Advacc Environmenta acctgl

8/13/2019 Advacc Environmenta acctgl

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Environmental Accounting | 1

I. INTRODUCTION

The natural resources play a vital role in a country's economic condition and

development. It serves as the main sources of every days need of an individual to

live, the business to earn profits, and of a government to run the country. But then

again those resources just like any other things have also limitations. That is why

citizen, business entities and the government have responsibility towards their

environment.

It was always been said that the Philippines is very rich in natural resources.

Which is true, it has fertile, arable lands, diverse flora and fauna, extensive

coastlines, and rich mineral deposits. And those things can easily be measured in

terms of their monetary value. But the question is do we really get to measure their

proper valuation, the effect of the environment on a company and as well as the

influence a company has on environment?

With the adaptation of environmental accounting in the Philippines, it helps the

country in achieving sustainable development, while maintaining a favorable

relationship with the community, and pursuing effective and efficient environmental

conservation activities.

Incorporating measures of natural wealth and depletion in the national accounts

would enable not only the governments and businesses but as well as its citizens to

better understand environmental risks and the economic condition of the nation.

A. Environmental Accounting in the Philippines

The Philippines is gifted with a wide area of dense forests, home to awide variety of fauna and flora, providing for clean water and fresh air. Throughthe years, rapid economic development, industrialization, creeping urbanizationand rising population gave rise to the demand for forest products. Areasclassified as forest were quickly exploited and others were converted to otheruses to support the demands of the economy and the population. What used tobe clean environment became polluted.

The unabated exploitation of earths natural resources and the resultingdegradation of its environment created a heightened level of awareness andconcern for the environment among many nations.

Phil ippines: Adop tation of the United Nations system o f

environm ental accounting

Environmental accounting in the Philippines started within the year 1990-

1991 with the implementation of the Philippine Environmental and Natural

Resources Accounting Project (ENRAP) funded by the U.S. Agency for


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International Development (USAID) over a nine-year period. Within that period, a

parallel effort on environmental accounting was implemented and funded by the

United Nations Development Programme (UNDP).

The first phase of the project developed the forest accounts; the second

assessed the importance of households as a major source of air and water

pollution, with implications on the investment required for managing solid waste

disposal; the third revealed a higher degree of depreciation for renewable rather

than non-renewable resources and the need for a concerted pollution

management effort involving not only various sectors of society but several

agencies as well; while the last phase concentrated on the institutionalization and

policy use and application of environmental accounts.

The National Statistical Coordination Board was a partner in the

implementation of the project by providing technical support specifically on the

SNA concepts and methods, doing some of the ENRAP estimates, attending the

training and discussions on environmental account estimates conducted by theproject, acting as resource persons on the UN System of Integrated

Environmental and Economic Accounting (SEEA) framework and serving as

consultant to the project. The NSCB expertise on environmental accounting was

clearly enhanced by its participation in ENRAP.

In that early years, Philippines and Namibia were the only two developingcountries identified that have made an ongoing commitment to environmentalaccounting. But as the time goes by the need for environmental accounting playsan important role to attain a balance between economic progress and thepreservation of the environment and our natural resources in every country andbusinesses.

B. What is environmental accounting?

Environmental Accounting is a field that identifies resource use, measures and

communicates costs of a companys or national economic impact on the

environment. Environmental Accounting is short for environmental and natural

resource accounting (ENRA). It is also referred to as resource accounting,

green accounting, and integrated environmental and economic accounting. It

refers to the compilation of data relating to the environment and natural

resources into an accounting framework organized in terms of stocks and flows,

and the interpretation and reporting of these data.

Through the use of assets or capital such as land, equipment, and etc., the

production of goods and services is made possible. Environmental accounting is

concept which aims to include in the traditional measurement of economic

development the cost for using the environment as inputs to production and as a

sink for wastes. From the point of view of environmental accounting, land, water,


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and other natural resources are treated as inputs and assets in the production of

goods and services of a country. Environmental accounting therefore estimates

the cost of the use of natural resources and its environmental functions and

segregates the portion of total expenditures of the various economic sectors

spent for protecting and preventing the decline in the quality of the environment.

ENRA seeks to track changes in the quantity as well as in the quality of naturalresources and the environment over a specified period of time. These changes

may be estimated both in physical and monetary terms.

Environmental Accounting is a subset of accounting proper, its target being to

incorporate both economic and environmental information. It can be conducted at

the corporate level or at the level of a national economy through the National

Accounts of Countries.

Environmental Accounting Elements and its Benefits

Environmental conservation cost (monetary value)

Investments and expense related to the prevention, reduction,

and/or avoidance of environmental impact, removal of such impact,

restoration following the occurrence of a disaster, and other activities are

measured in monetary value.

Investment amounts are expenditures allocated during a target

period for the purpose of environmental conservation. The benefits from

these investments are seen over several periods and are recorded as

expense during the depreciation period (the amount of depreciable assets

recorded during the period).

Expense amounts refer to the expense or losses recorded under

financial accounting standards resulting from the consumption of goods or

services for the purpose of environmental conservation.

Environmental conservation benefits (physical units)

Benefits obtained from the prevention, reduction, and/or

avoidance of environmental impact, removal of such impact, restoration

following the occurrence of a disaster, and other activities are measured

in physical units.


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Economic benefits of environmental conservation activities (monetary

value)

Benefits to a companys profit as a result of carrying forward with

environmental conservation activities are measured in monetary value.

Environmental Accounting Disciplines (Scope)

Global environmental accounting (Geographic and Geophysical level)is

an accounting methodology that deals areas includes energetics, ecology

and economics at a worldwide level.

National environmental accounting (Natural resources accounting)is an

accounting approach that deals with economics on a country's level.

Internationally environmental accounting has been formalized into the System

of Integrated Environmental and Economic Accounting, known as SEEA.

SEEA grows out of the System of National Accounts. The SEEA records the

flows of raw materials (water, energy, minerals, wood, etc.) from the

environment to the economy, the exchanges of these materials within the

economy and the returns of wastes and pollutants to the environment. Also

recorded are the prices or shadow prices for these materials as are

environment protection expenditures. SEEA is used by 49 countries around

the world including the Philippines.

