quarry rules in the philippines - binq mining
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mining in the philippines - lexology
The Philippines has been ranked as the fifth most mineralised country in the world, with an estimated US$1 trillion in untapped reserves of copper, gold, nickel, zinc and silver. Despite the foregoing, statistics from the Philippine Mines and Geosciences Bureau (MGB) indicate that, as of 2017, there are only 50 operating mines. For the same year, the Philippine Department of Environment and Natural Resources (DENR) has placed the preliminary gross production value for large-scale metallic mining at 107.7 billion pesos.
The Philippines top mineral exports are copper, gold and nickel. Other target minerals include quartz, mica, iron, gypsum, feldspar, chromite, calcite and sulphur. Some target non-metallic minerals are sand and gravel, limestone, marble, clay and other quarry materials.
Cobalt is the main factor for the increased interest in minerals used in battery technology in the Philippines. The Philippines has the fourth-largest cobalt reserves worldwide, at an estimated 280,000 tonnes.
The MGB has noted that the production value of mixed nickel-cobalt sulfide went up by 1.01 billion pesos, from 3,804 billion pesos in the first quarter of 2016 to 4,815 billion pesos in the first quarter of 2017. The MGB additionally noted that from 2012 to 2015 the joint production value of nickel direct shipping ore and mixed nickel-cobalt sulfide consistently took the top spot with a four-year average of about 49 per cent of the total metallic production value.
The Philippine legal system is a hybrid of both civil law and common law. The civil law elements are primarily derived from the civil law system of Spain and are evident in the law on family relations, property, succession, and obligations and contracts. The common law elements are primarily derived from the Anglo-American system of the US. Examples of Philippine legal concepts derived from common law include, among others, the doctrines of equity, estoppel, laches, and stare decisis. The authority of Philippine courts is limited to the interpretation of law. Nevertheless, the Philippine Supreme Court may reverse rulings of lower courts, and even abandon principles laid down in previous rulings.
It is regulated by the Philippine Constitution, and through laws, regulations and ordinances issued by the national government and local government units. Mining companies must also comply with the regulatory requirements for corporations in the Philippines.
The principal laws that regulate the mining industry are Republic Act No. 7942, otherwise known as the Philippine Mining Act of 1995 (the Mining Act), and its implementing rules and regulations, DENR Administrative Order No. 2010-21 (Mining Act IRR), both of which have not been amended in the past year. In 2012, Executive Order No. 79 (Institutionalising and Implementing Reforms in the Philippine Mining Sector, Providing Policies and Guidelines to Ensure Environmental Protection and Responsible Mining in the Utilisation of Mineral Resources) (EO 79) was issued as the policy of the Aquino administration. EO 79 instituted reforms such as a review of the performance of existing mining operations and cleansing of non-moving mining rights holders, imposed a moratorium against the issuance of mineral agreements (MAs) until the enactment of legislation rationalising existing revenue sharing schemes and mechanisms, and constituted the Mining Industry Coordinating Council, among others. The Duterte administration has not issued any order that has repealed, amended or replaced EO 79.
The DENR is the primary government agency responsible for the conservation, management, development and proper use of the countrys environment and natural resources, including mines. The MGB, a line bureau under the DENR, is responsible for the proper management and disposition of mineral lands and mineral resources. It promotes sustainable mineral resources development. The MGB director recommends to the DENR secretary the granting of MAs and monitors compliance with the terms and conditions of the MAs.
The MGB and the Environmental Management Bureau (EMB), another line bureau of the DENR, advise the secretary on matters relating to environmental management, formulate plans and policies on environmental quality standards, exercise supervision over regional offices in the implementation of plans and programmes and issue permits and clearances.
The mining industry uses the Philippine Mining Reporting Code (PMRC) for the reporting of all solid minerals, including industrial minerals and coal where public reporting is required by the Philippine Stock Exchange (PSE). The PMRC is largely based on the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves, or the JORC Code, and sets out minimum standards for mining companies in accordance with the principles of transparency, materiality and competence.
To what extent does the state control mining rights in your jurisdiction? Can those rights be granted to private parties and to what extent will they have title to minerals in the ground? Are there large areas where the mining rights are held privately or which belong to the owner of the surface rights? Is there a separate legal regime or process for third parties to obtain mining rights in those areas?
Under the Philippine Constitution, the state owns all natural resources, including minerals. Thus, the exploration, development and utilisation of mineral resources are under the full control and supervision of the state, which may directly undertake the same, or enter into co-production, joint venture or production-sharing agreements with Filipino citizens, or corporations or associations at least 60 per cent of whose capital is owned by such citizens. The President of the Philippines also may enter into agreements with foreign-owned corporations involving either technical or financial assistance for large-scale exploration, development, and utilisation of minerals, petroleum, and other mineral oils. Because of the states full control and supervision over mining rights, owners of surface rights do not automatically have rights over mineral resources found within their properties.
