Assessing RA7942 vs HB4315

7/31/2019 Assessing RA7942 vs HB4315

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ASSESSING THE1995 MINING ACT

AND THE

PEOPLES MINING BILLSHERWIN DE VERAResearch & Advocacy Officer, ICRED

Convenor, Save the Abra River Movement


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OUTLINE

Profile of the Philippine Mineral

Industry

Orientation & Features of theMining Sector

Debunking the Myth of Development& Responsible Mining under RA 7942

Towards a New Philippine MiningPolicy

Updates on HB 4315 TheConsolidated Mining Bill

Our Call


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Profile of the PhilippineMineral Industry


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THIRD FOURTH FIFTH

GOLD COPPER NICKEL

The estimated levels of metallic and non-metallicmineral reserves stood at 7 billion metric tons and 50billion metric tons, respectively. The country's refractorychromite resource in Zambales is one of the largest in the

world. (National Statistic Coordinating Board)


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From 545 approved mining agreements in

2009, we now have 785 approved miningprojects, as of January 2012.

Around 1,042,531 hectares from the total

land area of the country is now covered bymining permits.


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Mining Operations

30 Metallic Mines (2011) 3 copper + gold & silver

1 copper + gold, silver & zinc 5 gold mines 2 metallurgical chromite 18 nickel mine 1 magnetite mine

2, 358 Non-metallic mines 1820 sand & gravel 15 cement 523 others

Processing1 nickel processing plant

1 copper processing plant

Gold, nickel, copper & chromitecompose 96% of mineralproduction in the country.


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Orientation & Features ofthe Mining Sector


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STRUCTURAL ADJUSTMENT PROGRAMS OFINTERNATIONAL FUNDING INSTITUTIONS

In the 1990s leading IFIs (IMF, WB, ADB)took issue on the supposed restrictive laws &regulations governing foreign investments inkey sectors & industries.

They recommended & exerted their influencethrough financial loans to create a friendlierbusiness climate for foreign investments &rejuvenate mining in the Philippines.

During this period, the WB was very aggressive& explicit in recommending reforms towardsliberalizing the mining sector in Africa, LatinAmerica, & the Carribean consistent with theframework of RA 7942.


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STRUCTURAL ADJUSTMENT PROGRAMS OFINTERNATIONAL FUNDING INSTITUTIONS

The following are some of the recommendationsof the Asian Development Bank (ADB): The enactment of a new mining code; The integration of the Omnibus Investment Code and

the Foreign Investment Act, which is deemed essentialto establishing a single statute covering all major

provisions governing the rights and obligations offoreign investors in the Philippines

The World Bank (WB) proposed the followingactions to meet their investment standards:

Reducing risk and uncertainty for potential investors; Ensuring easy access to exploration permits and mining

concessions; Providing additional guarantees in investment

agreements to protect the investor from unwarranted

government interference;


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The RAMOS ADMINISTRATION kicked-off forthe full liberalization of major industries in

the Philippines including mining.

On 6 March 1995 RA 7942 or the PhilippineMining act of 1995 was passed into law takinginto account almost all the recommendations

of ADB and the World Bank.

Its primary objective wasto revitalized the Philippine

mining industry and make itamong the key contributorsto the countrys economicgrowth.


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Republic Act No. 7942 (Philippine Mining Act of 1995)AN ACT INSTITUTING A NEW SYSTEM OF MINERAL RESOURCES

EXPLORATION, DEVELOPMENT, UTILIZATION ANDCONSERVATION

Exploration Permit (EP) 2 years/renewable up to 8 years -Grants exclusive right to explore and eventually enter intoMineral Agreement or Financial or Technical Assistance

Agreement

Mineral Processing & Sharing Agreement (MA) 25 years &renewable for 25 years -Three (3) modes: MineralProduction Sharing; Co-Production and Joint Venture;Grants exclusive rights to explore, develop and utilize

minerals Financial or Technical Assistance Agreement (FTAA) 25

years/renewable for 25 years. It involves large-scale miningoperations with minimum committed investment of $50Million for infrastructure and development . Needs approvalby the President of the Phils.


