mining and resources law review 2014
TRANSCRIPT
Mining and Resources Law
Atty. Fernando S. Penarroyo Na$onal Ins$tute of Geological Sciences Geology Board Review 23 July 2014
Puno & Peñarroyo Law Of7ices
About the Lecturer • BS Geo, Bachelor of Laws (UP), Master of Laws (Univ. of Melbourne)
• Managing Partner, Puno and Penarroyo Law (www.punopenalaw.com)
• Trustee and Secretary, Philippine Mineral Explora$on Associa$on
• Trustee, Na$onal Geothermal Associa$on of the Philippines
• Director, Interna$onal Geothermal Associa$on • Professorial Lecturer, De La Salle-‐FEU MBA-‐JD Program
• hRp://www.philippine-‐resources.com/
Contents
• The Need to Know the Law • Recent Global Trends • Resources Industry Philippine Update • Mining and other Resources Laws and Regula$ons
WHY THE NEED TO KNOW THE LAW
Principles for Responsible Exploration • Adopt responsible governance and management • Apply ethical business prac$ces • Respect human rights • Commit to project due diligence and risk assessment
• Engage host communi$es and other affected and interested par$es
• Contribute to community development and social wellbeing
• Protect the environment • Safeguard the health and safety of the workers and the local popula$on
Legal Compliance
• IDENTIFY the legal and regulatory requirements of the host country for the project that are relevant to explora$on ac$vi$es, including int’l commitments made by host country, and also int’l standards and good prac$ce
• MEET the legal requirements of the host country • APPLY interna$onal good prac$ce where na$onal law or its implementa$on is not sufficient to meet the higher standards of performance
• COMMUNICATE the relevant requirements for compliance to employees and contractors
Project due diligence and risk assessment • Presence of indigenous peoples or vulnerable minori$es
• Presence of small scale and ar$sanal mining ac$vity • Proximity to parks, reserves and areas of special environmental significance, cultural heritage or high biodiversity
• Legal and regulatory framework with IPs • Character of na$onal and local government and IPs • Regimes with an ac$ve record of human rights abuse
• Presence of ac$ve community level conflict over resource development or mining
• Armed conflict, insurrec$on or civil war
RECENT TRENDS IN THE RESOURCES INDUSTY
Recent Trends in the Resources Industry China • Despite a slowing economy, China remains Asia’s largest and one of its fastest-‐growing economies.
• China’s rapid economic growth has posi$oned it as the world’s second largest economy and it is likely to overtake the US around 2025 to become the world’s largest economy
• The “old” China of low-‐cost labor, low-‐value-‐intensive industries and a coastal-‐based export economy is fading away
• China’s goal is to shie away from an investment-‐led model of growth to a more stable model driven by domes$c consump$on, advanced technology and environmental efficiency.
Recent Trends in the Resources Industry China • China has recently become the world’s largest importer of oil but its per capita oil consump$on lags behind the levels of the developed world.
• As China’s consump$on of oil ballooned, it’s state-‐owned oil and gas enterprises have developed into global players in tapping unconven$onal resources by collabora$ng with other interna$onal firms.
• China’s climb in the global value chain assures steady rise in demand for mineral products and advanced mining technologies.
Recent Trends in the Resources Industry China • Chinese companies are also increasingly becoming one of the industry’s leading sources of capital. Chinese acquisi$ons make headlines and Chinese companies are some of the more ac$ve deal makers in the industry.
• In addi$on to direct equity acquisi$ons, Chinese companies are also inves$ng in mine development and construc$on and suppor$ng infrastructure.
• According to the China Mining Associa$on, up to 80% of China’s overseas mining investments since 2005 has failed.
Recent Trends in the Resources Industry Petroleum new fron1ers • Tight oil -‐ hydraulic fracturing (US) • Arc$c offshore • Presalt deepwater (Brazil) • Oil shale – shale contains kerogen that has to be mined and then reheated to separate oil from shale (US)
• Oil sands – loose sand or sandstone saturated with bitumen that are exploited through open pit mines (Alberta, Canada)
Recent Trends in the Resources Industry Unconven1onal gas resources • Shale gas – natural gas contained in low permeability shale forma$ons; gas that has remained trapped in, or close to, its source rock
• Coalbed methane – coal seem gas, natural gas contained in coal beds
• Tight gas – low permeability gas reservoirs that cannot be produced economically without the use of technologies to s$mulate flow of the gas towards the well, such as hydraulic fracturing
GRAPHIC OF HYDRAULIC FRACTURING
Recent Trends in the Resources Industry World Energy Outlook (IEA, 2013) • China dominates the picture within Asia, before India takes over from 2020 as the principal engine of growth.
