SPEAKER Gloria Macapagal-Arroyo on Thursday vowed to pass a law that would allow the government to earn more revenues from the mining industry, as part of President Duterte’s priority legislative agenda.
Arroyo declared this at the Committee on Ways and Means hearing on the unnumbered Substitute Bill to House Bills 422 and 7994, titled “An Act Establishing the Fiscal Regime for Mining Industry.”
During the hearing, the House leader recalled that Finance Secretary Carlos G. Dominguez III, through a text message to Gloria Tan Climaco, said passage of such law is not a priority of the finance department but of Arroyo. Arroyo said she responded to Climaco by saying: “Excuse me. I’m the one who opened up the mining industry in 2004 and it is my priority to kill the industry?”
Nonetheless, Arroyo stood firm that the House of the Representatives would give priority to the passage of a law improving the revenue sharing scheme between the government and the mining industry, as Duterte ordered. The imposition of a royalty fee is among the key provisions of the second batch of reforms under the Comprehensive Tax Reform Program, but mining leaders have warned that this will not necessarily boost the government’s bottomline but merely end up killing some companies and dampening investments.
Arroyo said at the House hearing, “In the meantime, I have this instruction to the House from the President’s Sona [State of the Nation Address]. And I’ve said when I became Speaker, my job is to carry out his legislative agenda.”
Furthermore, Arroyo gave the finance department—Dominguez in particular—three days to submit their position paper on the substitute bill or else the upper chamber would push through with its own consolidated version.
“Now, since you’re all here, since it is not [Dominguez’s] priority, he just stated it verbally, but it is the President’s priority as he said in the Sona, therefore, we will come up with a mining bill. Unless the DOF communicates with us in three days’ time, we will make our own,” she said.
“Well, my main concern, anything with plus revenue is acceptable, because we are raising revenues. Second, if we don’t hear from the DOF in three days’ time, I’ve already sent to the Chairman of the Committee two very rough submissions that, I hope the technical working group, subject to style, will make as a substitute bill,” she added.
Arroyo also made clear that her position on the proposed bill is to tax mining operations regardless of whether they are within or outside the mineral reservations.
In fact, Arroyo said, the position that the Department of Envinronment and Natural Resources (DENR) transmitted to her is to “to include the royalty fees on mining firms operating outside mineral reservations.”
“Our proposal is if it’s a mineral reservation, if it’s [Financial or Technical Assistance Agreement], if it’s mining firm, they all pay royalty, the same royalty; that’s my proposal unless I hear from the DOF,” Arroyo said.
“I will ask the industry, talk to the DOF, otherwise we make our own. Talk to the DOF and let the DOF come back with a new draft in three days’ time, otherwise we do our own. Anyway it’s not your priority, it’s only the President’s
priority,” Arroyo added.
Open-pit mining
Furthermore, Arroyo said she wants a provision included in the bill that would “explicitly” prohibit open-pit mining across all types of minerals and firms practicing such methods would pay corresponding taxes.
“So I would like to incorporate a second portion of our draft bill to define ‘open-pit mining’ as a violation of DAO [department administrative order] of 2018-19,” she said.
“So I have a proposed provision that says ‘open-pit mining, as defined here in this Act, is prohibited and any mining tenement that will not comply with DAO shall take steps to comply with the DAO within a period allowed by the DENR. And within that period, they must pay an excise tax of such and such an amount which is the one you were saying was ‘prohibitive’ or that will kill the industry,” she added.
Arroyo explained that the DAO 2018-19 did not use the word open-pit mining and instead described the mineral extraction method, as DENR Secretary Roy A. Cimatu wanted to be “very diplomatic.”
“So that will be my proposal. If we do not hear from the DOF in three days’ time, I will ask Madam Chair for a technical working group to revise the substitute bill, only in accordance to these two provisions,” she said.
Chamber of Mines
Earlier, the Chamber of Mines of the Philippines (COMP) said the country may lose billions of pesos in investments if the government pushes through with a proposed additional royalty fee on mining operations.
The DOF is proposing to slap 5-percent royalty rate on mining operations outside mineral reservations (OMR), which is only imposed on mines within MRs.
The DOF said estimated revenues, once the 5-percent royalty is imposed on OMRs alone in 2019, would reach around P1.83 billion; and P1.94 billion by 2020, P1.86 billion in 2021, P2.50 billion by 2022 and P3.16 billion by 2023.
Cimatu vowed to continue holding talks with various mining stakeholders to promote responsible mining in the Philippines.
At the Gala Night of the on-going Mining Philippines 2018 happening at the Sofitel Hotel in Pasay City on Wednesday night, Cimatu mingled with mining industry’s stakeholders after delivering a brief message.
Cimatu said he was personally asked by Duterte to represent him in the event.
It was a first for a DENR secretary to attend the annual Gala Night, a formal dinner which highlights the interaction of top executives from member-companies of the COMP, which represents the largest mining operators in the country.
With a theme “Strategic Synergies: Communicating the Gains of Responsible Mining,” the three-day annual Mining Philippines 2018 gathered hundreds of mining industry’s stakeholders amid a period of uncertainty.
The industry’s large-scale operators are steel reeling from what they described as a “policy storm” with the previous DENR leadership of Regina Paz L. Lopez, an anti-mining advocate who recommended the closure or suspension of more than two dozen large-scale miners a week before her rejection by the Commission on Appointments in April last year.
Lopez had also canceled 75 inactive Mineral Production Sharing Agreements (MPSA) and one Financial and/or Technical Assistance Agreements (FTAA) to protect the country’s water sources from what she calls environmentally destructive development projects.
All eyes are now on Cimatu as DENR secretary and cochairman of the Mining Industry Coordinating Council (MICC), which is set to come up with a recommendation on various appeals to reverse Lopez’s alleged anti-mining policies and orders.
In his brief speech on Wednesday night, Cimatu vowed to continue discussions with the mining industry to ensure the successful implementation of environmental and mining laws.
He said he will continue to learn more about the mining law, both large-scale and small-scale mining, conceding that antimining sentiments intensified anew because of the recent landslide in Benguet Corp.’s abandoned mining tenement, particularly the Antamok mine site in Barangay Ucab, Itogon, Benguet, that small-scale illegal miners had taken over.
He then promised to be stricter in regulating small-scale mining and ensuring their compliance with regulations on human and environmental safety, such as health and sanitation, the prohibition on the use of mercury and containment of tailings.
Image credits: AP/Aaron Favila