What information and data are publicly available to private parties that wish to engage in exploration and other mining activities? Is there an agency which collects mineral assessment reports from private parties? Must private parties file mineral assessment reports? Does the agency or the government conduct geoscience surveys, which become part of the database? Is the database available online?
The MGB regularly publishes information on the mining industry through its official website (www.mgb.gov.ph). The information published includes details on existing exploration permits (EPs), mineral production sharing agreements (MPSAs), financial and technical assistance agreements (FTAAs), mineral processing permits (MPPs), pending mining applications, and pending cases with the Mining Adjudication Board and Panel of Arbitrators. The MGB also releases current and historical statistics on the mining industry such as the production level and prices of each type of mineral. There is also a list of currently producing mines and a map of where these operate.
Under the Mining Act IRR, holders of EPs and MAs are required to submit mineral assessment reports. The submission of an assessment of the mineral potential in a prospected area is a prerequisite to converting an EP into an MA.
The MGB through its Land Geological Survey Division and Marine Geological Survey Division conducts geoscience surveys such as geological mapping, mineral exploration, geo-hazard assessment, vulnerability assessment and other geological and geo-environmental studies. Mineral Land Surveys may also be conducted by geodetic engineers of the MGB and regional offices, deputised geodetic engineers in private practice and company-employed deputised geodetic engineers. These surveys and studies, however, are not readily available online.
What mining rights may private parties acquire? How are these acquired? What obligations does the rights holder have? If exploration or reconnaissance licences are granted, does such tenure give the holder an automatic or preferential right to acquire a mining licence? What are the requirements to convert to a mining licence?
Under the Philippine Constitution, exploration, development and utilisation of mineral resources shall be under full control and supervision of the state. Nevertheless, mining rights may be acquired by private parties through an FTAA, an EP or an MA.
The holder of an EP is granted the right to conduct exploration for all minerals in specified areas. The MGB directors approval of a declaration of a mining project feasibility study grants the holder of an EP the exclusive right to an MA or FTAA. An MA grants to the holder thereof the exclusive right to conduct mining operations and to extract all mineral resources found in the contract area, while an FTAA grants the right to provide financial or technical assistance directly to the government to undertake large-scale exploration, development and utilisation of mineral resources.
EO 79 suspended the issuance of MAs pending enactment of new legislation rationalising existing revenue-sharing schemes and mechanisms. As of the end of March 2018, House Bill No. 422 (An Act Establishing the Fiscal Regime and Revenue Sharing Arrangement for Large-Scale Metallic Mining, and for Other Purposes) has been referred to the House of Representatives Committee on Ways and Means, while a similar bill, Senate Bill No. 927 (An Act Establishing the Fiscal Regime and Revenue Sharing Arrangement for Large-Scale Metallic Mining, and for Other Purposes) remains pending with the Senate Committee on Ways and Means.
The term of an EP is two years from the date of its issuance. It may be renewed for another two years, but the total term of the permit shall not exceed four years for non-metallic mineral exploration or six years for metallic mineral exploration. In cases, however, where the permittee failed to file the declaration of mining project feasibility during the total term of the EP and further exploration is warranted, the EP may be further renewed by the DENR secretary for another term of two years for the very purpose of preparing or completing the feasibility studies and the filing of the declaration of mining project feasibility and the pertinent MA or FTAA application. In case the permit expires before the declaration of mining project feasibility is approved and the MA or FTAA is filed, the permit is automatically extended until such time that the MA or FTAA application is approved.
The renewal of an EP may be granted by the DENR secretary, through the MGB director, only if the permittee has complied with all its terms and conditions, and has not been found guilty of violating any provision of the Mining Act and its IRR.
The term of an MA shall not exceed 25 years from its date of execution, renewable for another 25 years under the same terms and conditions, without prejudice to changes mutually agreed upon by the government and the contractor. After its renewal, the mining operations may be undertaken by the government or through a contractor. The contract to operate the mine shall be awarded to the highest bidder in a public bidding, with the contractor having the right to match the highest bid upon reimbursement of all reasonable expenses of the highest bidder.
The term of an FTAA shall not exceed 25 years from its date of execution, renewable for another term not exceeding 25 years under such terms and conditions as may be provided for by law and mutually agreed upon by the parties.
EPs may be transferred or assigned subject to the approval of the MGB director. MAs may be transferred subject to the approval of the MGB Regional Director. FTAAs may be transferred subject to the approval of the MGB Regional Director, taking into account the national interest and public welfare.
The term of an EP shall be for a period of two years from the date of its issuance, renewable for another two years, but not to exceed a total of four years for non-metallic mineral exploration or six years for metallic exploration. The DENR secretary, MGB director or MGB regional director concerned may cancel the EP for violations by the permittee of the terms and conditions thereof, including the failure to secure the required proof of consultation with or project presentation to the Sanggunian (the legislative branch of a local government unit, which may be a barangay, a municipality, a city or a province) concerned.