• China is about to become the largest oil-‐impor$ng country and India becomes the largest importer of coal by the early 2020s. The United States moves steadily towards mee$ng all of its energy needs from domes$c resources by 2035.
• Unconven$onal gas accounts for nearly half of the increase in global gas produc$on to 2035, with most of the increase coming from China, the United States and Australia.
Recent Trends in the Resources Industry World Energy Outlook (IEA, 2013) • The role of OPEC countries in quenching the world’s thirst for oil is reduced temporarily over the next ten years by rising output from the United States, from oil sands in Canada, from deep-‐water produc$on in Brazil and from natural gas liquids from all over the world. But, by the mid-‐2020s, non-‐OPEC produc$on starts to fall back and countries in the Middle East provide most of the increase in global supply. Overall, na$onal oil companies and their host governments control some 80% of the world’s proven-‐plus-‐probable oil reserves.
Recent Trends in the Resources Industry BP Sta1s1cal Review of World Energy 2014 • The year 2013 saw an accelera$on in the growth of global energy consump$on, despite a stagnant global economy.
• Energy produc$on con$nued to be impacted by geopoli$cal events. Oil produc$on in Libya suffered the world’s largest decline in the face of renewed civil unrest and the produc$on of oil and gas was disrupted in a number of other countries as well. In the face of these disrup$ons and heightened risks to supply, average oil prices exceeded $100 per barrel for a third consecu$ve year, despite massive supply growth in the US.
Recent Trends in the Resources Industry BP Sta1s1cal Review of World Energy 2014 • Driven by massive investment in shale and other ‘$ght’ forma$ons, the US saw the world’s largest increase in oil produc$on last year, offsemng the numerous disrup$ons seen elsewhere and keeping prices stable.
• Coal was the fastest-‐growing fossil fuel, with China and India combined accoun$ng for 88% of global growth, while natural gas consump$on growth decelerated and grew at a below-‐average rate. As was the case for total energy, gas consump$on growth was below average in all regions except North America, which con$nues to enjoy the cheapest prices among interna$onal markets.
Recent Trends in the Mining Industry Impacts • As the mining industry cools from its 2012 boom, resource na$onalism, an increase in price vola$lity, higher opera$ng costs and declining mineral grades will increase risk and complexity in the global mining sector.
• 2013 was par$cularly challenging for the mining sector – falling number of M&As, a record low number of IPOs in both the Toronto and Australian stock exchanges.
• Low demand for professionals in the resources industry
RESOURCES INDUSTRY PHILIPPINES UPDATE
Developments in the Philippine Resources Industry • 100% foreign ownership allowed following the December 2004, Supreme Court decision on the Philippine Mining Act of 1995 but…..
-‐ New SC case against the Mining Act -‐ Alterna$ve Minerals Management Bill • West Philippine Sea conflict • Benham Rise • Framework Agreement of Bangsamoro • Narra Nickel Mining vs. Redmont Consolidated Mines – Foreign Ownership
• SR Metals vs. Sec Reyes – Small-‐scale Mining
Developments in the Philippine Resources Industry Mining Act revisited • Pe$$oners headed by then Akbayan party list Rep. Risa Hon$veros, Bayan Muna party list Rep. Teddy Casiño and former House Deputy Speaker and Quezon Rep. Lorenzo 'Erin' Tañada III of the ruling Liberal Party
• “Inequitable sharing of wealth” • Sec. 80 limits the share of the government in Mineral Produc$on Sharing Agreement (“MPSA”) to excise taxes
• Sec. 81 confines government's share to taxes, fees and royal$es instead of lemng it have full control over the explora$on, development and u$liza$on of mineral resources.
