the implementation of the Philippine Mining Act of 1995.Mining Act of 1995.

Developments in the Philippine Developments in the Philippine Mining IndustryMining Industry

Rapu-rapu mine accidentRapu-rapu mine accident Conflict between national and local Conflict between national and local

governments over taxationgovernments over taxation InsurgencyInsurgency ““small-scale” miningsmall-scale” mining

Mining Laws and other RegulationsMining Laws and other Regulations

Philippine Constitution of 1987 Philippine Constitution of 1987 (“Constitution”)(“Constitution”)

Philippine Mining Act of 1995 Philippine Mining Act of 1995 (“Mining Act”)(“Mining Act”)

Mining Act Revised Implementing Mining Act Revised Implementing Rules and RegulationsRules and Regulations

Other Laws Other Laws

ConstitutionConstitution All lands of the public domain, water, All lands of the public domain, water,

minerals, coal, petroleum, and other minerals, coal, petroleum, and other mineral oils, all forces of potential energy, mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora fisheries, forests or timber, wildlife, flora and other natural resources are owned by and other natural resources are owned by the state.the state.

The exploration, development and The exploration, development and utilization of these natural resources are utilization of these natural resources are under the full control and supervision of under the full control and supervision of the State.the State.

ConstitutionConstitution The State has the option of entering The State has the option of entering

into co-production, joint venture or into co-production, joint venture or production sharing agreements with production sharing agreements with Philippine citizens of Philippine Philippine citizens of Philippine corporations or associations.corporations or associations.

At least 60% of the capital of a At least 60% of the capital of a corporation or association must be corporation or association must be owned by Phil. Citizen to qualify as a owned by Phil. Citizen to qualify as a Philippine corporation or association.Philippine corporation or association.

ConstitutionConstitution Exception to the nationality Exception to the nationality

requirement: requirement: The Constitution The Constitution authorizes the President to enter into authorizes the President to enter into agreements with foreign-owned agreements with foreign-owned corporations involving either financial corporations involving either financial or technical assistance, for large- or technical assistance, for large- scale exploration, development and scale exploration, development and utilization of minerals, petroleum and utilization of minerals, petroleum and other mineral oils.other mineral oils.

ConstitutionConstitution Ownership of natural resources Ownership of natural resources

(Regalian doctrine) – if an investor (Regalian doctrine) – if an investor wishes to acquire the right to extract wishes to acquire the right to extract or develop natural resources, he or develop natural resources, he must enter into an agreement with must enter into an agreement with StateState

TYPES OF MINING PERMITS/CONTRACTSTYPES OF MINING PERMITS/CONTRACTS

1.1. Mining Lease Contracts (MLCs)Mining Lease Contracts (MLCs)2.2. Exploration Permits (EPs)Exploration Permits (EPs)3.3. Mineral AgreementsMineral Agreements4.4. Financial or Technical Assistance Financial or Technical Assistance

AgreementAgreement5.5. Mineral Processing PermitMineral Processing Permit6.6. Quarry PermitQuarry Permit7.7. Small-Scale Mining PermitsSmall-Scale Mining Permits8.8. Sand and Gravel PermitsSand and Gravel Permits9.9. Ore Transport PermitsOre Transport Permits

TYPES OF MINING PERMITS/CONTRACTSTYPES OF MINING PERMITS/CONTRACTS(under Presidential Decree No. 463)(under Presidential Decree No. 463)

Declaration of Location (DOLs)Declaration of Location (DOLs)• Document attesting to the filing of a mining claim Document attesting to the filing of a mining claim • Allows the claimowner (mining applicant) to enter, occupy Allows the claimowner (mining applicant) to enter, occupy

and conduct mineral exploration within the claimed area;and conduct mineral exploration within the claimed area;• Given the priority right to apply for any of the new modes of Given the priority right to apply for any of the new modes of

permits/agreements under Mining Act of 1995.permits/agreements under Mining Act of 1995.Mining Lease ContractsMining Lease Contracts• Contract allowing the lesee to explore, develop, extract and Contract allowing the lesee to explore, develop, extract and

utilize minerals from the contract area;utilize minerals from the contract area;• Respected up to the end of term under the Mining Act of Respected up to the end of term under the Mining Act of

1995; lessee is given the preferential right to apply for a 1995; lessee is given the preferential right to apply for a Mineral Agreement.Mineral Agreement.