The term of an MA shall not exceed 25 years from the date of its execution, renewable for another term not exceeding 25 years. The MA shall be cancelled, revoked or terminated for the failure of the contractor to comply with the terms and conditions thereof.
The term of an FTAA shall not exceed 25 years from the date of its execution, renewable for another term not exceeding 25 years. The FTAA may be cancelled, revoked or terminated, after due process, under any of the grounds for the cancellation of a mining permit, MA or FTAA.
The respective terms of a quarry permit and a sand and gravel permit shall be five years from the date of its issuance, renewable for a term of five years but not to exceed a total term of 25 years. The term of a guano permit shall be one year or upon the extraction of the quantity as specified in the permit. The term of a gemstone-gathering permit shall not exceed one year from the date of its issuance, renewable for periods of one year.
The grounds for the cancellation, revocation and termination of a mining permit, MA or FTAA are falsehood or omission of facts in the application for the above permits which may alter, change or affect substantially the facts set forth in said statements; non-payment of taxes and fees due to the government for two consecutive years; failure to perform all other obligations, including abandonment, under the permits or agreements; violation of any of the terms and conditions of the permits or agreements; and violation of existing laws, policies and rules and regulations.
Yes. Under the Philippine Constitution, only Philippine citizens or corporations at least 60 per cent of whose capital is owned by such citizens may enter into MAs. Non-Filipino nationals or corporations that are 100 per cent foreign-owned may enter into EPs and FTAAs only.
Mining rights are protected by the Philippine Constitution, particularly the non-impairment clause under section 10, article III, which states that no law impairing the obligation of contracts shall be passed. The non-impairment clause is limited in application to laws that derogate from prior acts or contracts by enlarging, abridging or in any manner changing the intention of the parties. There is impairment if a subsequent law changes the terms of a contract between the parties, imposes new conditions, dispenses with those agreed upon or withdraws remedies for the enforcement of the rights of the parties.
There is a system of arbitration for mining disputes provided under the Mining Act. The Panel of Arbitrators has exclusive and original jurisdiction to hear and decide mining disputes involving the following:
Foreign arbitral awards in respect of domestic mining disputes are recognised and enforceable in this jurisdiction. Under section 42 of Republic Act No. 9285 (the Alternative Dispute Resolution Act of 2004), the recognition and enforcement of such arbitral awards shall be filed with the Regional Trial Court (RTC). When confirmed by the RTC, they are enforced as a foreign arbitral award and enforced in the same manner as final and executory decisions of Philippine courts of law. Thus, foreign arbitral awards are not immediately executory in the sense that they may still be judicially reviewed and need to be confirmed by the RTC.
Permit holders and contractors, upon written notice and payment of just compensation, are entitled to enter, occupy and explore said mining areas or lands when mining areas are so situated that, for purposes of more convenient operations, it is necessary to build, construct or install on the mining areas or lands owned, occupied or leased by other persons, infrastructure such as roads, railways, mills, waste dump sites, tailings ponds, warehouses, staging or storage areas and port facilities, tramways, runways, airports, electric transmission, telephone or telegraph lines, dams and their normal flood and catchment areas, sites for water wells, ditches, canals, new river beds, pipelines, flumes, cuts, shafts, tunnels or mills. Further, holders of mining rights cannot be prevented from entering their contract areas, provided that written notices are sent to the surface owners, occupants and concessionaires, and that a bond is posted. In case of disagreement, the matter shall be brought before the Panel of Arbitrators.
Where the surface owners, occupants or concessionaires refuse to allow the permit holder or contractor entry into the lands, the permit holder or contractor shall bring the matter before the Panel of Arbitrators for proper disposition.
Yes, the Philippine Constitution allows the government and state agencies to participate in mining projects. The state may directly undertake exploration, development and utilisation of mineral resources. It may also enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or corporations or associations at least 60 per cent of whose capital is owned by such citizens. Finally, the state may enter into agreements with foreign-owned corporations involving either technical or financial assistance for large-scale exploration, development, and utilisation.
The Mining Act provides that contractors properties are generally free from expropriation. By way of exception, however, the government may expropriate when the purpose is public use or in the interest of national welfare or defence. The law does not provide for the specific manner of determining compensation but requires that just compensation be paid.
(ii) old growth or virgin forests, proclaimed watershed forest reserves, wilderness areas, mangrove forests, mossy forests, national parks, provincial and municipal forests, tree parks, greenbelts, game refuges, bird sanctuaries and areas proclaimed as marine reserves and marine parks and tourist zones as defined by law and identified initial components of the National Integrated Protected Areas System (NIPAS) pursuant to Republic Act No. 7586 and such areas expressly prohibited thereunder, as well as under Department Administrative Order No. 25, series of 1992, and other laws;
(iii) areas that the DENR secretary may exclude based, among others, on proper assessment of their environmental impacts and implications on sustainable land uses, such as built-up areas and critical watersheds with appropriate barangay, municipal, city or provincial council ordinance specifying therein the location and specific boundary of the concerned area;
(v) in the case of seabed or marine aggregate quarrying, offshore areas of less than 1,500 metres from the mean low tide level of land or island and where the seabed depth is less than 30 metres, measured at mean sea level; and
Further, under the IRR, no MAs, FTAAs or mining permits shall be granted in areas subject to certificates of ancestral domains or ancestral land claims or in areas verified by the Department Regional Office or other office or agency of the government authorised by law for such purpose as actually occupied by the indigenous cultural communities (ICCs) under a claim of time-immemorial possession except with their prior consent.