Corporate environmental accounting (Organization level)focuses on the

cost structure and environmental performance of a company. Corporate

Environmental Accounting can be further sub-divided into Environmental

Management Accounting and Environmental Financial Accounting.

Environmental management accountingfocuses on making

internal business strategy decisions. It can be defined as the

identification, collection, analysis, and use of two types of

information for internal decision making:

1) Physical information on the use, flows and fates of

energy, water and materials (including wastes) and

2) Monetary information on environmentally related costs,

earnings and savings.


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Environmental financial accountingis used to provide

information needed by externalstakeholders on a companys

financial performance. This type of accounting allows

companies to prepare financial reports for investors, lenders

and other interested parties.

C. Importance of Environmental Accounting

Incorporating measures of natural wealth and depletion in the national

accounts would enable not only the governments and businesses but as well

as its citizens to better understand environmental risks and the economic

condition of the nation.

With environmental accounting, the state of the environment can be

assessed how much resources are available to us, how much renewable

resources are being consumed, how fast nonrenewable resources are being

depleted, the quality of the environment and the remaining resources, their

economic importance/value and how much is spent by man for

the protection of the environment.

Through environmental accounting, it is possible to reveal economic

distortions in the production and consumption activities resulting from

subsidies granted to economic activities that are heavily dependent on the

environment for waste absorption and natural resources for raw materials.
http://en.wikipedia.org/wiki/Stakeholder_(corporate)http://en.wikipedia.org/wiki/Stakeholder_(corporate)


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II. INDUSTRY BACKGROUND

A. Mining Industry

Mining is a vital industry for techno-industrial societies. Throughout the centuries,

people from different corners of the globe mined for different kinds of minerals which

they used in their daily lives. However, the advent of neo-liberal capitalism has made

the mining industry more powerful and tyrannical. In just a few hundred years, the

industry has brought tragedy to various countries and regions. It has destroyed the

planet's biosphere, including wildlife, affecting farmers, fishermen, indigenous

people, and causing the degradation of the last remaining forests, rivers and oceans

of the world, which have existed for millions of years.

The mining industry locates valuable minerals in the earth and water and

removes them in the most economical and efficient way. Mined materials include

energy minerals, such as coal, petroleum, and uranium; nonmetallic minerals, such

as limestone, salt, sandstone, and diamonds; and metallic minerals, such as iron ore,

gold, and silver.

Mining is the discovery, valuation, development, exploitation, processing, and

marketing of useful minerals.

B. History of Mining in the Philippines

Mining in the Philippines started in the pre-colonial period. In a number of regionsin the archipelago, indigenous communities mined for gold, copper and many otherminerals. Natives from all over the Philippines used gold, pearls, agate, and so on,for body ornaments. Gold was also bartered, through the Arab world, with merchants

all over Asia and Europe in the pre-Islamic and Islamic periods. It is noted that manymerchants from Luzon (Northern Philippines), Brunei and Jolo traveled continually allthroughout Mindanao in search of slaves and gold.

The first commercial mine in the Philippines was in Benguet, in Central Luzon,established by the Benguet Mining Corporation. The Spanish colonisers tookadvantage of whatever mineral resources they could get. In fact, gold was the mainreason why Spain colonized the Philippines, mainly for their so-called Royal Service.They even made a law, called Inspeccion de Minas, to inspect the existence ofminerals in the archipelago.

It was the Americans, however, who made strategic steps to exploit the mineralsof the Philippines. They did a geological survey, which validated the Philippines as a

mineral-rich country, and issued Act 468, a law that basically gave the governmentthe right to reserve mineral lands for its own purposes. They claimed a number ofareas as "reserved areas" for future mining, hence the commercialization of theBenguet gold mining.

In the year 1914 in the south, Surigao and other parts of the Caraga region weredeclared as an "iron reserved" area for future mining. By then, the mining industry inthe Philippines was on its way to boom and the Commonwealth US government took


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Provides technical assistance in the implementation and monitoring of

research programs;

Coordinates all technological researches undertaken by all the regional

research offices; and

Assesses and translates all recommendable findings into understandablelanguage and presentation and disseminates these findings to end users

and clientele.

Research Functions is to generates technologies and provide technical

assistance in research development of technologies relevant to the sustainable

use of Philippine ecosystems and natural resources.

Forest Management Bureau (FMB) integrated and absorbed the powers and

functions of the Bureau of Forest Development (BFD) and the Wood Industry

Development Authority (WIDA) except those line functions and powers which

were transferred to the Regional Field Offices.

On June 10, 1987, Executive Order No. 192 reorganized and created

the Department of Environment and Natural Resources, and among others, the

Forest Management Bureau. It is headed by a Director and assisted by an

Assistant Director. It operates with five (5) technical divisions namely:

Reforestation Division, Natural Forest Management Division, Community-based

Forest Management Division, Forest Land Uses Division and Forest Economics

Division. The Forest Management Bureau (FMB) building is located along

Visayas Avenue, Diliman, Quezon City, PHILIPPINES.

Land Management Bureau LMBwith the Department of Environment andNatural Resources Field Offices is mandated by DENR to administer, survey,

manage, and dispose Alienable and Disposable (A&D) lands and other

government lands not placed under the jurisdiction of other government

agencies. LMB is also in charged with the management and administration of the

country's natural resources including the protection of the people's rights over

their lands.

The LMB is headed by a Director and assisted by an Assistant Director.

The director's support staff consists of a Special Assistant to the Director and the

Planning and Management Staff (PMS). There are three (3) technical divisions

namely: Geodetic Surveys Division, (GSD) Legal Division (LEGAL) and the LandAdministration and Utilization Division (LAUD) while two (2) divisions project

support services namely; Administrative Division (ADMIN) and Records

Management Division (RMD).

Functions of LMB

One of the program priorities of the LMB is the fast tracking of the

cadastral survey project in the country. The program is instrumental


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in efficient patent distribution and accelerating country side

development. They also implementing the Oplan:Fake Titles project

which primary aim is to curb the issuance of fraudulent and spurious

patents/titles and institute legal proceedings for their cancellation.