TYPES OF MAJOR MINING TENEMENTS TYPES OF MAJOR MINING TENEMENTS (under the Mining Act of 1995)(under the Mining Act of 1995)

A.A. TENEMENTS ISSUED BY DENR-MGBTENEMENTS ISSUED BY DENR-MGB1.1. Exploration Permit Exploration Permit 2.2. Mineral AgreementMineral Agreement

Mineral Production Sharing AgreementMineral Production Sharing Agreement Joint Venture AgreementJoint Venture Agreement Co-Production AgreementCo-Production Agreement

3.3. Financial or Technical Assistance AgreementFinancial or Technical Assistance Agreement4.4. Mineral Processing PermitMineral Processing Permit5.5. Industrial Sand and Gravel Permit (>5 to 20 hectares)Industrial Sand and Gravel Permit (>5 to 20 hectares)

B.B. PERMITS ISSUED BY LOCAL GOVTPERMITS ISSUED BY LOCAL GOVT1.1. Quarry PermitQuarry Permit2.2. Small-Scale Mining PermitsSmall-Scale Mining Permits3.3. Sand and Gravel Permits (5 hectares & below)Sand and Gravel Permits (5 hectares & below)

EXPLORATION PERMITEXPLORATION PERMIT (EPs) (EPs)

Allows the permittee to conduct exploration work for a Allows the permittee to conduct exploration work for a limited period only.limited period only.

Two (2) years, renewable for like periods up to 6/8 yrs;Two (2) years, renewable for like periods up to 6/8 yrs; Maximum area: 16,200 hectares/Province; Maximum area: 16,200 hectares/Province; 32,000 hectares in entire the country32,000 hectares in entire the country Area relinquishment: 25% for the first 2 years; Area relinquishment: 25% for the first 2 years;

10% /year, thereafter10% /year, thereafter Open to companies with up to 100% foreign ownership;Open to companies with up to 100% foreign ownership; Priority to enter into either an MPSA or FTAA after Priority to enter into either an MPSA or FTAA after

submission and approval of Declaration of Mining submission and approval of Declaration of Mining Project Feasibility;Project Feasibility;

Can be transferred or assigned to other qualified Can be transferred or assigned to other qualified individuals/corporations.individuals/corporations.

MINERAL AGREEMENTS MINERAL AGREEMENTS (MAs)(MAs)

a.a. Mineral Production Sharing Agreement (MPSA)Mineral Production Sharing Agreement (MPSA) Exclusive right to conduct mining operations w/in a Exclusive right to conduct mining operations w/in a

contract areacontract area Limited to Filipinos or Filipino-owned corporations Limited to Filipinos or Filipino-owned corporations

(Foreign equity not to exceed 40%)(Foreign equity not to exceed 40%) Minimum authorized capital of PhP 10 M and paid-up Minimum authorized capital of PhP 10 M and paid-up

of PhP 2.5 Mof PhP 2.5 M Maximum area for juridical entity: Maximum area for juridical entity: 8,100 Has./Province; 8,100 Has./Province;

16,200 Has. for the entire country16,200 Has. for the entire country Contract period of 25 yrs; renewable for another 25 Contract period of 25 yrs; renewable for another 25

yrs;yrs; Two (2) years Exploration Period; renewable for like Two (2) years Exploration Period; renewable for like

periods up to 6/8 yrs; three (3) years Construction periods up to 6/8 yrs; three (3) years Construction and Development Period; the rest for productionand Development Period; the rest for production

Can be assigned to any qualified individuals/ Can be assigned to any qualified individuals/ corporationscorporations

Can be converted into an FTAACan be converted into an FTAA

MINERAL AGREEMENTS MINERAL AGREEMENTS (MAs)(MAs)

b. Co-Production Sharing AgreementAn agreement between the Government and the Contractor wherein the former shall provide inputs to the mining operations other than the mineral resource.c. Joint Venture AgreementAn Agreement where a joint venture company is organized by the Government and the Contractor with both parties having equity share. Aside from the earnings in equity, the Government shall be entitled to a share in the Gross Output.

* These two modes of agreement have not been made operational due inability of government to input needed equity shares.

Other Permits:Other Permits:MINERAL PROCESSING PERMITSMINERAL PROCESSING PERMITS

A 5-year Term, renewable for like periods, up to a maximum of 25 years;

Allows both local and 100% foreign-owned corporations;

Requirement to submit adequate ore supply contract to justify the establishment of the processing plant;

Can be granted for cement plants, smelting and refining; beneficiation plants; marble cutting and processing plants, and others of similar nature;

Issued by the Secretary for projects with cost of more than PhP 500 Million, by the MGB Director for projects with cost of more than PhP 200 Million but less than PhP 500 Million, and by the MGB Regional Director for projects with cost of PhP 200 Million or lesser.

EXISTING MINING PERMITS/ EXISTING MINING PERMITS/ CONTRACTSCONTRACTS

Tenement TypeTenement Type NumberNumberExploration Permits (EP) 28Mineral Production Sharing Agreements (MPSA)

228

Financial or Technical Assistance Agreements (FTAA)