China’s Nine-‐Dashed Lines
Benham Rise – The New Frontier
Proposed Bangsamoro Core Territory
Developments in the Philippine Resources Industry Tampakan Gold Mining Project – • The MICC created the Inter-‐Agency Working Group (IAWG);
MGB assumed chairmanship. • IAWG presented to MICC recommenda$ons on the issues
involving the project. Philex Tailings Spill Incident – • MICC endorsed to DENR report of TWG chaired by Sec.
Acosta re: Philex’s compliance with clean up plan. • Case in PAB s$ll pending due to Philex’s mo$on for
reconsidera$on re: payment of fines; suspension order s$ll in effect.
• MGB suspension order s$ll in effect pending determina$on of compliance with clean up plan.
• Claim of NPC for payment is s$ll unresolved.
REVIEW OF CURRENT PHILIPPINE RESOURCES LAWS
Mining Laws and other Regulations
• Philippine Cons$tu$on of 1987 (“Cons$tu$on”) • Philippine Mining Act of 1995 (“Mining Act”) • Mining Act Revised Implemen$ng Rules and Regula$ons
• Small-‐scale Mining Laws • EO 79 • Other Laws
Constitution • All lands of the public domain, water, minerals, coal, petroleum, and other mineral oils, all forces of poten$al energy, fisheries, forests or $mber, wildlife, flora and other natural resources are owned by the state.
• The explora$on, development and u$liza$on of these natural resources are under the full control and supervision of the State.
Constitution • The State has the op$on of entering into co-‐produc$on, joint venture or produc$on sharing agreements with Philippine ci$zens of Philippine corpora$ons or associa$ons.
• At least 60% of the capital of a corpora$on or associa$on must be owned by Phil. Ci$zen to qualify as a Philippine corpora$on or associa$on.
Constitution • Excep$on to the na$onality requirement: The Cons$tu$on authorizes the President to enter into agreements with foreign-‐owned corpora$ons involving either financial or technical assistance, for large-‐ scale explora$on, development and u$liza$on of minerals, petroleum and other mineral oils.
Constitution • Ownership of natural resources (Regalian doctrine) – if an investor wishes to acquire the right to extract or develop natural resources, he must enter into an agreement with State
Mining Act • Explora$on Permit • Mineral Agreements -‐ MPSA -‐ Co-‐Produc$on Agreement -‐ Joint Venture Agreement
• Financial and Technical Assistance Agreement • Mineral Processing permits
Exploration Permit • Grant gives holder the right to conduct explora$on for all minerals within a specified area
• Valid for 2 yrs, can be renewed for another two but cannot exceed 6 yrs
• If explora$on results reveal economic mineral deposits and technically feasible for mining, holder can file a declara$on of mining project feasibility (MPF)
• Approval of MPF shall grant the holder exclusive right to Mineral Agreement or FTAA
Mineral Agreements • Mineral Produc$on Sharing Agreement (“MPSA”) • Co-‐Produc$on Agreement • Joint Venture Agreement • All agreements grant the contractor the exclusive right to conduct mining opera$ons and to extract all mineral resources in the contract area
MPSA • Contractor provides the financing, technology, management and personnel necessary for the implementa$on of the MPSA
• Valid for 25 yrs and renewable for another 25 • Government is en$tled to a share in the gross produc$on of the mining opera$on in the form of excise tax
Co-‐Production Agreement
• An agreement where the government provides inputs to the mining opera$ons other than the mineral resource
Joint Venture Agreement • An agreement under which the Philippine government and the contractor organize a joint venture company in which both par$es have equity.
• The government takes a share from equity earnings as well as from the gross output of the mining opera$ons.
Financial and Technical Assistance Agreement (“FTAA”) • Pursuant to the Cons$tu$on, the Mining Act provides that the President may enter into an FTAA with 100% foreign-‐owned corpora$on for the large-‐scale explora$on, development and u$liza$on of mineral resources.
• Minimum investment of US$50M • Not applicable to cement raw materials, marble, granite, sand and gravel, and construc$on aggregates
Mineral Processing Permits • Under the Mining Act, mineral processing means the milling, beneficia$on or upgrading of ores or minerals and rocks or by similar means to convert the same into marketable products.
