Aquino orders ban on new mining contracts

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Monday, July 9, 2012

MANILA (2nd Update, 5:34) -- President Benigno Aquino III has signed Executive Order (EO) 79 whose provision prohibits the government from granting new mineral agreements until a new legislation on revenue sharing schemes and mechanisms is passed.

"No mineral agreements shall be entered into until a legislation rationalizing existing revenue sharing schemes and mechanisms shall have taken effect," Section 4 of the EO reads.

It also stated that the Department of Environment and Natural Resources (DENR) may continue to grant and issue exploration permits under the existing laws, rules and guidelines, and grantees will be given the right of first option to develop and utilize minerals in their respective areas once a new law is in effect.

Executive Order 79

In a press briefing in Malacanang, Environment Secretary Ramon Paje said EO 79 aims to increase the revenue of government from mining while making sure that mining companies comply with environmental standards.

He said one provision on revenue would require mining companies operating in mineral reservation areas declared by President Aquino to pay five percent royalty.

"But somehow, in this EO, the mineral reservation provision or declaration cannot be retroactive. And, therefore, only future tenements or mining areas will have to be covered by this. But, as I've mentioned, once you operate inside the mineral reservation, the five percent royalty applies," Paje said.

He said the five percent royalty tax will not be applied to all mining companies as it will require Congress approval.

But he noted that if the five percent royalty will be applied to the existing mining operations, which is around 31 or 33, it will translate to around 16-billion increase in shares in mining revenues.

Potential and future mining sites with known strategic mineral reserves and resources may be declared as mineral reservations for the development of strategic industries identified in the Philippines Development Plan and a national industrialization plan, the EO stated.

Paje said the EO also ordered to increase fees and charges for occupational fee and application fees to generate more revenues from mining.

He noted that the government is targeting around P760 million revenues should occupational fees are charged upon filing of the mining claim.

"As of now, the mining companies pay only occupational fee once their mineral productions here and agreements are approved—or the FTAA or the Financial Technical Assistance Agreements are approved. But in this provision or in this particular EO, we are recommending or we are in fact going to implement that occupational fees should be paid upon filing. And that would translate to approximately around 700-plus million," he said.

The government is also expecting revenue from mine tailings and abandoned stockpiles.

"This would run to billions—hopefully our computation is correct—to around 50-billion for abandoned tailings and stockpiles. But this is a one-shot income," he said.

Paje also said that awarding of mining rights and mining tenements will no longer be based on a "first come, first served" basis but will now be done through public bidding.

"The Mines and Geosciences Bureau (MGB) shall prepare the necessary competitive bid packages and formulate the proper guidelines and procedures to conduct the same, which shall include ensuring that the social acceptability of the proposed project has been secured," Section 6 of the EO said.

The EO, meanwhile, stated that all existing mining contracts, agreements and concessions approved before the effectivity of the EO are still considered valid.

However, it added that the "DENR shall likewise undertake a review of existing mining contracts and agreements for possible renegotiation of the terms and conditions of the same, which shall in all cases be mutually acceptable to the government and the mining contractor.”

EO 79 identifies zones closed to mining applications – either for contracts, concessions or agreements – including areas in the National Tourism Development Plan, critical areas and island eco-systems, prime agricultural lands covered by Republic Act 6657, strategic agriculture and fisheries development zones and fisheries development zones an fish refuge and sanctuaries declared as such by the Department of Agriculture.

Aquino said earlier that there are roughly 78 areas, which will be reserved for tourism and not open for mining operations including Palawan.

Mining is also not allowed in areas already identified under the existing laws on mining, agrarian and protected areas, as well as in sites that may be determined by the DENR.

To improve small-scale mining operations, the EO states that mining activities should only comply with Republic Act 7076 or the People's Small-Scale Mining Act of 1991 and Environmental Impact Statement System requirements under Presidential Decree 1598.

The law specifically allows operations of small scale mining only in Minahang Bayan or the People's Small-Scale Mining Areas in order to contain mining waste in one place.

The government will not allow the renewal of permits of small scale mining operations outside the Minahang Bayan.

Paje said the permits of small-scale mining operations usually last for one year.

The order said "small-scale mining shall not be applicable for metallic minerals except gold, silver, and chromite." The use of mercury in small-scale mining is strictly prohibited by the EO.

It also mandates the creation and operation of Provincial/City Mining Regulatory Boards.

The EO also enjoined concerned national government agencies and LGUs to closely coordinate to harmonize mining policies on conservation, management, development and utilization of the state's mineral resources.

A Mining Industry Coordinating Council (MICC) will also be created to implement the EO and other industry reforms, conduct dialogue with stakeholders, and review all existing mining-related laws and rules.

The MICC, co-chaired by the head of the Cabinet clusters on climate change adaptation and mitigation, and economic development, is tasked, among others, to conduct assessment and review of all mining-related laws, rules and regulations, issuances and agreements toward the formulation of recommendations for better coordination between the national government and LGUs.

The MICC shall launch campaigns against illegal mining, serve as oversight committee over the operations of the Provincial/City Mining Regulatory Boards, monitor the implementation of mining laws and regulate small-scale mining participants, who are equally accountable to the same environmental and social obligations as large-scale mining companies.

Other members will include the Justice Secretary, the chairperson of the National Commission on Indigenous Peoples (NCIP) and the president of the Union of Local Authorities of the Philippines (ULAP)

Funding for the implementation of the EO will come from existing budget of all government agencies involved.

EO 79 was signed by President Aquino last July 6. It will take effect immediately upon publication in a newspaper of general circulation. (Jill Beltran/Sunnex)

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