2

Mineral Processing Permits (MPP) 26Mining Lease Contracts/Patents 312

6 sets of application and mandatory requirements

Filing of Application in Regional Office

Area Status and Clearance/ Consent by MGB, DENR Sectors and/or other

Govt. Offices

Publication, Posting and Radio Announcement

Clearance By DENR

EP APPLICATION PROCESS FLOW

Evaluation

Approval by MGB CORegistration and Releasing

By MGB Regional Office

Proof of Sanggunian Consultation/Approval

Certification of Publication/ Posting/Radio Announcement

NCIP Certification Pre-condition

Certification By Panel Of Arbitrators




Govt. Offices


Final Review By MGB CO

MPSA APPLICATION PROCESS FLOW

Evaluation

Approval by DENR SecretaryNumbering of MPSA by MGB

Central Office

Registration and Releasing By MGB Regional Office








Govt. Offices


Final Review By MGB CO / Negotiating Panel

FTAA APPLICATION PROCESS FLOW

Certification of Publication/ Posting/Radio Announcement Evaluatio

n

Endorsement by DENR Secretary

Numbering of MPSA by MGB CO

Registration & Releasing By MGB RO



Review / Approval by the President





GOVERNMENT SHARE FROM MINING GOVERNMENT SHARE FROM MINING National GovernmentNational Government

Income Tax Income Tax = 35 % of Taxable Income;= 35 % of Taxable Income; Excise Tax Excise Tax = 2 % of actual value of minerals = 2 % of actual value of minerals

extracted;extracted; Customs Duties and Fees= prescribed under Tariff and Customs CodeCustoms Duties and Fees= prescribed under Tariff and Customs Code Value Added TaxValue Added Tax = 10 % of Purchase Value of Goods/Services;= 10 % of Purchase Value of Goods/Services; Capital Gains Tax = 10-20 % of the gain;Capital Gains Tax = 10-20 % of the gain; Tax on Interest Payments to Foreign Loans = 15 % of Interest;Tax on Interest Payments to Foreign Loans = 15 % of Interest; Tax on Foreign Stockholders Dividends = 15 % of dividendTax on Foreign Stockholders Dividends = 15 % of dividend Royalties, if extracted from government Mineral Reservation = 5% of Royalties, if extracted from government Mineral Reservation = 5% of

market value;market value; Documentary Stamp Tax = graduated, depending on type of business Documentary Stamp Tax = graduated, depending on type of business

transactiontransaction Local GovernmentLocal Government

Local Business Tax: usually minimal, rate depends on LGU;Local Business Tax: usually minimal, rate depends on LGU; Real Property Tax: Max. of 2 % on Fair Market Value of Property;Real Property Tax: Max. of 2 % on Fair Market Value of Property; Occupation Fee: PhP 100.00/hectare/year;Occupation Fee: PhP 100.00/hectare/year; Community Tax: Approx PhP 15,000Community Tax: Approx PhP 15,000

FISCAL REGIME OF FTAAFISCAL REGIME OF FTAA

Entitled to a 5-Year Cost Recovery Entitled to a 5-Year Cost Recovery PeriodPeriod

• Exemption from payment of various national taxes Exemption from payment of various national taxes to enable the company to recover its investments;to enable the company to recover its investments;

• After recovery of investments, or at the end of the After recovery of investments, or at the end of the 5-year period, whichever comes first, the 5-year period, whichever comes first, the company pays the usual taxes and fees, plus the company pays the usual taxes and fees, plus the additional Government Share.additional Government Share.

FISCAL REGIME OF FTAAFISCAL REGIME OF FTAA

Basic Government ShareBasic Government Share• National Taxes, i.e., Excise Tac, Income Tax, National Taxes, i.e., Excise Tac, Income Tax,

Customs Duties and Fees, etc.Customs Duties and Fees, etc.• Local Taxes, i.e., Business Tax, Real Property Local Taxes, i.e., Business Tax, Real Property

Tax, etc.,Tax, etc., Additional Government Share to Additional Government Share to

achieve a cumulative Government achieve a cumulative Government share equal to 50% of the Net-Mining share equal to 50% of the Net-Mining RevenueRevenue

In 1997, group of NGOs petitioned the Supreme Court to invalidate Mining Act on the ground that foreign control over mining is unconstitutional:

Nullification of the Mining Act of 1995 and its implementing rules and regulations

Cancellation of the Financial or Technical Assistance Agreement (FTAA) of WMC

SUPREME COURT DECISION SUPREME COURT DECISION ON THE MINING ACT ON THE MINING ACT

Nature of the Case: Nature of the Case:

January 27, 2004 SC Decision: January 27, 2004 SC Decision: SC declared the following provisions as

unconstitutional & void: All provisions of the Mining Act on the

FTAA All provisions on Exploration Permits and

Mineral Processing Permits allowing the participation of foreign corporations

Provision on incentives to the FTAA & Mineral Agreements (MPSAs,Co-Production & Joint-Venture Agreements)

SUPREME COURT DECISION… SUPREME COURT DECISION…

December 1, 2004 SC Resolution on the December 1, 2004 SC Resolution on the Motion for Reconsideration: Motion for Reconsideration:New judgment declared Mining Act, IRR

and WMC FTAA as Constitutional

• Reversed and set aside the January 27, 2004 Decision and dismissed the Petition

• Affirmed President’s prerogative to enter into FTAA with foreign corporations to explore, develop and utilize mineral resources


Highlights of the SC Resolution:Highlights of the SC Resolution:

• The Constitution allows the continued use of service contracts with foreign corporations, which are similar to FTAAs

• Mining Act contains enough safeguards to regulate contractors

• FTAA fiscal regime is not disadvantageous to the State and to the Filipino people

• Foreigners are not prohibited from earning profits from businesses involving natural resources extraction


Mineral Processing PermitsMineral Processing Permits Under the Mining Act, mineral Under the Mining Act, mineral

processing means the milling, processing means the milling, beneficiation or upgrading of ores or beneficiation or upgrading of ores or minerals and rocks or by similar minerals and rocks or by similar means to convert the same into means to convert the same into marketable products.marketable products.