The LMB has also embarked on the creation of a computer-based

inventory of land records otherwise known as the LRMIS. This

project aims to improve the physical condition of our records and

identification of missing records. The Land Management Bureau

(LMB) of the Department of Environment and Natural Resources

(DENR) and the Chamber of Real Estate and Builders Associations

(CREBA) agreed to computerize the LMBs location monuments

registry at no cost to the government, in an effort to ensure the safety

of records vital to the countrys land titling administration.

Protected Areas and Wildlife Bureau

A Bureau of the Department of the Environment and NaturalResources of the Republic of the Philippines, is the conservation of the

country's biological diversity through:

Establishment, management and development of the NationalIntegrated Protected Areas System (NIPAS)

Conservation of Wildlife Resources Information and Education for Nature Conservation

PAWB envisions a perpetual existence of biological and physical

diversities in a system of protected areas and such other important

biological components of the environment managed by a well-informedand empowered citizenry for the sustainable use and enjoyment of

present and future generations.

Environmental Management Bureau (EMB)is a line bureau of the Department

of Environment and Natural Resources who is mainly responsible for the

implementation and enforcement of RA 8749, otherwise known as the Philippine

Clean Air Act of 1999.

Its primary goal is to come out with a comprehensive national

program to achieve and maintain air quality that meets the

National Ambient Air Quality Guidelines for Criteria Pollutantsand their emission standards, while minimizing the possible

associated negative impacts on the countrys economy. Its

implementing rules and regulations contain specific requirements

that prohibit vehicular and industrial sources from emitting

pollutants in amounts that cause significant deterioration of air

quality.


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Mines and Geosciences Bureau (MGB)is the primary government agency

under the Department of Environment and Natural Resources, pursuant to

Executive Order No. 192 on June 1987.

It is responsible for the conservation, management,

development and proper use of the countrys mineral resourcesincluding those in reservations and lands of public domains.

It took the functions of the Bureau of Mines and Geosciences

but minus the line functions that were transferred mainly to the

DENR regional offices. It also absorbed the functions of the

abolished Mineral Resources Development Board (MRDB), and

the Gold Mining Industry Assistance Board (GMIAB).

Other Offices and Agencies

The different offices and agencies that ensure the efficiency and effectiveness of DENR'sprojects include the following:

National Mapping & Resource Information Authority

Laguna Lake Management Authority

Natural Resources Development Corp.

Pasig River Rehabilitation Commissions

Land Registration Authority

National Commission on Indigenous People

National Water Resource Board

National Solid Waste Management Commission

River Basin Control Office

Philippine Forest Corporation

Land Administration Management Project

Environmental Law Enforcement Task Force


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III. ENVIRONMENTAL NEWS AND CURRENT EVENTS

A. PHILEX MINING

Philexs SMMCI adopts Surigao river for environmentalprotectionFriday, August 23, 2013'Silangan has been a blessing for us'

The Silangan Mindanao Mining Co., Inc. (SMMCI), a Philex Mining Corp. subsidiary, has adopted a

portion of Timamana River in this province as part of the companys environmental-protectionprogram.

Alfa Moog, SMMCI environment manager, announced this following the cleanup drive conducted bythe company on the two tributaries of the river, whose water ultimately flows to the south of Lake

Mainit, the countrys fourth-largest lake in terms of surface area, and the deepest, reaching amaximum depth of 223 meters.

She said that 40 SMMCI staff trooped June 29 to the tributaries and worked with residents of Purok

3, in Tubod towns Barangay Timamana, and Purok 1 of Barangay Boyongan, Placer, in cleaning upthe river systems with trash and debris.

Yulo Perez, SMMCI president and COO, said the company intends to play an active role in takingcare of the environment not just in its host-community but also in the entire province of Surigao del

Norte.

As a matter of policy, environmental stewardship is an integral part of SMMCIs activities inSilangan, even if it is still in the exploration phase, he stressed. In fact, SMMCI spent about P33.47

million for various environmental programs last year. Our goal this year is not just to continue withthese programs, but also to expand our involvement in protecting the environment.


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Members of Philex Minings environment team at SMMCI cleaning up a tributary of Timamana River, in Purok 1 of BarangayBoyongan,Placer, Surigao del Norte, June 29 | ALT

The cleanup of Timamana River near a cockfight arena and a recycling center in Tubod was part ofand concluded SMMCIs activities carried out in June to celebrate the Environment Month. This

has made residents realize the importance of keeping the river clean by disposing their garbageproperly.

This was a fitting culmination activity for the Environment Month, Ms. Moog said. The clean up was also SMMCIs way of supporting the Adopt-an-Estero program of the EnvironmentalManagement Bureau [EMB] under the Department of Environment and Natural Resources.

On June 7, EMB Region 13 Director Metodio Turbella requested SMMCI to join the other supportersof EMBs Water Body Program in the orchestrated cleanup of adopted estero[drainagecanal],creek, and river with schools and other sectors of the community.

Sonieta Campos, chairperson of Brgy. Boyongan, said continuous downpour at the start of the rainyseason had worsened the clogging of Timamana River last June, resulting in floods extending to themain road after three consecutive days of heavy rainfall.

Its a good thing we are part of Silanganshost-community because its people are on hand to help uscarry out our environmental projects, such as the cleanup of Timamana River, she added.

She also noted the various social projects that SMMCI has been implementing for its host- and

neighboring communities. She said, Silangan has been a blessing for us. We have greatly benefitedfrom its infrastructure projects, such as the construction of school buildings, a drainage system, and a

health center.


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Philex to raise TSF3s tails beach to 608 ML for more stabilitySaturday, November 9, 2013

Open spillway would be able to channel up to 1,500 mm of rain over 24 hours

Philex Mining Corp. aims to raise to between 602 and 608 meters the tailings beach in a storage

facility at Padcal Mines, as part of its move to further stabilize this for the continued production ofgold and copper in Benguet.