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KEY FEATURES OF RA 7942 (THE PHILIPPINEMINING ACT OF 1995)

100% ownership of foreign company and providingequal rights and opportunity to exploit the mineralresources with Filipino citizens, and the followingincentives:

Tax holidays (for a maximum of 5 years) & incentives

such as accelerated depreciation of fixed assets &exception from real property taxes on pollution control.

investment guarantees, repatriation of capital, freedomof expropriation, remittance of earnings and interest onforeign loans, freedom from requisition of properties and

the confidentiality of information with regards toendeavors and transactions.

Privileges free use of timer & water, easement rights;military protection & govt infrastructure support.


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In 2004, the Supreme Court (SC) declared its provision, theFinancial & Technical Assistance Agreement (FTAA)unconstitutional. But, controversially and suddenly, the SC

reversed its decision after the lobbying of the ExecutiveDepartment and business groups.

Furthermore, former Pres. Gloria Arroyo harmonized existinglaws & regulations through the Mineral Action Plan to conformwith the requests of mining corporation. This shifted the state

policy from tolerance to active promotion.

Creation of the Committee on MiningSecurity & Investments Defense forceunder the National Mineral Councilwhich provided the legal frameworkfor the AFP & PNP to activelyparticipate in the promotion of mininginvestments.


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Aquino had signaled that furtherliberalizing the countrys mining industry togenerate more revenues was a topeconomic priority.

PNoys economic target is to doubleforeign investment in mining ($2.8B)in 2011.

He also vowed to guide the mining industryby protecting the investments of miningcompanies.

Continued support for the InvestmentDefense Force (IDF)

Last October 2011, he ordered further

recruitment of paramilitary forces andtheir deployment in mining areas.

Exempted Mining Companies from totallog ban


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NEW EXECUTIVE ORDER ON MININGdraft was set to be completed by the end of February titledInstitutionalizing and implementing reforms in the

Philippine mining sector, providing policies and guidelinestherefor, and for otherpurposes

To maximize revenue from the mining sector,the government wants to:

Declare more mineral reservationswould increase the government take by 5% + 2%

excise tax = 7%; it would raise the govt revenuefrom P400M to P6B per year.

Increased regulations & controlintends to put greater pressure to small-scale miners

Auction of mineral rightsHighest bidder system to maximize the share for thegovernment.


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Debunking the Myth ofDevelopment & ResponsibleMining under RA 7942


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GOVT & CORPORATION CLAIMS ONTHE 1995 MINING ACT (RA 7942)

A comprehensive policy and

legislation that provides bothcomprehensive mine closure andpost-mining sustainabledevelopment

Will make the industry contributea multiplier effect of six timeswhich means at a potential value-added of P300 billion annually,mining can add an incrementaleconomic activity of P1.8 Trillionor 36% of the GDP


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Mining is the 3rd lowest value-added among 14major sectors but has the highest profit margin.

FOOLS GOLD: Insignificant economicgain from the industry


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FOOLS GOLD: Insignificant economicgain from the industry

Ave. Contribution to GDP (2000-2010): 1.105 %

Ave. Share to Total Employment(2000-2010): 0.438 %

Ave. Contribution to Exports Metallic (2000-2010): 3.33 %

Ave. Share of MiningInvestments to TotalInvestments: 2.50%

Mining has the highest povertyincidence of any sector in thecountry 48.7%. The only sectorwhere poverty incidenceincreased between 1988-2009.


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Depriving people of access to land andother natural resources

Section 18 of RA 7942 says, all mineral resources in public orprivate lands, including timber or forestlands shall be openedto mining operations.

Access and control to as much as 81,000 hectares onshore and324,000 hectares offshore are accorded to each of these miningcorporations.

Such right is given along with timber, water, easement, ingressand egress rights and a host of fiscal incentives.