Valid for 5 yrs, renewable for like Valid for 5 yrs, renewable for like periods up to 25 yrsperiods up to 25 yrs

Important Laws Related to MiningImportant Laws Related to Mining

Environmental Impact Statement Environmental Impact Statement (“EIS”) System(“EIS”) System

Indigenous Peoples Rights Act Indigenous Peoples Rights Act (“IPRA”)(“IPRA”)

Local Government Code of 1991Local Government Code of 1991 Small Scale Mining ActSmall Scale Mining Act

EIS SystemEIS System Project proponent of environmentally Project proponent of environmentally

critical projects and projects within critical projects and projects within environmentally critical areas must environmentally critical areas must obtain an environmental compliance obtain an environmental compliance certificate prior to commencementcertificate prior to commencement

Environmental Management Bureau Environmental Management Bureau as lead agencyas lead agency

ENVIRONMENTAL PROVISIONSENVIRONMENTAL PROVISIONS

Environmental Impact AssessmentEnvironmental Impact Assessment• All mining projects considered environmentally All mining projects considered environmentally

critical;critical;• Subject to Environmental Impact Assessment (EIA) and Subject to Environmental Impact Assessment (EIA) and

to secure the necessary Environmental Clearance to secure the necessary Environmental Clearance Certificate (ECC) from the Environmental Management Certificate (ECC) from the Environmental Management Bureau (EMB); andBureau (EMB); and

• Activities during the exploration period exempted Activities during the exploration period exempted from the EIA/ECC requirement.from the EIA/ECC requirement.

Environmental Work ProgramEnvironmental Work Program• In lieu of the ECC during the exploration period;In lieu of the ECC during the exploration period;• Program to address environmental impact; andProgram to address environmental impact; and• Defines financial commitment to be included in the Defines financial commitment to be included in the

annual exploration budget.annual exploration budget.

Environmental Protection and Enhancement Program Environmental Protection and Enhancement Program (EPEP)(EPEP)• Provides specific annual plans, programs and Provides specific annual plans, programs and

activities to institute environmental protection activities to institute environmental protection measures and/or rehabilitate mining-affected areas, measures and/or rehabilitate mining-affected areas, during development and production stages; andduring development and production stages; and

• Gives support in attaining the objectives of the Gives support in attaining the objectives of the Environmental Clearance Cerrtificate granted. Environmental Clearance Cerrtificate granted.

Final Mine Rehabilitation/Decommissioning PlanFinal Mine Rehabilitation/Decommissioning Plan• Provides activities to achieve mine closure, i.e., Provides activities to achieve mine closure, i.e.,

decommissioning, rehabilitation, residual care, etc.decommissioning, rehabilitation, residual care, etc.• Establishment of a Fund to be deposited during Establishment of a Fund to be deposited during

early years of the mine life.early years of the mine life.

ENVIRONMENTAL PROVISIONS. . .ENVIRONMENTAL PROVISIONS. . .

Contingent Liability and Rehabilitation Fund (CLRF)Contingent Liability and Rehabilitation Fund (CLRF)• Fund to be deposited in a government bank;Fund to be deposited in a government bank;• For the just and timely compensation of damages;For the just and timely compensation of damages;• For progressive and sustainable rehabilitation;For progressive and sustainable rehabilitation;• Has two components:Has two components:

Monitoring Trust Fund (MTF)Monitoring Trust Fund (MTF):: • Replenishable fund with a minimum of PhP 150,000.00 Replenishable fund with a minimum of PhP 150,000.00 • For exclusive use of the monitoring program by the multi-For exclusive use of the monitoring program by the multi-

sectoral Multi-Partite Monitoring Team (composed of sectoral Multi-Partite Monitoring Team (composed of national and local government, non-government national and local government, non-government organization or NGO, and company representatives) in organization or NGO, and company representatives) in the conduct of regular environmental monitoring;the conduct of regular environmental monitoring;

Rehabilitation Cash Fund (RCF)Rehabilitation Cash Fund (RCF):: • Replenishable fund with a minimum of PhP 5,000,000.00 Replenishable fund with a minimum of PhP 5,000,000.00

or 10% of EPEP budget, whichever is lower; or 10% of EPEP budget, whichever is lower; • For the conduct of environmental protection and For the conduct of environmental protection and

rehabilitation measures. rehabilitation measures.