The government shall also be entitled to compensation for its other contributions, which shall be agreed upon by the parties and shall consist of, among other things, the contractors income tax, excise tax, special allowance, withholding tax due from the contractors foreign stockholders arising from dividend or interest payments to the said foreign stockholders in case of a foreign national, and all such other taxes, duties and fees as provided for in existing laws.
The government share in an FTAA shall consist of, among others, basic government share, consisting of contractors income tax, customs duties and fees on imported capital equipment, value-added tax on imported tax and services, withholding tax on interest payments on foreign loans, withholding tax on dividends to foreign stockholders, capital gains tax, royalties for mineral reservations and to indigenous peoples (IPs), local business tax, real property tax, community tax, occupation fees, registration and permit fees and all other national and local government taxes, royalties and fees. It shall be negotiated by the government and the contractor taking into consideration, among others, the capital investment of the project, risks involved, contribution of the project to the economy and the technical complexity of the project. However, the government share in the FTAA shall only commence after the contractor has fully recovered pre-operating expenses and exploration and development expenditures.
After a certain period, FTAA contractors pay an additional government share consisting of the difference between the basic government share and 50 per cent of the net mining revenue, if the basic government share is less than 50 per cent of the net mining revenue.
After the lapse of the income tax holiday that is available under existing laws, the contractor shall pay income tax as provided in the NIRC. The contractor is also liable for excise tax on mineral products and value added tax under the NIRC and customs duties under the Tariff and Customs Code of the Philippines. Last, the contractor is also liable for local business taxes and real property tax under the Local Government Code.
For MAs, FTAAs, or mining permits covering ancestral lands, the contractor shall pay royalties to the concerned ICC based on gross output. Such payment shall depend on the agreement between the ICC and the contractor.
For MAs and FTAAs over areas covered by small-scale miners, the contractor shall pay royalties to the concerned small-scale miners upon utilisation of the minerals. Such payment shall depend on the agreement between the small-scale miners and the contractor.
Mining operations within mineral reservations are subject to a royalty paid to the MGB that shall not be less than 5 per cent of the market value of the gross output of the minerals or mineral products extracted or produced from the mineral reservations exclusive of all other taxes.
The Mining Act provides that contractors in mineral agreements and FTAAs shall be entitled to fiscal and non-fiscal incentives as provided in the Omnibus Investments Code. It mandates that mining activities always be included in the Investment Priorities Plan that is prepared annually by the Board of Investments. Under the 2017-2019 Investment Priorities Plan, approved on 28 February 2017, mining projects are limited to capital equipment incentives. However, as of this writing, the Board of Investments is still formulating guidelines with respect to such incentives for mining projects.
The Mining Act also provides that the contractor will be entitled to the basic rights and guarantees provided in the Philippine Constitution and such other rights recognised by the government, which include the following:
The Mining Act does not provide that the government is entitled to a carried interest or a free carried interest in mining projects. Nevertheless, the law appears to limit the supposed government share to the usual taxes, royalties and fees.
The Mining Act allows any Filipino citizen of legal age and with capacity to contract, or a corporation, partnership, association or cooperative, to engage in mining; however, considering the capital requirement, private parties ordinarily make use of corporations or enter into joint ventures to carry on mining activities. Applicants for EPs, MAs, and FTAAs must have authorised capital in the amount of 100 million pesos with 6.25 million pesos paid up. Applicants for FTAAs are required to have a minimum paid-up capital of 500 million pesos upon the grant of the FTAA.
Yes, with regard to MAs, applicants must be Filipino citizens, or a corporation, partnership, association, or cooperative at least 60 per cent of the capital of which is owned by Filipino citizens. However, as to EPs, FTAAs or MPPs, the participation of a local entity is not required since it may be held by a 100 per cent foreign-owned entity.
Are there jurisdictions with favourable bilateral investment treaties or tax treaties with your jurisdiction through which foreign entities will commonly structure their operations in your jurisdiction?
To date, the Philippines has signed bilateral investment agreements with Argentina, Australia, Austria, Bangladesh, Belgium-Luxembourg Economic Union, Cambodia (not in force), Canada, Chile, China, Czech Republic, Denmark, Finland, France, Germany, India, Indonesia (not in force), Iran (not in force), Italy, Kuwait, Laos, Mongolia, Myanmar, Netherlands, Pakistan (not in force), Portugal, Romania, Russia, Saudi Arabia, South Korea, Spain, Sweden (not in force), Switzerland, Syria, Taiwan, Thailand, Turkey, the UK, the US and Vietnam.