• Valid for 5 yrs, renewable for like periods up to 25 yrs
• Can be 100% foreign ownership
Fiscal Regime -‐ MPSA and FTAA • Under RA 7942, government’s take/share in the MPSA is the excise tax on minerals plus all other payable taxes and fees (na$onal and local, as well as payment to other Filipinos) termed as Basic Share
Basic share + other taxes and fees • Under the FTAA, aside from the basic share, the government is assured of an addi$onal share if the basic government share is less than 50% of the net mining revenue (DENR AO No. 2007-‐12).
Basic share + addi1onal gov. share (if basic share is less than 50% of NMR)
Small-‐Scale Mining • PD 1899 “A Decree Establishing Small Scale Mining As a new Dimension in Mineral Development” allowed local government units to issue mining permits
• RA 7076 “People's Small-‐Scale Mining Act” (1991) mandates that all applica$ons for small scale mining will now be under the approval of the Secretary of the DENR
• PD No. 1899 and RA No. 7076 shall con$nue to govern small-‐scale mining opera$ons. For areas not declared as People’s Small-‐Scale Mining area (PSSMA) under RA No. 7076, the per$nent rules and regula$ons of PD 1899 shall apply.
Recent Supreme Court Decisions Narra Nickel Mining vs. Redmont Consolidated Mines • The "control test" is s$ll the prevailing mode of determining whether or not a corpora$on is a Filipino corpora$on, within the ambit of Sec. 2, Art. II of the 1987 Cons$tu$on, en$tled to undertake the explora$on, development and u$liza$on of the natural resources of the Philippines. When in the mind of the Court there is doubt, based on the aRendant facts and circumstances of the case, in the 60-‐40 Filipino-‐equity ownership in the corpora$on, then it may apply the "grandfather rule."
Recent Supreme Court Decisions SR Metals vs. Sec. Reyes • In its ruling, the high court noted the firms’ summary of shipments showed it took 151,612 DMTs of ore to extract 1,699.66 DMTs of nickel and cobalt (Ni-‐Co).
• “This means that if we are to subscribe to the mining corpora$ons’ interpreta$on of how to measure mined ore by measuring only the Ni-‐Co and excluding the gangue, small-‐scale miners are virtually given the license to con$nuously collect large volumes of ore un$l the 50,000 DMTs of Ni-‐Co limit is met.”
Important Laws Related to Mining
• Indigenous Peoples Rights Act (“IPRA”) • Environmental Impact Statement (“EIS”) System • Local Government Code of 1991
IPRA • Grants to indigenous cultural communi$es certain preferen$al rights to their ancestral domains and all resources found therein.
• Royalty and right to benefits • No agreement shall be approved unless: -‐ There is prior cer$fica$on from NCIP that area does not overlap ancestral domain or -‐ Prior free and informed consent has been obtained from the ICC/IP concerned
BASIC PROCESS OF CP ISSUANCE
AGENCY ENDORSEMENT
CP ISSUANCE
FPIC MOA
FBI
FPIC MANDATORY ACTIVITES UNDER SEC 6 (A)
POSTING OF NOTICES AND SERVING OF
INVITATION TO IP ELDERS/LEADER
CONSULTATIVE COMMUNITY ASSEMBLY
CONSENSUS BUILDING
AND FREEDOM PERIOD
DECISION MEETING
FPIC PROCESS FLOWCHART
FBI - Field – Based investigation CNO – Certificate of non-Overlap issued by Regional Director MOA – Memorandum of Agreement
ENDORSING GOVERNMENT
AGENCY
APPLICANT
NCIP REGIONAL OFFICE
PRE-FBI
CONFERENCE
PAYMENT OF
FBI FEE
FBI
PROJECT REJECTED
MOA & SUPPORTING DOCUMENTS
PROJECT ACCEPTED
FPIC MANDATORY ACTIVITIES
PAYMENT OF
FPIC FEE
FBI REPORT
OVERLAP
COMMISSION EN BANC
PRE-FPIC
CONFERENCE
CNO ISSUED BY REGIONAL
DIRECTOR
NO OVERLAP
NO OVERLAP PER
MASTERLIST
OVERLAP PER MASTERLIST OR
MASTERLIST NOT AVAILABLE
CNO ISSUED IN 3 DAYS
Major Projects (Sec. 6A)- 70 days processing Small Scale Projects (Sec. 6B)-50 days processing
Local Government Code • Proponents applying for mining applica$ons intended for explora$on ac$vi$es are required to conduct consulta$on with all LGUs concerned, or the legisla$ve councils (sanggunian) at the provincial, city/municipal, and barangay levels.