Mine Waste and Tailings FeesMine Waste and Tailings Fees Based on PD No. 1251 PhP 5.00 per Metric Ton of mine waste materials PhP 10.00 per MT of mill tailings not utilized

within a 2-year period; PhP 50.00 per MT for any discharge of solid

materials for tailings not properly discharged into areas other than the duly approved tailings disposal area

Initial environment-related capital expendituresInitial environment-related capital expenditures 10% of the total capital/project costs

Annual environmental protection and enhancement Annual environmental protection and enhancement activities activities 3-5% of annual direct mining and milling cost


Other Laws Related to MiningOther Laws Related to Mining National Integrated Protected Area System National Integrated Protected Area System

LawLaw Ecological Solid Waste Management ActEcological Solid Waste Management Act Toxic Substances and Hazardous and Toxic Substances and Hazardous and

Nuclear Wastes Control ActNuclear Wastes Control Act Clean Air ActClean Air Act Clean Water ActClean Water Act Pollution Control LawPollution Control Law Water CodeWater Code National Environmental User’s Fee of 2002National Environmental User’s Fee of 2002

Sustainable DevelopmentSustainable Development Is mining inherently inconsistent with Is mining inherently inconsistent with

sustainable development?sustainable development? Does it mean different things to different Does it mean different things to different

people?people? Does it mean something different in Does it mean something different in

developed than in undeveloped developed than in undeveloped countries?countries?

Is it site specific?Is it site specific? Is it a process or a product?Is it a process or a product? Is it possible to have sustainable Is it possible to have sustainable

development, sustainable economic development, sustainable economic growth, sustainable communities and a growth, sustainable communities and a sustainable society without mining?sustainable society without mining?

Brundtland Definition of SDBrundtland Definition of SD Current generations meeting their needs Current generations meeting their needs

without compromising the ability of future without compromising the ability of future generations to meet their needsgenerations to meet their needs

IMPLIES:IMPLIES:• Future generations have rights over resourcesFuture generations have rights over resources• Current generation has a duty to include future Current generation has a duty to include future

generations’ needs in its decision-makinggenerations’ needs in its decision-making• An accounting of social and environmental An accounting of social and environmental

impactsimpacts» Who makes the call? Government, industry or Who makes the call? Government, industry or

the free market?the free market?

Business Case for SD Business Case for SD

What is Responsible MiningWhat is Responsible Mining Financially viable mining Financially viable mining

development that takes place in an development that takes place in an environmentally and socially environmentally and socially responsible manner with sound responsible manner with sound governance that provides lasting governance that provides lasting benefits to the community.benefits to the community.

Regional/Local IssuesRegional/Local Issues Social and Community-Related IssuesSocial and Community-Related Issues

- Disclosure and information sharing- Disclosure and information sharing- Community development plans- Community development plans- Consultation throughout a project’s - Consultation throughout a project’s lifecyclelifecycle- Compensation and resettlement- Compensation and resettlement- Local economic development- Local economic development- Mine closure- Mine closure

Regional/Local IssuesRegional/Local Issues EnvironmentalEnvironmental

- Legacy issues- Legacy issues- “No-go” zones for environmental impact - “No-go” zones for environmental impact projectsprojects- “No-go” technologies- “No-go” technologies

Small-scale miningSmall-scale mining- Legal tenure- Legal tenure- Technical including safety and - Technical including safety and environmentalenvironmental- Conflict resolution (with commercial - Conflict resolution (with commercial mining)mining)

National Global Level IssuesNational Global Level Issues GovernanceGovernance

- Transparency- Transparency- Revenue management- Revenue management

OthersOthers- Human rights- Human rights- Indigenous people- Indigenous people- Impact on global climate change- Impact on global climate change

Sustainable Development in the Context of Mineral and Energy Development

Encompasses: Economic Responsibility -- shareholders, Economic Responsibility -- shareholders,

employees, community, societyemployees, community, society Environmental Responsibility -- Environmental Responsibility -- society is more society is more

concerned with mining’s impacts and behavior concerned with mining’s impacts and behavior than its productsthan its products

Resource Stewardship -- wise and efficient useResource Stewardship -- wise and efficient use Community Engagement -- shared objectivesCommunity Engagement -- shared objectives Product Stewardship Product Stewardship Social License and Public Accountability– Social License and Public Accountability– Miners Miners

mine with the consent of the publicmine with the consent of the public

IPRAIPRA Grants to indigenous cultural Grants to indigenous cultural

communities or indigenous peoples communities or indigenous peoples certain preferential rights to their certain preferential rights to their ancestral domains and all resources ancestral domains and all resources found therein.found therein.

Royalty and right to benefitsRoyalty and right to benefits Cruz v. DENR Sec.Cruz v. DENR Sec.