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Perpetuates export-orientation andimport-dependence

Dependent to foreign capitaland technology

Stuck at low valued-addedextractive stage: 1 copper

smelter & 1nickel processingplant

Export oriented: US$ 2.173Bor 6% of total exports (2011)

Japan, Australia, Canada, China Unequal trade: US$ 2.5B

exports vs US$3.3B imports(2008)


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Widespread environmentaldestruction

Marcopper(1996)

Marinduque Philex Mining Spill (1997-

1998) Zamboanga del Norte Maricallum (2001)

Negros Occidental

Dizon Silver & Copper Mines(2002) Zambales

TVI Mining Corp. (2004)Zamboanga del Norte

Lafayette Mining (2005)

Rapu-Rapu, Albay

Lepanto Consolidated MiningCorporationBenguet Mining Corporations

Philex Mining Corporation


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Blatant disrespect of human rights &culture of impunity

36 recorded cases of anti-mining activist killingssince 2001, 7 in 2011

Harassment todiscourage publicopposition (SLAPP onCEC-Phils, red-baiting, &vilification of activists)

Militarization ofcommunities andadvocates through SCAAs,continuation of IDFs,approved by Aquino this2011


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policy is misguided because mining hasnot solved poverty despite severaldecades of operation in hostmunicipalities

private financial benefits from mining infact remains to be inferior to those fromalternative investments

the financial contribution of mining tothe economy ranges from almost zero tonil to negative compared to the social &environmental cost

PRIVATIZE BENEFITS & SOCIALIZECOSTS

THE PMA OF 1995 IS A FAILURE & THREATTO THE PEOPLE & ENVIRONMENT


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TOWARDS A NEW PHILIPPINEMINING POLICY (HB 4315)


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What is HB 4315 or the PeoplesMining Bill?

An Act Re-Orienting the PhilippineMining Industry, Ensuring theHighest Industry DevelopmentStandards, and for Other Purposes

Reorient the current policy onownership, management &

governance of metallic and non-metallic resources

Based on the 2005 PeoplesMining Policy developed throughnationwide consultation with grass-

roots peoples organization. It covers onshore & offshore, large

& small scale mining operationsand their conservation, exploration,development, utilization,processing & transport.

Sponsored by BM Rep. TeddyCasio with otherprogressive partylists. Filedon march 2, 2011


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What is the framework and principlebehind the bill?

Motive: build localindustries, create jobs,develop local communities.

Domestic oriented, state-

led, Filipino owned &controlled.

Based on nationalindustrialization strategy

Economically viable,environmentally sound,rights based, balanced withfood security and

agriculture modernization


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Mining Act of 1995 HB 4315 (People's Mining Bill)

State owns all minerals in public and privatelands in Philippine territory.

State owns all minerals, coal, natural gasand petroleum resources in its nationalterritory. Appropriate utilization, soundmanagement, and benefits of minerals isexclusive to the Filipino people and shallnot be alienated

State responsible for promoting the rationalexploration, development, utilization, andconservation of minerals through thecombined efforts of government and theprivate sector.

State leads mining industry developmentaccording to a National IndustrializationProgram and Mining Plan

Framework isto enhance national growth,revitalize the mining industry throughfiscal reforms, additional benefits andincentives for foreign investors.

To be developed within the framework of1.) national industrialization through thenationalization of the industry towardsself-sufficiency, and 2.) achievinggenuine agrarian reform, themodernization of its agricultural base

and rural development.

Mining Act of 1995 vs Peoples Mining Bill

SCOPE & BASIC PRINCIPLES


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Mining Act of 1995 HB 4315 (People's Mining Bill)Emphasis on Presidential prerogative.Decisions over mining permits highlyconcentrated on the decision of thePresident (upon recommendation of theDENR Secretary). Little opportunity todecide is given to LGUs and

other stakeholders via public consultation.

Based on strategic and local plans andconsultations. Industry development isbased on a National IndustrializationProgram and Mining Plan and decision-making on the local level devolved to Multi-Sectoral Mineral Councils (MSMCs) which

include representatives from affected LGUs,mining-affected communities and otherstakeholders.

All areas open to mining unless declaredclosed by the Government

All areas are closed to mining unlessdeclared open by the MSMCs, through atwo-thirds vote.

Role of gov't agencies.DENR has theauthority to enter into mineralagreements.MGB in charge of theadministration, disposition of minerals,researches and exploration surveys. MGBDirector recommends to the DENRSecretary the granting of mining agreements

to qualified persons.