The beach at the Tailings Storage Facility No. 3 (TSF3), where Philex Mining has been dumping

about 26,000 tons of tails daily from March 8, is currently at 597 meters above sea level (masl),according to Libby Ricafort, vice president at Philex Mining and resident manager of Padcal.

We must continue with our operations at the current pace, in order to bring our TSF3 at its formercondition before the Aug. 1, 2012 accident, he stressed. At 602 masl, little water will go into

Penstock B while at 608 masl, the latter may be decommissioned.

Building an open spillway at and creating a beach in TSF3 are part of the government-approvedurgent remediation measures for the pond. The beach is done by filling up the void created by a

sinkhole when TSF3 discharged nontoxic water and sediment onto Balog Creek after historicallyunprecedented rains brought about by two successive typhoons.

Since August, water has been flowing onto the open spillway from TSF3, whose two chutes were

done in June while the third and last one will be undertaken during the next dry season. Upon fullcompletion, the spillway, whose each chute measures 12 meters wide and 300 meters long, will beable to channel up to 1,500 millimeters (mm) of rain over 24 hoursor more than thrice the 455 mmof rain that Typhoon Ondoy dumped over a 24-hour period in 2009.

According to government regulation, an open spillway must be designed in such a way that it couldwithstand a flood event having an unusual rainfall with a 1-percent chance of occurring at any giventime. For TSF3 and its open spillway, this unusual rainfall would be equivalent to 1,000 mm in 24

hours.

Padcals urgent remediation measures have progressed significantly since government regulatorsallowed Philex Mining to resume operations, Michael Toledo, SVP for Corporate Affairs at Philex

Mining, said.

Mr. Ricafort said the 602 meter level (ML) of tails at TSF3 can be achieved in between nine and 12

months from July, while having the 608 ML may take another two years, emphasizing that the less

than 100-hectare pond is cone-shaped and, therefore, becoming wider from bottom to top.

He added that there is now a limited amount of water going into the ponds Penstock B, which may

be decommissioned once the tails beach rises to between 602 ML and 608 ML while the offset dike,which is being reconstructed, reaches 615 ML from its current 611 ML.

It may be recalled that Philex Mining had condemned TSF3s Penstock A and its connecting Tunnel

A and sealed these off with concrete after the accident. Penstock B and Tunnel B, on the other hand,may still be used if needed.

The quality of water at tributaries near the Padcal mine site, including Balog Creek and Agno River,

and even downstream to the irrigation canal in Pangasinan, has passed regulatory limit and remainedbelow the effluent standards set by government, while fish samples were within the criteria imposedby foreign environmental commissions.


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A Philex Mining team creating a pontoon for vetiver to be floated on a fishpond at Balog Creek, June 16 | BUTCH FRANCO

TSF3s nontoxic water drains into Agno River through Balog Creek, which has been cleaned off ofsilt by Philex Mining following the tailings-leak accident last Aug. 1. Rehabilitation efforts havecontinued following the go-signal given by government regulators on July 5 to continue with the

urgent remediation of TSF3 while they are reviewing technical details.

Saying that vetiver helps eradicate the oversupply of nitrogen and phosphorus from the water due to

topsoil erosion, Ms. Manarang calculated that the 90-hectare TSF3 would need at least 300 pontoons

of vetivers from the start for the sustainable and cost-efficient propagation of the plant for all theneeds of TSF3. She added that her team has also proposed to Philex Mining that vetiver grasses be

planted near the silt traps installed at Balog Creek.

She said vetiver, which grows in various types of soilfrom porous sand to dense clayand onwater, could likewise be used for the livelihood of a community since there is high demand for its

roots in Japan, where they stuffed these in pillows, and The Netherlands, among other countries.

She revealed that a company in Tokyo, for instance, has asked Vetiver Farms for one ton of vetiverroots per monthsomething which her company cannot and will not provide all, stressing that their

focus is the promotion of the plant for its bioengineering and environmental application.

She also said that a Dutch company has been looking for sources for hats with vetiver roots, as these

are good repellent against mosquitoes and other insects. She added that vetiver, which is also a goodsource for essential oil, is used by one of the worlds leading perfume manufacturers.


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B. OTHER NEWS AND CURRENT EVENTS RELATING TO THE

INDUSTRY

Leyte coastal rehab to cost P350MNovember 28, 2013

MANILA, PhilippinesThe Department of Environment and Natural Resources (DENR) hasearmarked almost P350 million for the restoration of the green wall of mangrove and natural beach

forests on the coasts of the Eastern Visayas that was the worst hit by Supertyphoon Yolanda.Environment Secretary Ramon Paje on Wednesday said the DENR would lead a massive coastalrehabilitation of the region, particularly Leyte and its capital city, Tacloban, and has set aside some

P347 million for the program.

Tacloban is a major concern given its being a major population center, but the undertaking willcover practically the entire eastern seaboard of Eastern Visayas, Paje said.

The objective is to restore the regions degraded coastal forests and to make its coastline s less

vulnerable to extreme weather events.

It is clear in the law that we cannot allow people to build houses in areas for mangroves and beach

forest, said Paje, referring to Presidential Decreee 1067, or the Philippine Water Code.Under Article 51 of that code, banks of rivers and streams and the shores of the seas and lakes

throughout their entire length and within a zone of three meters in urban areas, 20 meters inagricultural areas and 40 meters in forest areas, along their margins are subject to the easement of

public use in the interest of recreation, navigation, floatage, fishing and salvage.

Paje said the situation in Eastern Visayas necessitates a display of political will from their local

government officials to restore their mangrove areas and beach forests.

He noted that the affected coastlines were once mangroves and beach forest areas but most had beenconverted into settlement areas by squatters or for development activities.

Had the mangroves in Leyte and Eastern Samar not been decimated, the storm surge in those areaswould have been dissipated by 70 to 80 percent of its strength, Paje said.

He cited a study by the Department of Science and Technology indicating that the strength of aneight-meter storm surge is concentrated within the lower six meters with the upper two meters as

only having tidal currents.

The surge can only destroy the leaves, but it cannot uproot the mangroves because they are so deep -

rooted and strong that they will regrow in time, Paje said.