Results of Anti-‐Mining Sentiment
• LGUs issuing ordinances and resolu$ons against mining:
Leyte Mindoro Provinces Romblon An$que Zamboanga Sibugay Bohol
Zamboanga del Norte Samar
Marinduque South Cotabato Bukidnon La Union Capiz Negros Occidental
Results of Anti-‐Mining Sentiment • Congress passing resolu$ons and considering House Bills
declaring mining free provinces and ci$es:
Catanduanes Sorsogon Romblon Southern Leyte Eastern Samar Nueva Viscaya Cagayan de Oro Davao City
EIS System under Presidential Decree No. 1586 • Project proponent of environmentally cri$cal projects and projects within environmentally cri$cal areas must obtain an environmental compliance cer$ficate prior to commencement
• EMB/DENR as lead agency • DAO 2003-‐30 Implemen$ng Rules and Regula$ons
The Environmental Impact Assessment Process
Environmental Consultants STAKE
HOLDERS: • Direct and Indirect Impact Communities
• LGU
• NGO’s
• PO’s
• GO’s
Baseline Data Collection
(Collection of Base-line data of the Bio-physical and Sociocultural Environment)
SITE SCOPING
(Stake holder's perception of the Problems, Issues and Concerns of their present Biophysical and Sociocultural Environment)
Environmental Impact Assessment
(Analysis of the Impacts and Mitigations based on secondary and base-line data collected.
I. Environment Management Plan II. Social Development Plan
EIS Document Preparation
EIA Review by EMB
PUBLIC HEARING
Approved Disapproved
Issuance of Environment Compliance Certificate
DENR – EMB organizing of the Multipartite Monitoring Team
EXECUTIVE ORDER NO. 79
Executive Order No. 79 • Sets the policy framework that will guide government and other stakeholders in the implementa$on and opera$onaliza$on of mining laws, rules and regula$ons. It also provides concrete steps and solu$ons to major issues and concerns of the mining sector.
• Sets the direc$on and lays the founda$on for the implementa$on of responsible mining policies.
• Aims to improve environmental mining standards and increase revenues to promote sustainable economic development and social growth, both at the na$onal and local levels.
Speci7ic zones closed to mining applications, either for contracts, concessions or agreements (No-‐go Zones)
• Areas in the Na$onal Tourism Development Plan • Cri$cal areas and island eco-‐systems • Prime agricultural lands covered by RA 6657 • Strategic agriculture and fisheries development zones and fisheries development zones and fish refuge and sanctuaries declared as such by the Department of Agriculture
• Areas already iden$fied under the exis$ng laws on mining, agrarian and protected areas, as well as in sites that may be determined by the Department of Environment and natural Resources (DENR)
Measures to address the country's economic or revenue-‐related concerns
• Establishment of Mineral Reserva$ons for strategic mineral reserves to be able to collect 5% addi$onal royal$es, or higher
• Opening of mining areas through compe$$ve public bidding
• Value-‐adding ac$vi$es and development of downstream industries
• Demand opera$onal and financial reports from both large-‐ and small-‐scale miners at all stages of the mining cycle
Measures to address the country's economic or revenue-‐related concerns • Conduct of verifica$on at the na$onal, regional and local levels of taxes and fees payable and monitoring of all entry and exit points of minerals in the country
• Fast-‐track release and access of LGUs to their share from mining revenues
• Conduct a study on exis$ng mechanisms for benefit sharing and review of exis$ng taxes, fees and incen$ves receive by mining companies
Measures to address the country's economic or revenue-‐related concerns • Study the imposi$on of higher export fees for metallic and non-‐metallic minerals in the country
• Consider tapping 3rd party interna$onal auditors to validate the volume and value of mineral exports from the Philippines
• Increase mine wastes and tailings and occupa$on fees and impose processing fees for all mining applica$ons
• Provide benchmarks for the valua$on of minerals based on prevailing interna$onal minerals market prices