The Philippines has also entered into tax treaties with Australia, Austria, Bahrain, Bangladesh, Belgium, Brazil, Canada, China, the Czech Republic, Denmark, Finland, France, Germany, Hungary, India, Indonesia, Israel, Italy, Japan, Kuwait, Malaysia, the Netherlands, New Zealand, Nigeria, Norway, Pakistan, Poland, Qatar, Romania, Russia, Singapore, South Korea, Spain, Sweden, Switzerland, Thailand, Turkey, United Arab Emirates, the UK, the US and Vietnam.
The principal sources of financing available to private parties carrying on mining activities are debt and equity financing, as well as foreign investments. The domestic public securities market finances the mining industry through bond issuances, initial public offering and sale of preferred shares.
In general, the government, its agencies or major pension funds do not provide direct financing to mining projects. Nevertheless, government financial institutions, such as the Social Security System and the Government Service Insurance System, have investments in certain mining corporations.
There is currently no Philippine legal framework for taking security over mining interests. However, the Mining Act IRR requires that MAs and FTAAs include a stipulation that the financial institutions that have granted loans to contractors shall have the authority to designate their assignees in case of default by the contractors.
The Mining Act and its IRR impose the policy of preferential use of local goods, services and technologies over its imported counterparts of comparable quality to the extent compatible with efficient mining operations. In relation to labour, the Mining Act IRR specifically requires that the majority of a contractors personnel in its mining operations are qualified Filipino citizens originating from the host and neighbouring communities in the municipality and province where the mine is located. Further, the Mining Act IRR provides strict limitations in the hiring of foreign personnel.
The standard conditions covering equipment supplies that must be observed by the contracting parties are in DENR Administrative Order No. 2000-98 or the Mine Safety and Health Standards, issued by the DENR to comply with the Philippines international obligations relating to safety and health.
All contractors, permittees, lessees, permit holders and service contractors must comply strictly with all the rules and regulations embodied under Department Administrative Order No. 2000-98. For new technologies and equipment in mining and milling operations not covered under Department Administrative Order No. 2000-98, the Central Office of the Philippine MGB shall formulate the appropriate rules and regulations to govern the same after due consultation with all parties concerned.
The Philippine Chamber of Mines, a local organisation of miners, recently adopted the mining sustainability standards of the Mining Association of Canada (MAC) in answer to the incumbent presidents call for the mining industry to follow the responsible mining practices of Australia and Canada. The MACs initiative, called Towards Sustainable Mining, requires mining companies to annually assess their tailings management, community outreach, safety and health, biodiversity conservation, crisis management, energy use and greenhouse gas emissions management.
There is no requirement that metallic minerals be processed or sold in the Philippines. However, the Philippine government examines all sales and exportation of minerals or mineral products, including the terms and conditions of all sales commitments. The government must be informed when any marketing agreement or sales contract is entered into with foreign and local buyers.
Furthermore, certain permits must be obtained for certain types of activities. For mineral trading either domestically or internationally, the party must be registered with the Department of Trade and Industry and accredited by the DENR. Marketing contracts and sales agreements involving commercial disposition of minerals and by-products shall be subject to approval by the Secretary of the DENR upon recommendation of the Director of the MGB. The approved marketing contracts and sales agreements shall be registered with the MGB and is confidential between the Philippine government and the contractor. In addition, the sale must be made at the highest commercially achievable market price and lowest commercially achievable commissions and related fees under circumstances then prevailing. Parties must likewise negotiate sales terms and conditions compatible with world market conditions.
For the transport of ores, a permit must first be secured from the regional director for mines under the DENR, having jurisdiction over the area where the ores were extracted. For exportation of ores, a permit must be secured from the MGB.
Two bills requiring mandatory domestic processing of all mineral ores are pending before the Philippine Congress: House Bill No. 2165 (An Act Providing for the Mandatory Domestic Processing of All Mineral Ores, Amending for the Purpose Republic Act No. 7942 Otherwise Known as the Philippine Mining Act of 1995 and for Other Purposes) and Senate Bill No. 1634 (An Act Providing for the Mandatory Domestic Processing of All Mineral Ores Before Exportation and a Certification Showing Presence or Lack of Rare Earth Elements, Amending for the Purpose Republic Act No. 7942 Otherwise Known as the Philippine Mining Act of 1995 and for Other Purposes). At the time of writing, House Bill No. 2165 remains pending with the Committee on Natural Resources, while Senate Bill No. 1634 is pending its second reading.
The Philippine government encourages inward foreign investments in mining. As a rule, foreign investments need not be registered with the Philippine Central Bank (BSP). However, if a foreign investment is classified as a direct investment or an inward foreign portfolio investment in a peso-denominated debt instrument issued onshore by private resident firms, it must be registered with the BSP.
