Mining has gotten back on track with the relatively vigorous promotion of corporate social responsibility at all levels to increase acceptability of mining with help from the home state of a company through lobbying and development assistance to host countries.
Meanwhile, various countries have been coalescing as a network to promote transparency and accountability as a standard of good governance in the extractive industry. The people behind this transparency network are stakeholders in mining activities. The stakeholders are representatives of the public sectors (various levels of government), the extractive sector (the mining industry), and the CSOs or the civil society organizations. This network called the Extractive Industries Transparency Initiative (EITI) started in 2002 through former Prime Minister Tony Blair and is aimed to increase the transparency of payments made by companies in extractive industries to the host government. The CSOs, whose advocacies counter against extractive industries, are natural allies of communities who say no to mining. The transparency component of the network promotes the contribution of the mining industry to the economy.
While transparency in the amount that mining actually pays the government is important, the value of good governance helps break distrust between communities and the mining company. Good governance manifests through efficient utilization of revenues from mining to achieve development results. The same paper points out corruption as the weakness of governments that rely heavily on natural resources, and this becomes a chokepoint in advancing economic development. Thus, adoption of good governance as a framework will create strong institutions that utilize revenues from mining to economic activities that benefit the general population, minimize hazards from mining, create safeguards.
Mining contributes to government revenues for poverty alleviation, but it has also been recognized by some government officials that there is a need to regulate the industry to curb the damages and potential danger of the operation to the environment. Studies also state that there should be sound mining policy with corresponding appropriate standards, mechanisms, and capacities before any mining project should be allowed to operate. There is a need to properly understand mining because it is such a high-risk activity. Even with the economic benefits it contributes, these would not be enough to forego attendant risks.
The contributions of mining to the economy is very important because the Philippine Mining Act has been created the way it is to attract local or foreign investors. Its guiding policy is partnership with the “private sector in order to enhance national growth in a way that effectively safeguards the environment and protect the rights of the affected communities.” Therefore, it is in line with the national government’s policy that mining operations will not be derailed on the ground to sustain mining contractors’ interest to invest in the country.
The efforts of the national government to push mining as another revenue source has never stopped and it has continuously searched for ways on how to increase the sector’s payments. However, there might be a need to caution policymakers against increasing taxes on mining, especially mining companies that are already paying above industry standard.
Nevertheless, there might also be a need to scrutinize the flaw in the current schedule of taxes imposed over the mining sector. Inasmuch as these taxes become the government’s revenue, the government stands to gain more if the taxes imposed on the mining industry will intentionally be differentiated from other industries that are also subjected to the same tax schedule. The ownership of mineral resources belongs to the state; therefore, those involved in mining activities should pay for having extracted these minerals by way of royalty, aside from the taxes that are existing under the law.
Thus far, the national government receives 5 percent royalty (from the market value of the gross output) only from mining operations within areas declared by the government as mineral reservation. The Philippine Mining Development Corp. (PMDC) has sole jurisdiction over two mineral reservation projects: (1) the Diwalwal gold mine in Compostela Valley province, and (2) the Dinagat Chromite-Nickel mining Caraga region, while other declared mineral reservation areas are in Zambales, Surigao del Norte and Surigao del Sur.
Mining is an industry where the effects are irreversible (i.e., ecology in an open-pit mining will forever vanish), and the landscape where the area of extraction can never be remotely restored to its original form. As a hazardous industry not only for its workers but to its immediate environment and contiguous areas, mining poses risks where it operates. Therefore, for the Philippine government to allow this sector to continue its business, there should be serious trade-offs that benefit local economies and the economy as a whole.
Ms. Perpevina C. Tio is a graduate student at the Department of Economics of Ateneo de Manila University.