• Prepare and maintain revenue baseline data and properly account for all taxes and fees generated from mining
Speci7ic legislative measures gov’t will pursue in light of the EO • Ra$onaliza$on of revenue-‐sharing schemes and mechanisms and incen$ves given to mining companies
• Bigger LGU shares from mineral resource u$liza$on and providing beRer mechanisms for the faster release of their share
• S$ffer penal$es for mining-‐related offenses • Stronger regulatory rules over traders and middlemen to improve mineral produc$on monitoring and collec$on of taxes and fees from mining
• Stricter enforcement of environmental laws and rules, and holding violators accountable
Speci7ic legislative measures gov’t will pursue in light of the EO • Iden$fying addi$onal areas closed to mining • Review of the performance of mining opera$ons and cleansing of non-‐moving mining rights holders
• Proper accoun$ng of Environmental Protec$on and Enhancement Programs (EPEP) of mining companies
• Use of geo hazard and mul$-‐hazard maps and climate change forecasts in determining “go” and “no-‐go” areas
• Explore use of mandatory and compulsory insurance coverage for mining affected areas and adop$on of Comprehensive Environmental Response, Compensa$on and Liability Act of the USA
• Resource accoun$ng or full-‐cost benefit analysis
1. On the No-‐Go Zone Map
§ Integrated map submiRed to OP on October 27, 2013. § MICC approved the adop$on of the map. § The MGB is now accep$ng and processing. applica$ons for Explora$on Permits.; accepted 136 mining applica$ons as of May 15, 2014.
Department of Environment and Natural Resources Republic of the Philippines
STATUS OF IMPLEMENTATION OF E.O. NO. 79
2. On the crea1on of One-‐Stop-‐Shop § OSS to be created in the DENR Central Office. 3. On the par1cipa1on in the Extrac1ve Industries Transparency Ini1a1ve (EITI) § The Mul$-‐stakeholder group was created. § The Philippines was officially admiRed as a candidate. § Execu$ve Order No. 147 was issued on November 26, 2013. § Consulta$on process ongoing.
Developments in the Philippine Resources Industry Extrac1ve Industries Transparency Ini1a1ve (EITI) • EITI is a global standard for transparency in the extrac$ves sector that involves the reconcilia$on of company payments with government receipts by an independent administrator and disclosure of that informa$on to the public
• EITI is a voluntary, mul$-‐stakeholder ini$a$ve launched in 2002, in response to Publish What You Pay (PWYP) campaign;
• The process is managed by government, company and civil society stakeholders. Civil society must be involved in the process;
Developments in the Philippine Resources Industry Extrac1ve Industries Transparency Ini1a1ve (EITI) • The Philippine and Bri$sh Governments, along with NGO Bantay Kita, are embarking on a partnership that will push the Philippine agenda on strengthening transparency and accountability in extrac$ve industries.
• The collabora$on will help the Philippine Government fulfill its ini$a$ve as a candidate country to the EITI by working together with Bantay Kita in the PH-‐EITI mul$-‐stakeholder group with support from the Bri$sh Government.
• The process is managed by government, company and civil society stakeholders. Civil society must be involved in the process.
4. On measures to improve Small-‐Scale Mining § MICC endorsed the revised guidelines to the DENR on January 8, 2014. § DENR to issue the per$nent Administra$ve Order. 5. On the establishment of Mineral Reserva1ons § 15 Mineral Reserva$ons are targeted to be iden$fied and assessed for this year.
6. On the new Revenue Sharing Scheme § MICC approved the proposed legisla$on during the 17th MICC mee$ng held on May 30, 2014. DENR to issue the per$nent Administra$ve Order. -‐ contractor shall pay the government (a) 10% of gross revenue or (b) 55% of Adjusted Net Mining Revenue (ANMR), whichever is higher, plus; if ANMR margin exceeds 50%, Government share is 60% on the excess ANMR -‐ Payment to the Government shall be inclusive of all na$onal and local taxes § The bill prescribes that mining areas be declared as Mining Industry Zones.
