THE government’s failure to check an apparent misdeclaration by quarrying firms of the value of their limestone output may be causing it to lose billions of pesos in revenues, according to a mining engineer.
Engr. Graciano M. Calanog Jr. told the BusinessMirror that the sector is not closely monitored and regulated by the government.
“It’s not just millions, the government is losing billions [due to undervaluation]. There are about 19 cement plants in the country and most of them are [undervaluing] their limestone,” Calanog said.
Calanog claimed that quarrying firms, such as Apo Land and Quarry Corp. (ALQC), are selling their limestone at a market price of P45 per metric ton (MT) or around P0.045 per kilogram (kg).
This, according to Calanog, is more than 10 times lower than the average P500-per-MT price of Bohol Limestone Corp. He added that the average price of limestone ranges from $8 to $10 per ton.
Calanog said the Department of Environment and Natural Resources-Mines and Geosciences Bureau (DENR-MGB) should issue guidelines overseeing limestone sales in the country to ensure that quarries pay the correct excise taxes.
To address undervaluation, he urged the government to impose an excise tax based on the ratio of limestone to the cost of cement, benchmark the local limestone prices to the prevailing international value, and impose a 5-percent royalty fee on quarries.
“What the government can do is to tax the firms based on the percentage share of limestone to the operating costs of cement manufacturers. For example, [if] limestone is 10 percent of the cost of cement, then that should be the excise tax,” he explained.
“Another option could be for the MGB to get the actual international price of limestone abroad and then benchmark the local prices to those values,” he added.
Citing data from the United States Geological Survey, the average price of crushed limestone in 2017 is around $11.45 per MT, which is more than P600 per MT and nowhere near ALQC’s P45 per MT, according to Calanog.
Calanog said the government should impose the 5-percent royalty fee if the prices of quarrying firms are really low, similar to what is being done to mining firms with mineral reservations.
Appeal to DENR
Calanog wrote a letter to Environment Secretary Roy A. Cimatu and urged him to look into the alleged undervaluation of ALQC limestone prices.
In his letter, Calanog claimed that ALQC’s limestone was sold at P45 per MT or P0.045 per kg, which was way cheaper than a kilo of camote that is sold at P20 per kg.
Using available data, Calanog estimated that ALQC paid P6.292 million in excise taxes in 2015, P3.899 million in 2016 and P3.77 million in 2017.
He noted that ALQC earned P189.398 million in 2015, P194.967 million in 2016 and P188.529 million in 2017. In terms of production, ALQC posted a total output volume of P4.133 million metric tons in 2015, P4.369 MMT in 2016 and 4.167 MMT last year.
Based on Calanog’s estimates, the average value per MT of ALQC’s limestone output is at P45.82 per MT in 2015, P44.62 per MT in 2016 and P45.24 per MT in 2017.
“As can be seen above, ALQC has been paying excise tax of as low [as] P3.77 million per year. This is due to the undervaluation of the limestone at around P45 per metric ton or P0.045 per kilogram, a price that is lower than that of camote [around P20 per kg in the public markets],” Calanog said in his letter, a copy of which was obtained by the BusinessMirror.
“For the sake of the Filipino people, the DENR should immediately address this matter not only for Apo Land and Quarry Corporation but for all nonmetallic mining/quarrying companies. I hope that this matter and all doubts related to it would be resolved in favor of the Filipino people, not big business interests,” he added.
Calanog’s letter was received by Cimatu’s office on September 28. A copy of the letter was also received by the DENR’s MGB on the same day at 11:45 a.m.
Cimatu and DENR-MGB Director Wilfredo Moncano have not responded to the BusinessMirror’s query as of press time.