IPRAIPRA

No mineral agreement shall be No mineral agreement shall be approved unless:approved unless:

- There is prior certification from NCIP There is prior certification from NCIP that area does not overlap ancestral that area does not overlap ancestral domain ordomain or

- Prior free and informed consent has Prior free and informed consent has been obtained from the ICC/IP been obtained from the ICC/IP concernedconcerned

Development of host and neighboring communities Development of host and neighboring communities through the Social Development and Management through the Social Development and Management Program; Program; • Provision of alternative livelihood, health and Provision of alternative livelihood, health and

nutrition, education, peace and order, infrastructure, nutrition, education, peace and order, infrastructure, etc.etc.

• Budget of 90% of the 1% of the direct mining and Budget of 90% of the 1% of the direct mining and milling costs;milling costs;

Preferential employment of majority from host Preferential employment of majority from host communities and ensure technology transfer;communities and ensure technology transfer;

Preferential use of indigenous products, services and Preferential use of indigenous products, services and technologies as well as local construction enterprises;technologies as well as local construction enterprises;

Payment of royalties to surface ownersPayment of royalties to surface owners

SOCIAL PROVISIONSSOCIAL PROVISIONS

Protection of rights of IPs/ICCsProtection of rights of IPs/ICCs• Secure Free and Prior Informed Consent of Secure Free and Prior Informed Consent of

IPs/ICCs IPs/ICCs • IPs entitled to minimum 1% of annual gross IPs entitled to minimum 1% of annual gross

revenue for the implementation of Ancestral revenue for the implementation of Ancestral Domain Sustainable Development and Protection Domain Sustainable Development and Protection PlanPlan

• Respect and preserve the culture and tradition Respect and preserve the culture and tradition of IPs/ICCsof IPs/ICCs

SOCIAL PROVISIONS. . .SOCIAL PROVISIONS. . .

Benefits/Obligations to LGUsBenefits/Obligations to LGUs• LGUs entitled to 40% of the excise tax (Barangay LGUs entitled to 40% of the excise tax (Barangay

- 35%; Municipal - 45%; and Province - 20%)- 35%; Municipal - 45%; and Province - 20%)• Endorsement from LGUs required for mining Endorsement from LGUs required for mining

operationsoperations• Beneficiaries of social development projectsBeneficiaries of social development projects

SOCIAL PROVISIONS. . .SOCIAL PROVISIONS. . .

Local Government CodeLocal Government Code Proponents applying for mining Proponents applying for mining

applications intended for exploration applications intended for exploration activities are required to conduct activities are required to conduct consultation with all LGUs concerned, consultation with all LGUs concerned, or the legislative councils or the legislative councils ((sangguniansanggunian) at the provincial, ) at the provincial, city/municipal, and barangay levels.city/municipal, and barangay levels.

Lessons LearnedLessons Learned

Consultation and relationship building Consultation and relationship building between the mine and affected people – between the mine and affected people – starting at exploration, based on respect starting at exploration, based on respect for local community culture and landfor local community culture and land

Mine closure planning with strong focus Mine closure planning with strong focus on post-closure sustainabilityon post-closure sustainability

Local economic development plan and Local economic development plan and agreements – hiring preferences, agreements – hiring preferences, training, small businesses support, joint training, small businesses support, joint venturesventures

Lessons LearnedLessons Learned

Revenue sharing framework with Revenue sharing framework with specific benefits for local specific benefits for local communitiescommunities

Environmental and social protection Environmental and social protection plans and agreements and plans and agreements and independent verificationindependent verification

What Mining Companies Has to DoWhat Mining Companies Has to Do

Obey the lawObey the law Pay proper taxesPay proper taxes Be civic minded, actively financially Be civic minded, actively financially

support local communities and adapt support local communities and adapt to grassroots businessesto grassroots businesses

Have Filipino staffHave Filipino staff Build relationships – national and Build relationships – national and

locallocal Identify tribal leaders and real IPsIdentify tribal leaders and real IPs

From Anglo AmericanFrom Anglo American

““To secure a continuing license to operate, the To secure a continuing license to operate, the mining and resources industry will have to mining and resources industry will have to frame its future in economically viable, frame its future in economically viable, socially beneficial and environmentally sound socially beneficial and environmentally sound practices that are negotiated with communities practices that are negotiated with communities within which it works.”within which it works.”

From Rio TintoFrom Rio Tinto

"We believe we can only continue to generate "We believe we can only continue to generate value for our shareholders over the long run if value for our shareholders over the long run if we excel in our performance on environmental we excel in our performance on environmental and social issues. Sustainable development …and social issues. Sustainable development …manages all the business risks to earn a manages all the business risks to earn a license to operate from all stakeholders."license to operate from all stakeholders."