MGB is a scientific research institution underthe DENR, to serve primarily as a centralrepository of information on miningoperations. It is responsible for resourcedatabase, inventory, and prioritization,mining exploration on behalf of the State,and public Information.


OWNERSHIP & GOVERNANCE


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Mining Act of 1995 HB 4315 (People's Mining Bill)Limited government share.Government share is limited toexcise taxes of 2% required bylaw. No mandate on royalty fee orbenefit sharing.

Government, community shares increased: National government share equivalent to 10% ofgross revenues in addition to 2% excise tax LGU share from net revenues for MSMC, DisasterRisk Management, ICCs and IPs.Indigenous cultural communities royalty, of at

least ten percent of the gross revenues. Scientific Research and Development Fund Legal Services Fund for communities and LGUs

Limited taxes and fees, includingsemi-annual mine wastes andoccupation fees. Mining permits

enjoy 6 years income taxexemption, 10 years export taxexemption, and import taxexemption.

Taxes and fees increased to include, but not limitedto, Mine Wastes and Tailings fees,contractors incometax, customs, duties and fees on imported capital

equipment, Value-added tax on imported goods andservices, withholding tax on interest payments toforeign loans and on dividends to foreign stockholders,documentary stamps tax, capital gains tax, excise taxon minerals, local business tax, real property tax,community tax, occupation fees, registration,accreditation and permit fees, and water usage fees.


TAXES, FEES, & BENEFIT SHARING


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Taxes, Fees, and Benefit Sharing

Mining Act of 1995 HB 4315 (People's Mining Bill)Generous fiscal and non-fiscalincentives. Through the Executive OrderNo. 226 (Omnibus Investments Code of1987), contractors are given incentives forPollution Control Devices, Income Tax-CarryForward of Losses, Income Tax-Accelerated

Depreciation, and Investment Guarantees.

Incentivesshall be given for the use ofpollution control or mitigation devices.

Investment guarantees. The contractor isentitled to (a) Repatriation of investments,(b) Remittance of earnings, (c) Foreignloans and contracts,(d) Freedom from

expropriation, (e) Requisition of investmentand (f) Confidentiality

All large-scale mining contractors arerequired to deposit their capital investmentand profits in Philippine banks or financialinstitutions. Contractors with foreign

financial assistance are required to fullydisclose all profits, and allowed torepatriate profits up to fifty percent (50 %)of the total posted at the end of every fiscalyear. Full repatriation of profits shall beallowed one year after mining ends and thearea is rehabilitated.


TAXES, FEES, & BENEFIT SHARING


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Mineral Agreements

EXPLORATION PERMITSMining Act of 1995 HB 4315 (People's Mining Bill)

Duration of operations: Two years,

maximum of eight yearsMaximum area: 32,000 ha. onshore,81,000 ha. offshoreEconomic priveleges: 100% repatriationof capital and profits, Six years income taxexemption, 10 years export tax exemption,Import tax exemption, employment of

foreign nationals allowed, right to transferor sell mining permit, confidentiality rightsPolitical rights over timber, water,easement, entry into privatelands/concession areas

None

The MGB has the exclusive right andresponsibility to conduct mining explorationthroughout the country.


MINERAL AGREEMENTS


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Mineral Agreements


Duration of operations: 25 years,renewable up to 50 yearsMaximum area: 81,000 ha. onshore,324,000 ha. offshoreCapitalization: 100% foreign ($50 millionminumum investment)

Economic priveleges and politicalrights: Same as EP

None

FTAA is deleted.

Mineral Agreements

FINANCIAL &TECHNICAL ASSISTANCEAGREEMENT (FTAA)


MINERAL AGREEMENTS


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Mineral Agreements


Duration of operations: 25 years,renewable up to 50 yearsMaximum area: 16,200 ha. onshore,40,500 ha. offshoreCapitalization: 60% Filipino, 40% foreignEconomic priveleges: Same as EP

Political rights: Same as EP

Duration of operations: 15 years or lessMaximum area: 500 ha.; exact size to beset by the MSMCCapitalization: 60% Filipino, 40% foreign

Mineral Agreements

MINERAL PRODUCTION & SHARINGAGREEMENT (MPSA)


MINERAL AGREEMENTS


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Lenient and inadequate. Provisions onSafety and Environmental Protection do notstipuate stringent financial, technical, andprocedural guidelines to ensure ecologicalconservation, mitigation, and rehabilitation.