Moreover, there are no restrictions on the disposition of the proceeds from the export of minerals and mineral products. Under BSP regulations, foreign exchange receipts or earnings of residents from exports may be used freely for any purpose. Such proceeds may be sold for pesos, retained or deposited in foreign currency accounts, whether in the Philippines or abroad at the option of the exporter.
The Mining Act and its IRR contain provisions on environmental protection. Mining contractors are required to institute an environmental protection and enhancement programme prior to the commencement of mining operations and to submit final mine rehabilitation or decommissioning plans to ensure environmental protection beyond the life of the mine. Other environmental laws that may apply to mining operations include the Toxic Substance and Hazardous and Nuclear Wastes Control Act of 1990, the Clean Air Act of 1999 and the Clean Water Act of 2004. The DENR, and the agencies under it, including the MGB and EMB, ensure compliance with environmental laws.
An environmental compliance certificate (ECC) is required for mining projects. To secure an ECC, a proponent must prepare and submit an environmental impact statement (EIS). The EIS should include, among others, the following:
The environmental impact assessment (EIA) process involves four steps: scoping, conduct of EIA study and report preparation, review and evaluation of the EIA report, and decision making. The EMB takes at least 40 days to process an ECC application.
The Mining Act IRR requires that a final mine rehabilitation and decommissioning plan (FMRDP) or mine closure plan be integrated in the environmental protection and enhancement programme (EPEP) to be submitted by contractors to the Mine Rehabilitation Fund Committee. The FMRDP shall consider all mine closure scenarios and shall contain cost estimates for the implementation of the FMRDP, taking in consideration expected inflation, technological advances, the unique circumstances faced by the mining operation, among others. Contractors and permit holders must rehabilitate the excavated, mined-out, tailings covered and disturbed areas to the condition of environmental safety pursuant to the FMRDP or mine closure plan.
The government has established an environmental guarantee fund mechanism known collectively as the Contingent Liability and Rehabilitation Fund (CLRF). The CLRF comprises the Mine Rehabilitation Fund (MRF), Mine Waste and Tailings (MWT) fees and the Final Mine Rehabilitation and Decommissioning Fund (FMRDF). The MRF must be established and maintained by each operating contractor and permit holder as a reasonable environmental deposit to ensure availability of funds for the satisfactory compliance with the commitments and performance of the activities stipulated in the EPEP. MWT fees are collected biannually from each operating contractor and permit holder based on the amounts of mine waste and mill tailings it generated for the said period to be used for payment of compensation for damages caused by any mining operations. The FMRDF must be established by each operating contractor or permit holder to ensure that the full cost of the approved FMRDP is accrued before the end of the operating life of the mine.
DENR Memorandum Order No. 32-99 (MO 32-99), issued in 1999, provides for policy guidelines and standards for mine wastes and mill tailings management. Mining permittees must first secure clearance from the MGB, without prejudice to other required permits from other agencies of the DENR, before constructing and operating building tailings or waste dams. Permittees are required to establish contingency and emergency preparedness plans to deal with significant events, which are assessed by the MGB prior to issuing the said clearance.
The Mining Act is the principal health and safety law for the mining industry. The DENR, through the MGB, is the principal regulatory body that administers the Mining Act. The Mining Act IRR contains provisions on mining health and safety measures.
The principal labour law applicable to the mining industry is the Philippine Labour Code. The Department of Labour and Employment (DOLE) is the principal regulatory body that administers the Labour Code.
Contractors have rights over their mine production including the mining waste products but are required to use the best available appropriate anti-pollution technology and facilities to protect the environment and rehabilitate areas affected by mine waste, mill tailings and other pollution. Moreover, MWT fees are collected in order to cover damages caused by pollution.
Under EO 79, all valuable metals in abandoned ores and mine wastes and mill tailings generated by previous and now defunct mining operations belong to the state and shall be developed and utilised through competitive public bidding in accordance with the pertinent provisions of law. Under DENR Administrative Order No. 2012-07, or EO 79s IRR, these include those that were abandoned during transport or shipment and which are not covered by valid and existing ore transport permits, mineral ore export permits or delivery receipts. Further, in the case of existing mining operations, all valuable metals in mine wastes and mill tailings shall automatically belong to the state upon the expiry of the pertinent mining contracts and shall be similarly developed and utilised through public bidding.
The Mining Act mandates that a party to a mining agreement or a FTAA shall give preference to Filipinos who are qualified to perform the corresponding work with reasonable efficiency and without hazard to the safety of the mining operations within the Philippines. However, as an exception, a party may hire foreign employees, subject to the provisions of Commonwealth Act No. 613, as amended (the Philippine Immigration Act), for technical and specialised work that, in his or her judgment and with the approval of the MGB director, requires highly specialised training or lengthy experience in the exploration, development or utilisation of mineral resources.
Further, under Republic Act No. 7610, as amended (the Special Protection of Children Against Abuse, Exploitation and Discrimination Act), children under the age of 18 shall not be allowed to work under circumstances that are hazardous or likely to be harmful to their health and safety.