PHILIPPINEPHILIPPINE MINING ACT MINING ACT

6161

1987 CONSTITUTION (Article XII, Sec. 1987 CONSTITUTION (Article XII, Sec. 2) National Economy and Patrimony2) National Economy and Patrimony

All lands of the public domains, waters, All lands of the public domains, waters, mineralsminerals, coal, petroleum, and other , coal, petroleum, and other mineral oils, all forces of potential mineral oils, all forces of potential energy, fisheries, forests or timber, energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural wildlife, flora and fauna, and other natural resources resources are owned by the Stateare owned by the State. x x x . x x x The The exploration, development, and exploration, development, and utilization of natural resourcesutilization of natural resources shall be shall be under the under the full control and supervision of full control and supervision of the Statethe State..

6262

REPUBLIC ACT NO. 7942 REPUBLIC ACT NO. 7942 MINING ACT OF 1995 MINING ACT OF 1995

Approved on 20 February 1995 by Congress Approved on 20 February 1995 by Congress and consequently by President Fidel V. and consequently by President Fidel V. Ramos on 03 March 1995 Ramos on 03 March 1995

Espoused the principle of responsible Espoused the principle of responsible mining mining

Revised Implementing Rules and Revised Implementing Rules and Regulations approved on 19 December 1996 Regulations approved on 19 December 1996 - DAO No. 96-40 by Secretary Victor O. - DAO No. 96-40 by Secretary Victor O. RamosRamos

6363

DECLARATION OF POLICY (RA 7942)DECLARATION OF POLICY (RA 7942)All mineral resourcesAll mineral resources in public and in public and

private lands within the territory and private lands within the territory and exclusive economic zone of the Republic of exclusive economic zone of the Republic of the Philippines the Philippines are owned by the Stateare owned by the State. It . It shall be the shall be the responsibility of the State to responsibility of the State to promote their rational exploration, promote their rational exploration, development, utilization and conservationdevelopment, utilization and conservation through the combined efforts of the through the combined efforts of the Government and private sector in order to Government and private sector in order to enhance national growthenhance national growth in a way that in a way that effectively safeguards the environmenteffectively safeguards the environment and and protects the rights of affected communities.protects the rights of affected communities.

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NEW PARADIGM NEW PARADIGM ON MININGON MINING

Promotion of responsible mining as an engine for economic growth and alleviation of poverty in the countryside;

Strict adherence to the principles of sustainable development – economic development, environmental protection & social equity

6565

Issued on 16 January 2004Issued on 16 January 2004 Strengthened Mining Act of Strengthened Mining Act of

19951995 Provides 12 guiding Provides 12 guiding

principles for responsible principles for responsible mining = economic mining = economic development, development, environmental protection & environmental protection & social equitysocial equity

Executive Order No. 270/270ANational Policy Agenda on Revitalizing Mining in the

Philippines

6767

1995 Mining Act vis-à-vis Old Law1995 Mining Act vis-à-vis Old Law1995 Mining Act1995 Mining Act

• EP, MPSA, FTAAEP, MPSA, FTAA• Adequate environmental Adequate environmental

provisions (Chapter XI)provisions (Chapter XI) EWP during explorationEWP during exploration EPEP during operationEPEP during operation FMRDP during mine closureFMRDP during mine closure Funds deposited for EPEP Funds deposited for EPEP

and FMRDPand FMRDP• Recognition and protection Recognition and protection

of IPs/ICCs (Sec. 16)of IPs/ICCs (Sec. 16)• Sufficient social provisions Sufficient social provisions

(Chapter X)(Chapter X) Mandatory SDMPMandatory SDMP

• Endorsement of LGU Endorsement of LGU required (Sec. 70)required (Sec. 70)

Old Laws (PD No. 463)Old Laws (PD No. 463)

• Mining leases and claimsMining leases and claims• Inadequate environmentalInadequate environmental

provisions provisions No EWP during explorationNo EWP during exploration No EPEP during operationNo EPEP during operation Unrealistic mine closure Unrealistic mine closure

requirementrequirement No funds deposited for No funds deposited for

environmental worksenvironmental works• No provision on recognition No provision on recognition

and protection of IPs/ICCsand protection of IPs/ICCs• Insufficient social provisions Insufficient social provisions

Voluntary social programs Voluntary social programs • Endorsement of LGU not Endorsement of LGU not

requiredrequired

Government ManagementGovernment Management Mineral Reservations – established by Mineral Reservations – established by

the President; mining operations may the President; mining operations may be undertaken by the DENR or be undertaken by the DENR or through a contractor.through a contractor.