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Aquino urged to stop pushing coal power plantsOcteber 22, 2013

MANILA, PhilippinesA civil society network advocating for reforms to help the country adapt toclimate change expressed dismay on Tuesday, over the Aquino administrations push for coal-fired

power plants, and renewed its call on government to tap cleaner and less wasteful sources of energy.

Aksyon Klima Pilipinas, in a statement, said it was disappointed with the apparent priority given tocoal by government in supplying the countrys energy needs.

We are dismayed to see the governments renewable energy plans go to waste i n favor of dirty and

harmful energy. Our message is simple: Coal will cost us the climate, which in turn will cost all of usour lives and livelihoods, Voltaire Alferez, national coordinator of Aksyon Klima, said.It looks cheaper in the short term compared to renewable energy, but our lives and our environment

are much more costly, he said.

Aksyon Klima noted that the Renewable Energy Law was passed in 2008, and the government lateron followed it up with the National Renewable Energy Plan in 2010 seeking to triple the renewable

energy capacity of the country by 2030.

Moreover, Aquino signed in 2011 the National Climate Change Action Plan, which identified

sustainable energy as a priority, it said.

However, Aquino has defended the building of more coal-fired power plants in his last State of theNation Address by citing the limitations of renewable energy, the group said.

In addition, the Philippine Development Plan prioritizes coal-fired power plants in the next several

years of this administration, affirming the presidents SONA pronouncement, it added.Renewable energy technologies continue to improve while the costs continue to decrease, Alferezsaid.

In the meantime, the sea continues to warm and rise, while typhoons are becoming more frequen t

and intense because of the burning of coal and other fossil fuels. [Mr. Aquino] has more than enoughreasons to invest in renewable energy, but has yet to step up his game, he said.

Forty-three percent of carbon dioxide emissions from fuel combustion were produced from coal in2010, compared to 36 percent from oil and 20 percent from gas, according to a 2012 publication ofthe International Energy Agency.

On the other hand, a 2011 United States study estimated that the economic, health-related,

environmental, and other impacts of coal cost the United States a third to over one-half a trilliondollars annually.


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Mining industry sees role in typhoon-hit areas'

rehabilitation

November 20, 2013

BAGUIO CITYThe Philippine mining industry sees its essential role in the massive reconstruction

in areas severely devastated by super typhoon Yolanda (Haiyan).

Mining industry leaders and stakeholders converging here for four days until Friday said their role in

the rehabilitation and reconstruction of typhoon-devastated Leyte province and nearby areas in the

Visayas will be very important.

Engr. Louie Sarmiento, president of the Philippine Mine Safety Association (PMSEA) spearheading

the Annual National Mine Safety and Environment Conference, said the industry sees the devastation

as an opportunity to prove that it can play a vital role in national reconstruction and rehabilitation.

Bohol for one is limestone rich, Sarmiento said, adding that that resource in the making of cement is

important in the physical reconstruction of the area and the rest of the Yolanda-damaged areas in the

Visayas.

"It is the mining industry that has the technical capability to extract that mineral richness. It is the

time when the industry should shine and show its imporantance," Sarmiento said.

Samuel Paragas, director of the Mines and Geosciences Bureau Region 4-A, dispelled the mindset

that the mining industry is the reason behind various problems in the communities. He said that

instead, the industry is the backbone of every nation.


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IV. ENVIRONMENTAL POLICIES AND ISSUES

P.D. 984 Pollution Control Law

aims to prevent, abate and control pollution of water, air and land for the more effective

utilization of the resources of this country.

P.D. 1151Philippine Environmental Policy

- defines the general policies on he pursuit of a better quality of life for the present and

future generations and mandates the undertaking the environmental impact

assessments for all projects, which may significantly affect the environment.

P.D. 1152Philippine Environmental Policy

- defines the policy objectives and the strategies for the various aspects of

environmental management, such as air and water quality management, natural source

development, land management, and waste management. It launches a comprehensive

national program of environmental protection and management, with reference to

policies and standards of noise, air quality, water quality, classification of water and

waste management.

P.D. 1586defines the framework for the implementation of the environmental impact

assessment as the mechanism to reconcile the impacts of development projects on

society and the physical environment.

P.D. 1219providing for the protection of coral ecosystems.

P.D. 1067Water Code of the Philippines

- adopts adequate measures to conserve and regulate the use of water in commercial,

industrial and residential areas. It also provides other policy guidelines in water quality

and management of water resources.

P.D. 463amended the Mining Act of 1936, requires all mining leaseholders to comply

with Pollution Control Laws and regulations and provide for penalties for noncompliance.

P.D. 1198 reinforces this provision for restoration of mined-out areas to this original

condition to the extent possible.


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P.D. 1251imposes fines on tailings and mine wastes and the fund generated is used

to pay for the damages to land, agricultural crops, forests products, aquatic resources

and infrastructures caused by pollution for mining operations.

P.D. 600 ( amended by P.D. 979)Water Pollution Control

- prohibits the discharge of oil, noxious liquid substances, and other harmful substances

into the countrys inland and territorial waters.

R.A. 9003The Solid Waste Management Act of 2001

- An act providing for an ecological solid waste management program, creating the

necessary institutional mechanisms and incentives, declaring certain acts prohibited and

providing penalties, appropriating funds therefor, and for other purposes.

R.A. 9275- also known as the Philippine Clean Water Act of 2004 an actproviding a comprehensive water quality management and for other purposes.


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V. ENVIRONMENTAL ACCOUNTING

A. PFRS 6 - EXPLORATION AND EVALUATION OF MINERAL

RESOURCES

Exploration for and evaluation of mineral resources mean the search for mineral

resources, including minerals, oil, natural gas and similar non-regenerative resources

after the entity has obtained legal rights to explore in a specific area, as well as the

determination of the technical feasibility and commercial viability of extracting the

mineral resource.

Exploration and evaluation expenditures are expenditures incurred in connection with

the exploration and evaluation of mineral resources before the technical feasibility and

commercial viability of extracting a mineral resource is demonstrable.

