In spite of the ban on new mining projects, the areas covered by mining contracts, specifically mineral production sharing agreements (MPSAs), have increased by at least 6 percent between 2015 and 2016.
The reason: Executive Order (EO) 79, which imposed the ban on new mining projects pending new legislation that would put in place a new mining revenue-sharing scheme, also allowed mining companies to apply for area expansion through an amendment to the existing MPSAs.
The amendment allowed areas covered by another mining permit, including exploration permit—via “annexation”—hence, allowing a company to expand mining tenements under the terms and condition of the existing MPSAs.
Possibly, mining companies granted with MPSA area coverage expansion have skipped the normal permitting process under the Philippine Mining Act of 1995 and its implementing rules and regulations (IRR), a very tedious process that would sometimes take a decade, and completely avoided not only the increase in mining tax, but a future equitable mining revenue-sharing deal with a new legislation being sought by the government.
Is it legal?
The Department of Environment and Natural Resources (DENR) said it will scrutinize the MPSA area expansion and review EO 79 signed by President Benigno S. Aquino III on July 6, 2012, and its IRR.
Environment Undersecretary for Climate Change Services and Mining Concerns Analiza Teh said they will look into the legal basis of the MPSA coverage expansion to settle the issue and eliminate some gray areas on the matter.
She said they will come up with a recommendation that will possibly form part of a new mining policy under the watch of Environment Secretary Roy A. Cimatu.
To be reviewed mostly are MPSA expansions made during the second half of 2015 and the first half of 2016, six months before President Duterte took over.
Anti-mining advocates consider these as “midnight deals” secured by quarry and mining companies at the tail end of the Aquino administration leading up to the turnover to the Duterte administration.
EO 79’s intention
EO 79 aims to introduce reforms in the mining sector, starting with increasing the government’s share in mining profit.
As such, it imposed a ban on new mining projects, which remains in effect until now, as no new legislation putting in place a revenue-sharing scheme has been enacted.
For decades, anti-mining groups have raised the issue of environmental degradation as against the benefits of mining to the government through taxes and the host communities through jobs and livelihood, and better infrastructure. There is also the adverse impacts of mining, such as loss of livelihood and environmental degradation, that often lead to disasters.
Communities in mining impact areas benefit from various programs and projects, but they are also the first to suffer the consequence of irresponsible mining.
Also known as Aquino’s mining policy, EO 79 increased the number of areas that are closed to mining, or no-go zones, and limited small-scale mining operation within a declared Minahang Bayan.
It also banned the use of toxic chemicals, particularly mercury, in small-scale mining.
Despite the ban on the approval of new mining projects, EO 79, however, gave quarry and mining companies the option to expand their mining areas.
Sweet deals
Under the scheme, government regulators, particularly the DENR-Mines and Geosciences Board (MGB), grant special favor to MPSA holders because they will be able to expand their mining tenements.
Teh said that, in reviewing the MPSA area expansions, the DENR will discuss the circumstances in which area expansions of the existing MPSAs were allowed and to verify claims that they were, in fact, approved by the Mining Industry Coordinating Council (MICC).
She added they will ask for a meeting with the MGB and would have to sit down with MICC people to shed light on the MPSA area expansion, including the basis of the applications’ approval or rejection.
The MGB had been asked to provide details of the expansion, as Teh learned that 25 holders of MPSAs were allowed to expand their areas.
The MGB started receiving applications for MPSA expansion as early as 2013. Most of the applications were filed in 2015 and 2016, but the bulk of the approved applications happened in May and June 2016.
No formal complaint
While there is no formal complaint about the expansions made, it was learned that the issue has been the subject of discussions within the MGB and the DENR because some of the annexed areas are covered by other mining applications, or in another location, during the short stint of former Environment Secretary Regina Paz L. Lopez.
“It is worth looking back while we are doing policy reform,” Teh said.