Other Reservations – mining in Other Reservations – mining in reserved lands other than mineral reserved lands other than mineral reservations may be undertaken by reservations may be undertaken by DENR or through a qualified person; DENR or through a qualified person; awarded by the President awarded by the President

Areas Open to MiningAreas Open to Mining Subject to existing rights Subject to existing rights Mineral resources in public or private Mineral resources in public or private

lands including timber or forestlands lands including timber or forestlands shall be open to mining permit shall be open to mining permit applicationsapplications

Areas Closed to MiningAreas Closed to Mining Military & other government reservations Military & other government reservations

except upon prior written clearance from except upon prior written clearance from government agency concernedgovernment agency concerned

Built up areas, including plantations or Built up areas, including plantations or valuable crops except upon written valuable crops except upon written consent of govt agency or private entity consent of govt agency or private entity concernedconcerned

Areas covered by valid and existing mining Areas covered by valid and existing mining rights rights

Areas closed to MiningAreas closed to Mining Areas prohibited by lawAreas prohibited by law Areas covered by small scale miners Areas covered by small scale miners

unless with prior consent of SSMsunless with prior consent of SSMs Old growth or virgin forests, Old growth or virgin forests,

proclaimed watershed forest proclaimed watershed forest reserves, mangrove forests, mossy reserves, mangrove forests, mossy forests, national parks under NIPASforests, national parks under NIPAS

Small Scale MiningSmall Scale Mining Governed by RA 7076 (small Scale Governed by RA 7076 (small Scale

Mining Act)Mining Act) Managed through the P/CMRBManaged through the P/CMRB Maximum 20 hectaresMaximum 20 hectares Includes Quarry Permits, permits for Includes Quarry Permits, permits for

sand and gravel, guano, gemstone sand and gravel, guano, gemstone gathering; government gratuitous gathering; government gratuitous permit; private gratuitous permitpermit; private gratuitous permit

Transport, Sale & Processing of Transport, Sale & Processing of MineralsMinerals

Ore Transport Permit – specifies Ore Transport Permit – specifies origin & quantityorigin & quantity

Mineral Trading Registration – Mineral Trading Registration – registered by DTI and accredited by registered by DTI and accredited by DENRDENR

Minerals Processing PermitMinerals Processing Permit

Auxiliary Mining RightsAuxiliary Mining Rights Timber rights – subject to forestry Timber rights – subject to forestry

laws, rules and regulationslaws, rules and regulations Water rights – approval by concerned Water rights – approval by concerned

agencyagency Right to possess explosivesRight to possess explosives Easement rightsEasement rights Entry into private lands and Entry into private lands and

concession areasconcession areas

Settlement of ConflictsSettlement of Conflicts Regional Panel of Arbitrators – two Regional Panel of Arbitrators – two

members of the Philippine Bar and members of the Philippine Bar and one licensed mining engineer or one licensed mining engineer or professional in a related field.professional in a related field.

Mines Adjudication Board – DENR Mines Adjudication Board – DENR Secretary as Chair, USEC for Field Secretary as Chair, USEC for Field Operations & MGB Director as Operations & MGB Director as membersmembers

Taxes and FeesTaxes and Fees Income taxesIncome taxes Excise tax on mineral products – 2%Excise tax on mineral products – 2% Mine wastes and tailings fees – semi-Mine wastes and tailings fees – semi-

annual 0.05 / MT; 0.10/ MTannual 0.05 / MT; 0.10/ MT Occupation fees – EP = P10 /ha; Occupation fees – EP = P10 /ha;

MPSA = P100/ha; 30% to the MPSA = P100/ha; 30% to the province and 70% to the municiplaityprovince and 70% to the municiplaity

Grounds for CancellationGrounds for Cancellation Late or Non-filing of requirementsLate or Non-filing of requirements Violation of the terms and conditions Violation of the terms and conditions

of Permits or Agreementsof Permits or Agreements Non-payment of taxes and feesNon-payment of taxes and fees Falsehood or omission of facts in the Falsehood or omission of facts in the

StatementStatement

Penal ProvisionsPenal Provisions False statements – P10,000False statements – P10,000 Illegal Exploration – P50,000Illegal Exploration – P50,000 Theft of Minerals – 6 months to 6 Theft of Minerals – 6 months to 6

years imprisonment and/or fine of years imprisonment and/or fine of P10,000 to P20,000P10,000 to P20,000

Destruction of mine structures – Destruction of mine structures – imprisonment not to exceed 5 years imprisonment not to exceed 5 years plus compensation for damagesplus compensation for damages

Penal ProvisionsPenal Provisions Mines arson – revised Penal Code Mines arson – revised Penal Code

plus compensation for damagesplus compensation for damages Wilfull damage to a mine – Wilfull damage to a mine –

imprisonment not to exceed 5 years imprisonment not to exceed 5 years and compensation for damagesand compensation for damages

Illegal obstruction to permittees or Illegal obstruction to permittees or contractors – P5,000 or imprisonment contractors – P5,000 or imprisonment not exceeding 1 year or bothnot exceeding 1 year or both

Penal ProvisionsPenal Provisions Violation of the terms and conditions Violation of the terms and conditions

of the ECC 6 months to 6 years of the ECC 6 months to 6 years imprisonemtn or a fine of P50,000 to imprisonemtn or a fine of P50,000 to P200,000 or both at the discretion of P200,000 or both at the discretion of the courtthe court

Illegal obstruction to (DENR) Illegal obstruction to (DENR) government officials – P5,000 fine or government officials – P5,000 fine or imprisonment not exceeding 1 year imprisonment not exceeding 1 year or bothor both

2. Mining Laws

Documents

Transcript of 2. Mining Laws