Exploration and evaluation expenditures include the following:

1. Acquisition of rights to explore

2. Topographical, geological, geochemical and geophysical studies

3. Exploratory drilling

4. Trenching

5. Sampling

a. Activities in relation to evaluating the technical feasibility and commercial viability

of extracting a mineral resource.

b. General and administrative costs directly attributable to exploration and

evaluation activities.

Expenditures related to development of mineral resources, for example, preparation

for commercial production, such as building roads and tunnels, cannot be recognized as

exploration and evaluation expenditures.

Exploration and evaluation asset

The exploration and evaluation expenditures may qualify as exploration and

evaluation asset. However, the standard does not provide a clearcut guidance for the

recognition of exploration and evaluation asset.

Measurement and classification

If an entitys accounting policy results in the recognition of an exploration and

evaluation asset, such asset shall be measured initially at cost.After initial recognition,

an entity shall apply either the cost model or the revaluation model.

Exploration and evaluation asset is classified either as tangible asset or an intangible

asset. For example, vehicles and drilling rigs would be classified as tangible assets and

drilling rights would be classified as intangible assets.


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Impairment

PFRS 6 provides that exploration and evaluation asset shall be assessed for

impairment when facts and circumstances suggest that the carrying amount may exceed

recoverable amount. Facts and circumstances that may indicate impairment include:

a. The period for which the entity has the right to explore in a specific area has

expired and is not expected to be renewed.

b. Substantive expenditure for exploration and evaluation is neither budgeted nor

planned.

c. The exploration and evaluation activities have not led to the discovery of

commercially viable quantity of mineral resource and the entity has decided to

discontinue such activities.

d. Sufficient data indicate that the carrying amount of the exploration and evaluation

asset is unlikely to be recovered in full from successful development by sale.

Wasting assets

Wasting assets are material objects of economic value and utility to man produced

by nature. Actually, wasting assets are natural resources. Natural resources usually

include coal, oil, ore, and precious metals like gold, silver and timber.

Wasting assets are so called because these are physically consumed and once

consumed, the assets cannot be replaced anymore. If ever, the wasting assets can be

replaced only by the process of nature. Natural resources cannot be produced by man.

Thus, wasting assets are characterized by two main features:

1. The wasting assets are physically consumed.

2. The wasting assets are irreplaceable.

3.

Cost of wasting asset

Entities follow a wide variety of practices in accounting for an extractive industry. At

present, IFRS does not address wasting assets. There is no comprehensive standard

that is applicable to the extractive or mining industry.

In general, the cost of wasting assets can be divided into four categories, namely:

a. Acquisition cost

b. Exploration cost

c. Development cost

d. Estimated restoration cost


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Acquisition cost

Acquisition cost is the price paid to obtain the property containing natural resource.

Unquestionably, this is the initial cost of the wasting asset. Generally, the acquisition

cost is charged to any descriptive natural resource account.

If there is a residual land value after the extraction of the natural resource, the

portion of the acquisition cost applicable to the land may be included in the natural

resource account or may be set up in a separate account and the remaining cost should

be charged to the natural resources account.

Actually, the land value is the residual value of a wasting asset for purposes of

computing depletion. Thus, this should be deducted from the total acquisition cost to get

the depletable amount.

Exploration cost

The exploration cost is the cost incurred in an attempt to locate the natural resourcethat can economically be extracted or exploited. The exploration may result in either

success or failure. Accordingly, the exploration cost may be accounted for following two

methods, namely successful effort method and full cost method.

Under the successful effort method, only the exploration cost directly related to the

discovery of commercially producible natural resource is capitalized as cost of the

resource property. The exploration cost related to dry wells or unsuccessful discovery

is expensed in the period incurred.

Under, the full cost method, all exploration costs, whether successful or

unsuccessful, are capitalized as cost of the successful resource discovery.

Development cost

Development cost is the cost incurred to exploit or extract the natural resource that

has been located through successful exploration.

Development cost may be in the form of tangible equipment and intangible

development cost.

Tangible equipment includes transportation equipment, heavy machinery, tunnels,

bunker and mine shaft. The cost of tangible equipment is not capitalized as cost of

natural resource but set up in a separate amount and depreciated in accordance withnormal depreciation policies.

Intangible development cost is capitalized as cost of the natural resource. Such cost

includes drilling, sinking mine shaft and construction of wells.

Restoration cost


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The resource property may be sold after extraction activities are complete. The

amount expected to be derived from such sale represents the residual value of the

resource property. To prepare the property for sale, however, restoration cost may be

necessary to bring the property to its original condition.

Such restoration cost may be added to the cost of resource property or netted

against the expected residual value of the resource property.

Under paragraph 16 of PAS 16, the estimated cost of restoring the property to its

original condition is capitalized only when the entity incurs the obligation when the asset

is acquired.

In other words, the restoration cost must be an existing present obligation although

the amount and timing are uncertain.

DEPLETION

The removal, extraction or exhaustion of a natural resource is called depletion.

Depletion is the systematic allocation of the depletable amount of a wasting asset

over the period the natural resource is extracted or produced.

In essence, however, depletion is recognized as the cost of the material used in

production and thus becomes the finished product of the extractive entity since the

wasting asset is conceived as the total cost of the materials available for production.

Depletion Method

Normally, depletion is computed using the output or production method. Following

the output method, depletion is computed as follows:

The depletable amount of the wasting asset is divided by the units estimated to be

extracted to obtain a depletion rate per unit. The depletion rate per unit is then multiplied

by the units extracted during the year to arrive at the depletion for the period.

Example:

A wasting asset entity has acquired the right to use a property to explore a natural

resource. The acquisition cost is P5, 500,000, the related exploration costs amount to

P3,500,000, and development costs incurred in erecting wells and drilling the deposit are

P6,000,000. Total costs of the wasting asset therefore amount to P15,000,000.

It is estimated that the resource deposit is approximately 1,000,000 units. The

depletion rate per unit is computed as follows:


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Depletion rate per unit = P15,000,000

1,000,000units

= P15

If 350,000 units are extracted in the first year of operations, then the depletion for theyear is P5,250,000, computed by multiplying the production of 350,000 units by the rate

of P15.