“Timely so, we are conducting a mining-policy review. So there will be parallel reviews on the issue of closure or suspension orders, the 75 MPSAs, and the MPSA area expansion,” she said.
The official is referring to the controversy hounding the closure and suspension orders affecting more than two dozen large-scale operating mines and 75 MPSAs within or near watershed.
According to Teh, with the review of the MPSAs, a look into the provisions of EO 79 is in order, plus the two DENR administrative orders (AO) that pertain to the IRR of EO 79.
Clarification
Two consecutive DENR administrative orders were issued, putting in place the IRR.
The first, AO 2012-07, was issued on September 10, 2010. However, amid clamor seeking clarification on certain provisions of EO 79, the DENR issued AO 2012-07A, amending Sections 3, 7 and 9. It took effect on October 25, 2012.
Under the provision of EO 79 on the continued moratorium, no new mineral agreements shall be entered into until a legislation rationalizing existing revenue-sharing schemes and mechanisms shall have taken effect.
The moratorium does not cover exploration permits (EP) and financial and technical assistance agreements, which will continue to be granted.
Since no new MPSA will be issued pending new legislation that will put in place a new revenue-sharing scheme, MPSA holders appealed to the MGB for area coverage expansion of their existing MPSAs through annexation of another area covered by another mining-permit application.
The window for the expansion was provided under EO 79’s amended IRR, which states that “no expansion of existing contract areas shall be allowed by the DENR secretary unless there is imminent and/or threatened economic disruption, such as a shortage of critical commodities and raw materials, that could adversely affect priority government projects and/or economic activities as determined by the Economic Development Cabinet Cluster.”
According to Teh, the first IRR has no expressed prohibition, allowing the expansion in contract areas with available mineral reserves subject to validation by the MICC. Some applicants, such as Holcim Cement, reasoned out possible supply shortage and hence were granted area expansion.
Conditions
Under the Revised IRR, Teh noted that it was expressly stated that the approval for expansion may be allowed by the DENR secretary, because of the same reason.
“We will review this [MSPA area coverage expansion] whether this is in accordance with the guidelines,” she said.
“We will discuss this with the MGB…. We would also like to sit down with the MICC to understand the context. We will hold a preliminary review,” she added.
The new provision also now allows the grant of new mineral agreements in case of an imminent and/or threatened economic disruption that could adversely affect priority government projects or activities—such as, in the case of a quarry, where construction materials such as gravel and sand come from.
Does it apply to metallic minerals, particularly precious metal?
Teh said it is a general provision and does not distinguish the commodity being mined. This means gold and copper, silver and other precious metals, and nickel, which is the country’s top commodity, are included.
What is important, Teh added, is for the DENR to know whether the MPSA area expansions were, in fact, approved by the MICC and have corresponding MICC resolutions.
To recall, as early as April 2015, former DENR MGB Director Leo Jasareno bared that quarry and mining companies are opting to expand areas covered under their MPSA to continue their operation in the face of the moratorium on new mining projects.
Holcim and LaFarge, two of the leading cement companies, were among the first to avail themselves of the scheme to increase their limestone resources. Limestone is a main ingredient of cement, the production of which is important so as not to adversely affect the construction industry.
Several mining companies, whose mines are nearly depleted of resources, have followed suit.
Under such scheme, the total area covered by MPSAs had increased from 2015 to 2016 by as much as 35,067.35 hectares, or around 6 percent of the total area of 603,158.21 hectares as of April 2017, which represents a total of 317 existing MPSAs.
As of January 2018, the Mining Tenements Management Division of the MGB lists a total of 313 MPSAs covering a total of 598,335.71 hectares. There are also six suspended MPSAs covering a combined area of 13,207.38 hectares; eight expired MPSAs covering 8,409 hectares, with some having applications for renewal; 10 canceled MPSAs covering 13,101.9 hectares with a motion for reconsideration; and nine canceled MPSAs covering 6,474.75 hectares whose orders are final and executory.