It is based only on the submission of anenvironmental protection and enhancementprogram in the contractor's work plan andcompliance with Environmental ImpactAssessment (EIA), which does notadequately address the complexity of mineoperations.

It recognizes the precautionary principle andthe polluter pays principle. Thus, it requirescontractors to supply the financial requirementsfor environmental and disaster protection and

technological support for rehabilitationactivities, including:Environmental insurance contractCalamity & Human Rights Protection FundPerformance BondMine Rehabilitation Fund

It requires permit holders to conductprogressive rehabilitation and pollutionmitigation activities, prioritize the use ofwater for domestic, municipal, andagricultural purposes and mitigate theincidence of acid mine drainage throughspecific recommendations and provisions.


ENTL PROTECTION, CONSERVATION & REHAB


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Mining Act of 1995 HB 4315 (People's Mining Bill)Grounds are only limited toadministrative violations, suchas late or non-filing of registration,violation of permit terms, and non-payment of taxes and fees. Thelaw does recognize human rightsviolations of corporations as aground for cancellation.

Grounds include 1.) violations of any provision of theAct, 2.) non-payment of taxes; 3.) bribery, use of force,intimidation, threat, coercion of public officials andcommunities; 4.) acts creating or contributing toconflicts; and the like, and 5.) failure to initiate miningoperations within two years.

Grounds for immediate cancellation are 1.) humanrights violations by the contractor or any of its agents;2.) use of paramilitary forces to protect miningoperations, and 3.) violations of environmentalprovisions, which shall also require compensation andrehabilitation.

Permit holders found guilty are perpetually bannedfrom participating directly or indirectly in miningoperations in the Philippines. Government officialsguilty of administrative violations shall be removedfrom office and perpetually disqualified from holdingany government post.


CANCELLATION, REVOCATION &TERMINATION


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small-scale mining operations shall be supportedand regulated by the state.

The state will encourage the formation ofcooperatives among small-scale miners andprovide financial and technical support to developthe labor-intensive and upgrade the backwardtechnologies into a more efficient and lessenvironmentally destructive mining process.

Whenever smallscale mining are stopped,alternative and sustainable livelihood shall beprovided to the small-scale miners.

Ban to large scale mining in areas covered bysmall-scale miners as defined by law unless withprior consent of the small-scale miners, in whichcase a royalty payment upon the utilization ofminerals shall be agreed upon by the parties

SMALL SCALE MINING


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Moratorium on mining

Cancellation of all permits,licenses, agreements

Livelihood support and job

placements for dislocatedworkers

Presidential Decree 463,Presidential Decree 512,

Republic Act 7942, & otherrelated mining laws arerepealed

P100B appropriation

TRANSITORY & FINAL PROVISIONS


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UPDATES ON HB 4315


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THE DRAFT CONSOLIDATED MINING BILL

House Bill 206 - Alternative Mining Billby Reps. Tanada & Padilla

House Bill 3763 - Minerals Management Bill

By Reps. BAG-AO, BELLO, BAGUILAT, RODRIGUEZ, RUFUS RODRIGUEZ,MAXIMO JR., PADILLA, GOLEZ, AGLIPAY, VALENCIA, LAGMAN, GARIN,

JANETTE, ALVAREZ, ANTONIO, ABAD, UMALI, ZUBIRI, CORTUNA, CATAMCO,SAN LUIS, FERNANDEZ, CELESTE, GARCIA-ALBANO, PANGANDAMAN,HATAMAN-SALLIMAN, VERGARA, SARMIENTO, BATOCABE, RIVERA,

ROMARATE, FLORES, SACDALAN, UNGAB, PING-AY

OTHER MINING BILLS


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THE DRAFT CONSOLIDATED MINING BILL

THE CONSOLIDATED BILL

House Bill 206Alternative Mining Bill

+House Bill 3763

Minerals Management Bill+

House Bill 4315Peoples Mining Bill


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OUR CALL


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QUESTIONS?

Assessing RA7942 vs HB4315

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