The entry to record depletion is:

Depletion P5,250,000

Accumulated Depletion P5,250,000

In the income statement, the depletion is classified as part of the cost of production

or cost of sales. If a statement of financial position is prepared at the end of the first

year, the wasting asset would be shown as a separate line item as follows:

Resource deposit, at cost P15,000,000

Accumulated depletion (5,250,000)Carrying Amount P9,750,000

Revision of depletion rate

Not frequently, the original estimate of the resource deposit has to be changed either

because new information is available ir because production processes have become

more sophisticated.

Accordingly, the procedure is to revise the depletion rate on a prospective basis, that

is, by dividing the remaining depletable cost of wasting asset by the revised estimate of

the productive output.

For instance, assume that, in the preceding example, additional development costs

of 3,750,000 are incurred in the second year, and recoverable deposits are estimated to

be 1,350,000 at the beginning of second year.

The depletion rate per unit for the second year is computed as follows:

Original cost of wasting asset:

Original cost of wasting asset P15,000,000

Additional development costs in second year 3,750,000Total P18,750,000

Accumulated depletion (5,250,000)

Remaining depletable amount P13,500,000Depletion rate per unit (13,500,000/1,350,000 units) = P10


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Shutdown

In the year of the shutdown, the remaining carrying amount of the equipment is

divided by the remaining life of the equipment to arrive at the depreciation.

Thus, in the preceding example, if there is a shutdown in the second year, the

depreciation is determined as follows:

Equipment, at cost P 9,000,000

Accumulated depreciation (1,000,000)Carrying Amount (beginning of 2ndyear) P8,000,000

Depreciation for second year (8,000,000/9 years) = P888,888

When operations are resumed, the depreciation is again computed following the

output method.

But in such case, a new depreciation rate per unit is computed by dividing the

remaining carrying amount of the equipment by the remaining or revised estimate of the

deposit.

Thus, if in the third year, operations are resumed and 60,000 units are extracted, the

depreciation on the equipment is computed as follows:

Equipment, at cost P9,000,000Accumulated depreciation (1,000,000 +888,888) (1,888,888)

Carrying Amount (beg of third year) P7,111,112

Original estimate of deposit 450,000unitsLess: Extracted in first year 50,000

units

Remaining estimate if deposit 400,000units

Depreciation rate per unit (7,111,112/400,000 P 17.78Depreciation for the third year (60,000 units x 17.78 P1,066,800

Wasting asset doctrine

Under this doctrine, a wasting asset corporation or an entity engaged in the

extraction of a natural resource can legally return capital to shareholders during the

lifetime of the corporation.

Accordingly, a wasting asset corporation can pay dividend not only to the extent of

retained earnings but also to the extent of accumulated depletion.


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B. MISSION-VISION

Vision

Our vision is to be a highly respected, world-class natural resource company committed

to deliver excellent value to its investors, employees, and other stakeholders.

Mission

We are a responsible mining corporation that discovers and processes minerals and

energy resources for the use of society.

C. ORGANIZATIONAL CHART


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D. CORPORATE STRUCTURE

E. FACTS

First mining company in the Philippines to have earned the International Standard

Organization (ISO) 14001 certification since 2002.

Largest mining company in the Philippines

Made the first underground block cave mine in the Far East

Has produced 5.3 million ounces of gold and 2.0 billion pounds of copper to-date from

Padcal mine.

Padcal Mines (Benguet), which Philex has been operating since 1958, is the first

underground block cave operation in the Far East.

Silangan Project (Surigao del Norte) combines the Boyongan and Bayugo deposits,

which are comprised of gold, copper, and silver.


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Philex is exploring the possibility of re-opening the Bulawan Project (Negros Occidental),

which is now on care-and-maintenance phase

F. ACCOUNTING PECULIARITIES

Exploration and Evaluation of Mineral Resources (IFRS 6)

Exploration for and evaluation of mineral resources mean the search for mineral

resources, including minerals, oil, natural gas and similar non-regenerative resources

after the entity has obtained legal rights to explore in a specific area, as well as the

determination of the technical feasibility and commercial viability of extracting the

mineral resource.

Exploration costs

These are assets to which an expenditure can be associated with finding specific

mineral resources. The entity must develop its own accounting policy for the recognition

of this asset.

Classification: can either be tangible or inatngible asset.

Initial Measurement: shall be measured at cost

Measurement after recognition: the entity shall apply either the cost model or the

revaluation model. If the revaluation model is applied it shall be with the classification ofassets

Impairment Recognition and Measurement: shall be assessed for impairment when facts

and circumstances suggest that the carrying amount of an exploration and evaluation

asset may exceed its recoverable amount. If it exceeds the recoverable amount, the

entity shall be measure, present and disclose the resulting impairment loss in

accordance to IAS 36

Exception: An entity shall determine an accounting policy for allocating exploration and

evaluation assets to cash- generating units or groups of cash-generating units for the

purpose of assessing such assets for impairment. Each cash-generating unit or group of

units to which an exploration and evaluation asset is allocated shall not be larger than an

operating segment determined in accordance with IAS 14.


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Royalty fees

These are payments to the indigenous cultural community as part of a trust fund for their

socio-economic well being, upon utilization of the minerals by the entity.

Valuation: At least 1% of gross revenue if ancestral land is developed for mining fromthe Social Development Provisions Of The Mining Act of 1995 of the Philippines.

Provision for mine rehabilitation fund

Fund to rehabilitate an excavated mined-out, tailings covered and disturbed areas to the

condition of environmental safety. The fund shall be deposited as a trust fund in a

government depository bank and used for physical and social rehabilitation of areas and

communities affected by mining activities and for research on the social, technical and

preventive aspects of rehabilitation.

Valuation: Variable

Penalty: Failure to fulfill the above obligation shall mean immediate suspension or

closure of the mining activities of the contractor/permittee concerned.

