Mining Arangkada Assessment_2013

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With an estimated $1.4 trillion in reserves, Philippine mining potential ranks

fifth in the world, covering an estimated 9 million hectares, but less than

2% has mining permits. After long stagnation, the sector has been coming

back after a 2005 SC decision affirming RA 7942, considered a world-class

legal framework for sustainable development. Minerals development is a

government priority and has great potential for jobs and revenue. Government

has identified over 60 priority PPP projects. Mining can support poor

rural areas through high quality jobs, local tax payments, and community

development. The national government receives substantial royalty and tax

payments. Government revenue from mining increased 800% from 2002 to

PhP10.4 billion in 2007. However, full development of the sector continues

to face significant challenges. Lengthy, tedious approvals for Exploration

Permits (EPs) continue to impede investment. Several LGUs have closed their

provinces to mining. Industry is concerned that the Writ of Kalikasan might

disturb lawful activities. An investor cannot tell easily if land is ancestral land.

Skilled Mines and Geosciences Bureau (MGB) personnel often leave public

service. EO 79 has imposed a moratorium on new mining permits, pending the

passage of a new law on the revenue-sharing scheme between industry

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  • YES TO LIFE YES TO AGRICULTURE & ECO TOURISM No to mining in Palawan AND other Key Biodiversity Areas (KBAs)...No to mining in our Islands.
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  • YES TO LIFE Ang yaman ng Palawan ay yaman ng Pilipinas It is known as the Philippines’ Last Ecological Frontier. It has 40% of our country’s remaining mangrove areas, 30% of our coral reefs, at least 17 Key Biodiversity Areas (KBAs), 2 UNESCO World Heritage Sites, and 8 declared Protected Areas (PAs). It is unmatched anywhere in the country
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Mining Arangkada Assessment_2013