In addition, foreign nationals seeking admission to the Philippines for employment must secure a permit from the DOLE after determination that there is no available Filipino employee who is competent, able and willing to do the job intended for the foreign national.
Moreover, employment in connection with mining activities shall likewise be subject to the provisions of Commonwealth Act No. 108 (the Anti-Dummy Law), as amended, which prohibits any person not possessing the necessary requisites under the law and constitution to intervene in the management, operation, administration or control thereof. Technical personnel, however, may be exempted after having been specifically authorised by the secretary of the Department of Justice. Further, the election of foreigners as members of the boards of directors or governing bodies of corporations or associations engaged in partially nationalised activities is allowed in proportion to their allowable participation or share in the capital of such entities.
There are currently no principal community engagement or CSR laws that are applicable to the mining industry. However, community engagement or social development provisions are found in various laws and regulations, including the Mining Act IRR. Under the Mining Act IRR, a contractor is mandated to annually allot a minimum of 1.5 per cent of operating costs to do the following:
Further, public participation is one of the three general criteria in the EIS system. It helps the community reach an informed decision on the social acceptability of a mining project. In this regard, the local government units and the MGB facilitate the dialogue process. In the case of ICCs or IPs, free and prior consent of the concerned ICCs and IPs must be secured prior to the conduct of mining operations.
Under mining regulations, the contractor is mandated to coordinate with proper authorities in providing development plans for host and neighbouring communities, promote community service and volunteerism in the community, and help create self-sustaining income-generating activities such as reforestation and production of goods and services needed by the mine and the community. The DENR, the MGB and the concerned local government units administer this requirement.
ICCs and IPs are given priority rights in the harvesting, extraction, development or exploitation of natural resources within their ancestral domains. No ancestral land shall be opened for mining operations without the free and prior consent of the ICCs and IPs concerned. The parties must enter into an agreement with ICCs and IPs indicating the royalty payment, which may not be less than 1 per cent of the gross output. The said royalty shall form part of a trust fund for the socio-economic well-being of the ICCs and IPs.
Republic Act No. 3019, as amended (the Anti-Graft and Corrupt Practices Act), enumerates all corrupt practices of any public officer, declares them unlawful and provides the corresponding penalties of imprisonment, perpetual disqualification from public office, and confiscation or forfeiture of unexplained wealth in favour of the government. Among the corrupt practices, the following are acts usually cited:
Republic Act No. 6713 (the Code of Conduct and Ethical Standards for Public Officials and Employees) requires all government personnel to make an accurate statement of assets and liabilities, disclose net worth and financial connections. It also requires new public officials to divest ownership in any private enterprise within 30 days from assumption of office to avoid conflict of interest.
Republic Act No. 7080(the Act Defining and Penalising the Crime of Plunder) penalises any public officer who, by him- or herself or in connivance with members of his or her family, relatives by affinity or consanguinity, business associates, accumulates or acquires ill-gotten wealth, through a combination or series of overt criminal acts, an aggregate amount of at least 50 million pesos.
Act No. 3815 (the Revised Penal Code) penalises public officers for direct bribery, indirect bribery and qualified bribery. It also penalises private individuals who offer, promise or give gifts to a public officer under circumstances that will make the public officer liable for direct or indirect bribery.
Presidential Decree No. 46 makes it punishable for any public official or employee, whether of national or local governments, to receive, directly or indirectly, any gift, present or other valuable thing on any occasion, including Christmas, when such gift is given by reason of his or her official position, regardless of whether the same is for past favour or the hope or expectation of future favours or better treatment from the public official or employee in the discharge of his or her official functions. Included within the prohibition is the throwing of parties or entertainments in honour of the official or employee or of his or her immediate relatives. The decree also punishes private persons who give, or offer to give, such gifts.
No. Although the Philippines has been a signatory to the United Nations Convention Against Corruption (UNCAC) since 2003, the Philippine Congress has not yet enacted a law specifically implementing all of the provisions of the UNCAC. However, there has been partial and full implementation of some of its provisions as reflected in various laws such as Republic Act No. 9160, as amended, the Anti-Money Laundering Act, the Republic Act No. 9485, the Anti-Red Tape Act and the Anti-Graft and Corrupt Practices Act, among others. Companies registered in the US and the UK must also comply with the US Foreign Corrupt Practices Act and the UK Bribery Act of 2010, respectively.
Has your jurisdiction enacted legislation or adopted international best practices regarding disclosure of payments by resource companies to government entities in accordance with the Extractive Industries Transparency Initiative (EITI) Standard?
The president, through EO 79, mandated the establishment of mechanisms to operationalise the EITI in the mining sector. Following EO 79, the president issued Executive Order No. 147, series of 2013, creating the Philippine EITI Multi-Stakeholder Group. Philippine EITI developments may be found at www.ph-eiti.org.