7. On the review of performance of exis1ng mining opera1ons § Mul$-‐Stakeholder Teams created in every Regions. § Cleansing process ongoing; 43 MPSAs recommended for cancela$on. 8. On Illegal Mining § Task Force on illegal mining created. § Fact-‐Finding CommiRee on Illegal Mining created. § An$-‐illegal mining opera$ons launched. § MICC adopts measures to address black sand mining.
Recent Trends in the Philippine Mining Industry Resource Na1onalism • Governments are now looking at different strategies to extract a greater share of the value from mining opera$ons.
• Strategies include increasing taxes and royal$es to restric$ng foreign ownerships.
• Requiring in-‐country processing or beneficia$on prior to export is another form.
• Encouraging in-‐country processing can also be achieved indirectly by imposing export restric$ons and increasing export levies on unrefined ores.
• Con$nued resource na$onalism from governments makes the countries less aRrac$ve for mining investment.
The State of the Philippine Mining Industry -‐ Chamber of Mines of the Phils.
• Impending Change in Fiscal Regime – Increase taxes
• Expanding No Go Zone Areas for Mining (Highly mineralized prospec$ve areas being reduced)
• More than 2 years moratorium in the grant of mining permits
• No new mining agreement un$l Congress approve a new sharing scheme bill
• Mining investments down, explora$on is at a stand s$ll
• Mining industry is at the back burner of the Philippine Development Plan although it is promoted under the Export Development Plan
Other Laws Related to Mining • Ecological Solid Waste Management Act • Toxic Substances and Hazardous and Nuclear Wastes Control Act
• Clean Air Act • Clean Water Act • Pollu$on Control Law • Water Code • Na$onal Environmental User’s Fee of 2002
Why does mining generate con7licts
• Should mining prevail over current land-‐uses? • Are the benefits sufficient and fairly distributed? • Are the social and environmental costs fully considered and compensated?
• Are the risks of adverse impacts reduced to a minimum and socially acceptable to those who bear them?
• When local stakeholders decide that the risks are unacceptable, can the na$onal gov’t override that decision?
• Does small-‐scale mining provide more equitable access to resources?
Issues in the Philippine Mining Industry
• Conflict between na$onal and local governments over taxa$on
• Insurgency/peace and order • “small-‐scale” mining • Unavailability of a good digital tenement and mineral database
• Ancestral domain and protected areas
Issues with LGU • Local government veto/moratorium on mineral development and produc$on
• Integra$on of mineral development into local development land use and resources use plans
• Small scale mining regula$on
Issues on Gov’t Share • Na$onal government should develop a transparent system of accoun$ng for and alloca$on of sharing of revenues and taxes with LGUs.
• Expedite and streamline the release of LGU share on revenues and taxes through a simplified process with $meframe requirements to lessen local opposi$on to mining projects.
• Local taxa$on
Issues with IPRA • Iden$ty of proper IPs • Lack of clear cut rules on how to arrive at a decision making process of IPs
• Preferen$al rights of IPs
Rules of Procedure for Environmental Cases • Introduced new remedies for the “alleged” viola$on of environmental laws: temporary environmental protec$on order, writ of con$nuing mandamus, writ of kalikasan
• TEPO is in contraven$on of “no injunc$on rule” under PDs 605 and 1818
• harassment suits?
Other Laws on Resources Development • Presiden$al Decree (P.D.) 87, as amended, "Oil Explora$on and Development Act of 1972” for petroleum service contracts
• PD 972,as amended, introduced the coal service contract system and established the guidelines for coal opera$ons. – coal opera$ng contracts
• RA 9513 “Renewable Energy Law of 2008” for renewable energy service contracts
Conclusion • Mineral and energy explorers must carry out due diligence to be informed as to the laws, regula$ons, trea$es and standards, and also interna$onal standards of prac$ce associated with human rights, social and environmental management.
• Most importantly, they should follow these laws and if the legal and regulatory frameworks are lacking, explorers should self regulate u$lizing interna$onal standards and good prac$ce.
Mining and Resources Law Atty. Fernando S. Penarroyo Na$onal Ins$tute of Geological Sciences