Environmental Protection Fund

To finance this fund :

a) A national environment protection fee in an amount equivalent to ten percent (10%) of

the total fees charged, but not more than One hundred pesos (P100.00) for every

business or non-business permit or license issued by the government.

b) An allocation equivalent to ten percent (10%) of the total unclaimed bank balances

escheated in favor of the State under Republic Act No. 3936

IFRIC 5 - Decommissioning restoration & environmental rehabilitation funds

Decommissioning restoration and environmental rehabilitation fund - purpose is to

segregate assets to fund some or all of the costs of decommissioning plant (such as a

nuclear plant) or certain equipment (such as motor cars). or in undertaking

environmental rehabilitation (such as rectifying pollution of water or restoring mined land)

The contribution in the above funds may be through voluntary or regulatory obligations.

The funds may have any of the following structures.


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(a) Funds that are established by a single contributor to fund its own decommissioning

obligations whether for a particular site or for a number of geographically dispersed

sites.

(b) Funds that are established with multiple contributors to fund their individual or jointdecommissioning obligations when contributors are entitled to reimbursement for

decommissioning expenses to the extent of their contributions plus any actual earnings

on those contributions less their share of the costs of administering the fund.

Contributors may have an obligation to make additional contributions for example in the

event of the bankruptcy of another contributor.

(c) Funds that are established with multiple contributors to fund their individual or joint

decommissioning obligations when the required level of contributions is based on the

current activity of a contributor and the benefit obtained by that contributor is based on

its past activity. In such cases there is a potential mismatch in the amount of

contributions made by a contributor (based on current activity) and the value realizable

from the fund (based on past activity).

Recognition: The contributor shall recognize its obligation to pay decommissioning costs

as a liability and recognize its interest in the fund separately unless the contributor is not

liable to pay decommissioning costs even if the fund fails to pay

When a contributor has an obligation to make potential additional contributions, for

example in the event of the bankruptcy of another contributor or if the value of the

investment assets held by the fund decreases to an extent that they are insufficient to

fulfill the funds reimbursement obligations. this obligation is a contingent liability that iswithin the scope of IAS 37. The contributor shall recognize a liability only if it is probable

that additional contributions will be made.

IFRIC 20Stripping Costs in the Production Phase of a Surface

This interpretation applies to waste removal costs (stripping costs) that are incurred in

surface mining activity during the production phase of the mine (production stripping

costs).If the benefit from the stripping activity will be realized in the current period, an

entity is required to account for the stripping activity costs as part of the cost ofinventory. When the benefit is the improved access to ore, the entity should recognize

these costs as a non-current asset, only if certain criteria are met (stripping activity

asset). The stripping activity asset isaccounted for as an addition to, or as an

enhancement of, an existing asset. After initial recognition, the stripping activity asset is

carried at its cost or revalued amount less depreciation or amortization and less

impairment losses, in the same way as the existing asse of which it is a part.


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Mine Wastes and Tailings Fees

A semi-annual fee imposed on all operating mining companies. The mine wastes and

tailings fee shall accrue to a reserve fund to be used exclusively for payment for

damages to:

(a) Lives and personal safety;

(b) Lands, agricultural crops and forest products, marine life and aquatic resources,

cultural resources; and

(c) Infrastructure and the revegetation and rehabilitation of silted farm lands and other

areas devoted to agriculture and fishing caused by mining pollution.

Occupation Fees

Collected from any holder of a mineral agreement, financial or technical assistance

agreement or exploration permit on public or private lands, an annual occupation fee

(a) For exploration permit - Five pesos (P5.00) per hectare or fraction thereof per

annum;

(b) For mineral agreements and financial or technical assistance agreements - Fifty

pesos (P50.00) per hectare or fraction thereof per annum; and

(c) For mineral reservation - One hundred pesos (P100.00) per hectare or fraction

thereof per annum.

Solid Waste Management Fund

Treated as a special account in the National Treasury, to finance this fund:

Purpose: to finance products, facilities, technologies and processes to enhance proper

solid waste management.

a) Fines and penalties imposed, proceeds of permits and licenses issued by the

Department of Environment and Natural Resources and donations, endowments, grants

and contributions from domestic and foreign sources

b) Amounts specifically appropriated for the Fund under the annual General

Appropriations Act


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Air Quality Management Fund

Treated as a special account in the National Treasury

Purpose: is for the containment, removal, and clean-up operations of the Government in

air pollution cases, guarantee restoration of ecosystems and rehabilitate areas affected.

Sources of Fund:

a) Fines imposed and damages awarded to the Republic of the Philippines by the

Pollution Adjudication Board (PAB), proceeds of licenses and permits issued by the

Department of Environment and Natural Resources, emission fees and from donations,

endowments and grants in the forms of contributions.

Exemption:

Contributions to the Fund shall be exempted from donor taxes and all other taxes,

charges or fees imposed by the Government.

National Water Quality Management Fund

Treated as a special account in the National Treasury

Purpose: Finance containment and clean-up operations of the government in water

pollution cases

Sources of Fund:

The fines imposed and damages awarded to the government by the Pollution

Adjudication Board (PAB), proceeds of permits issued by the Department of

Environment and Natural Resources donations, endowments and grants in the form of

contributions to the national government.

Exemption:

Such donations, endowments and grants shall be exempt from donor's taxes and all

other taxes, charges or fees imposed by the government and shall be deductible from

the gross income of the donor for income tax purposes.


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The Area Water Quality Management Fund -

Purpose: Utilized for the grant of rewards and incentives for entities whose effluent

discharges are better than the water quality criteria of the target classification of the

receiving body of water, loans for acquisitions and repairs of facilities to reduce quantity

and improve quality of waste water discharges, and regular maintenance of the waterbodies within the management area.

Allocation: An amount of not more than ten percent (10%) of the total amount accruing to

the funds annually shall be allocated for the operational expenses of the governing

board,its secretariat and multi-sectoral water quality surveillance and monitoring

network.

Source of Fund:

This fund shall initially be sourced from the fines incurred by the establishments located

in rural areas. Thereafter, the fees collected under the waste water charge system,

donations, endowments and grants for water quality management of the area shall

accrue to the fund.

Advacc Environmenta acctgl

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