Yes. Mining is considered a nationalised industry, the conduct of which is limited by the Philippine Constitution to Philippine citizens or corporations at least 60 per cent of whose capital is owned by such citizens. Hence, only Philippine citizens or such corporations may enter into MAs. Nevertheless, non-Philippine nationals, or corporations that are 100 per cent foreign-owned, may still enter into EPs and FTAAs.
Philippine courts and administrative agencies apply two tests to determine whether a corporation meets the 60 per cent requirement: the control test and the grandfather rule. The control test computes the total percentage of foreign ownership based on the shares directly held by foreigners in a corporation. The grandfather rule computes the total percentage of foreign ownership by tracing both the direct and indirect shareholdings of foreigners based on the companys corporate structure. In Narra Nickel Mining and Development Corporation v Redmont Consolidated Mines, 722 SCRA 382 (2014), 748 SCRA 455 (2015), the Supreme Court held that the control test remains the primary test and must be complied with in all cases. However, notwithstanding compliance with the control test, the grandfather rule may additionally apply when doubt exists as to the extent of control and beneficial ownership in a corporation, such as when a foreign-owned corporation practically provided all the funds in an ostensibly Filipino-owned corporation.
In Roy v Herbosa, 810 SCRA 1 (2016), the Supreme Court clarified that compliance with nationality restrictions was validly limited by the Securities and Exchange Commission to the voting shares and the total outstanding capital stock of the corporation. This clarified the earlier ruling of the same court in Heirs of Gamboa v Teves, 682 SCRA 397 (2011), which ostensibly required the nationality restrictions to be applied to each class of shares.
There is currently no multilateral international treaty or convention to which the Philippines is a party that specially applies to the mining industry or an investment in the mining industry. However, the Philippines has bilateral investment treaties, 32 of which are in force with other states and economic unions, specifically: Argentina, Australia, Austria, Bangladesh, Belgium-Luxembourg Economic Union, Canada, Chile, China, Czech Republic, Denmark, Finland, France, Germany, India, Italy, Kuwait, Mongolia, Myanmar, Netherlands, Portugal, Romania, Russia, Saudi Arabia, South Korea, Spain, Switzerland, Syria, Taiwan, Thailand, Turkey, United Kingdom and Vietnam. These bilateral investment treaties typically include provisions generally prohibiting the expropriation of investments in the Philippines of nationals or permanent residents of a contracting state (except for a public purpose, under due process of law, in a non-discriminatory manner and against prompt, adequate and effective compensation), as well as clauses allowing the nationals or permanent residents of a contracting state to submit a dispute involving the Philippine government to international commercial arbitration.
What were the biggest mining news events over the past year in your jurisdiction and what were the implications? What are the current trends and developments in 2017 in your jurisdiction's mining industry (legislation, major cases, significant transactions)?
The DENR conducted an audit on the appeals made by 26 large-scale mining firms against suspension and closure orders imposed by former DENR Secretary Regina Lopez. DENR Secretary Roy Cimatu stated that the DENR and the Mining Industry Coordination Council (MICC) had conducted separate reviews and, as of April 2018, were finalising and harmonising the results and recommendations. The results of the audit have yet to be released to the public. The MICC also announced its intention to expand its review to an additional 70 large-scale mines, with its findings and recommendations to be submitted to the DENR and the Office of the President.
Former Secretary Lopezs ban on open-pit mining remains in force despite the MICCs recommendation for its revocation. President Rodrigo Duterte also warned mining companies that the ban on open-pit mining may be extended until 2019, and ordered mines to begin reforestation of their mining areas under penalty of closure of their operations.
As part of the governments crackdown on illegal small-scale mining, the DENR issued Special Order No. 2018-53, creating the National Task Force on Mining Challenge (NTFMC). The NTFMC is tasked with the enforcement of mining and other environmental laws, rules and regulations. Since its formation, the NTFMC has closed and blasted 18 small-scale mining operations and dozens of gold-processing plants in surprise raids in Baguio City.
Mr Cimatu also pledged to fast-track the processing of applications for the declaration of new Minahang Bayans, or mineralised areas declared by the Provincial or City Mining Regulatory Board in the locality as peoples small-scale mining areas, where registered small-scale miners may conduct their activities. Mr Cimatu stated that the fast-tracking would start with the Cordillera Administrative Region, particularly in Benguet.
In January 2018, the Tax Reform for Acceleration and Inclusion Law took effect and, among other things, doubled the excise tax on mining, with an increase from 2 per cent to 4 per cent excise tax on metallic minerals such as copper, gold and chromite, as well as non-metallic minerals and quarry resources.
philippines: value of approved investments in mining and quarrying industry | statista
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forecast: industry revenue of mining and quarrying n.e.c. in the philippines 2012-2024 | statista
* Estimate - This also applies for past years as data provided by statistical institutions often is not available for more recent years.Currency conversion factor: (PHP -> USD) = 0.020The industry classification is based on the - system in the Philippines. The industry mining and quarrying n.e.c. has the code B089.Details on the methodology can be found here.Please visit here for more information on Statista market forecasts.
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