  1. 1. PART 3: BIG WINNER SECTORS MININGRECOMMENDATIONS: 32 PROGRESS RATINGS RATINGS IMPROVED 5 2 12 DECLINED 4 3 4 STEADY 22 11 0
  2. 2. BIG WINNER SECTORSMININGWith an estimated $1.4 trillion in reserves, Philippine mining potential ranksfifth in the world, covering an estimated 9 million hectares, but less than2% has mining permits. After long stagnation, the sector has been comingback after a 2005 SC decision affirming RA 7942, considered a world-classlegal framework for sustainable development. Minerals development is agovernment priority and has great potential for jobs and revenue. Governmenthas identified over 60 priority PPP projects. Mining can support poorrural areas through high quality jobs, local tax payments, and communitydevelopment. The national government receives substantial royalty and taxpayments. Government revenue from mining increased 800% from 2002 toPhP10.4 billion in 2007. However, full development of the sector continuesto face significant challenges. Lengthy, tedious approvals for ExplorationPermits (EPs) continue to impede investment. Several LGUs have closed theirprovinces to mining. Industry is concerned that the Writ of Kalikasan mightdisturb lawful activities. An investor cannot tell easily if land is ancestral land.Skilled Mines and Geosciences Bureau (MGB) personnel often leave publicservice. EO 79 has imposed a moratorium on new mining permits, pending thepassage of a new law on the revenue-sharing scheme between industry andgovernment. 119
  3. 3. RECOMMENDATION 1Promote the port of Batangas for CALABARZON-destinedshipments and Subic for Central Luzon-destined shipments.RECOMMENDATION A Invite international feeder vessel operators to call at Batangas and Subic. 2012 RATING 2011 RATING Not Ongoing Backward / RegressionWhile MGB has been quite active in this area, the result has created the situation wherenumerous appeals are headed to the court system, which will cause more delay and keepaccess to the ground inaccessible. The EITI may improve this in the future but currentmoratorium continues.RECOMMENDATION B Applicants should be vetted strictly. 2012 RATING 2011 RATING Not Ongoing Not OngoingRECOMMENDATION C Reduce Environmental Clearance Certificate processing time and certificates of non-coverage. 2012 RATING 2011 RATING Not Ongoing Not OngoingRECOMMENDATION D Allow pre-permitting access by firms to potential project lands. >>>120 | PART 3: MINING
  4. 4. 2012 RATING 2011 RATING Backward / Regression Not OngoingTemporary EPs have been stopped.RECOMMENDATION E Continue processing of mining applications involved in mining cases. 2012 RATING 2011 RATING Not Ongoing Not OngoingRECOMMENDATION F MGB should strictly monitor compliance by mining companies with the Mining Act and related departmental orders. MGB should cancel permits after two years of non-performance. 2012 RATING 2011 RATING Started StartedMineral Production Sharing Agreements and Financial or Technical Assistance Agreements areregularly monitored, but small scale mining is not, unless provoked by incidents. EO 79 tries toaddress this.RECOMMENDATION 2 Establish regional level one-stop shops. 2012 RATING 2011 RATING Not Ongoing Not Ongoing ARANGKADA PHILIPPINES SECOND ANNIVERSARY ASSESSMENT | 121
  5. 5. RECOMMENDATION 3 Develop model best-practice regions. 2012 RATING 2011 RATING Not Ongoing Not OngoingRECOMMENDATION 4 MGB should adopt the Philippine Mineral Ore Resources Reserve Reporting Code. 2012 RATING 2011 RATING Substantial Progress Substantial ProgressThis is generally adopted, but enforcement by PSE needs strengthening.RECOMMENDATION 5 Seek to end LGU mining moratoriums. 2012 RATING 2011 RATING Backward / Regression Backward / RegressionThe national government seems unwilling to tackle this important issue with firmness.RECOMMENDATION 6 Implement the simplified joint circular regarding release of mining taxes to LGUs. 2012 RATING 2011 RATING Started StartedThere have been various bills over time addressing this, but they seem to get to a point andstop. HB 4410, which passed the House on Third Reading on May 16, 2011, promotes the directremittance of the 40% LGU share of national government collection. The Senate bill saw only122 | PART 3: MINING
  6. 6. one hearing in 2012, and the chair decided to hold another which was rescheduled to the weekbefore recess in late January 2013. A joint circular was issued, but no one is tasked to monitorhow well it is working.RECOMMENDATION 7 Continue dialogue to find common-ground solutions to issues being raised against specific mining and exploration projects. 2012 RATING 2011 RATING Started StartedThere is substantial dialog, but little progress has resulted.RECOMMENDATION 8 Industry should actively monitor developments in Congress and the judiciary. 2012 RATING 2011 RATING Started Substantial ProgressIndustry has never been so active in monitoring, participating, and presenting position papers.There is close coordination between the Chamber of Mines and the Philippine Mining andExploration Association.RECOMMENDATION 9 Support revision of the 60-40 equity restriction provision in the Constitution. 2012 RATING 2011 RATING Not Ongoing Not OngoingThe current administration was unwilling to address constitutional change of foreign equityrestrictions in 2012.RECOMMENDATION 10 Continue implementation of the Minerals Action Plan; continue active private sector participation in the Mineral Development Council (MDC). >>> ARANGKADA PHILIPPINES SECOND ANNIVERSARY ASSESSMENT | 123
  7. 7. 2012 RATING 2011 RATING Backward / Regression No Longer RelevantMDC was abolished. The Mining Industry Coordinating Council (MICC) established in EO 79does not have industry representation.RECOMMENDATION 11 GPH should work on four programs to industrialize: (1) promote downstream processing and manufacturing for copper, nickel, gold, and chromite; (2) develop community-based supplier industries and services; (3) improve government benefits from mining; and (4) better control exports of small scale mining and unprocessed minerals. 2012 RATING 2011 RATING Started StartedDISTRIBUTION OF MANUFACTURING GVA BY SUBSECTOR, 2012 4.0 200% 3.0 150% 2.0 100% 1.0 50% 0.0 0% -1.0 -50% -2.0 -100% 97 98 20 9 0 20 7 12 95 93 92 20 4 20 1 10 90 9 11 20 8 20 5 91 94 20 3 20 2 96 6 0 0 0 0 9 0 0 0 0 0 0 20 20 19 20 20 19 19 19 19 19 20 19 19 19 19124 | PART 3: MINING
  8. 8. EO 79 addresses some of these issues but overall, there has been no real progress to date.RECOMMENDATION 12 Community building should commence from the first day. 2012 RATING 2011 RATING Started StartedRECOMMENDATION 13 Mining firms should support labor intensive community-run enterprises. 2012 RATING 2011 RATING Started Not OngoingCompanies tend to focus on labor intensive projects by default.RECOMMENDATION 14 Increase the allocation of direct mining and milling costs for community development from 1% to 1.5%. 2012 RATING 2011 RATING No Longer Relevant StartedEO 79 has superseded this review.RECOMMENDATION 15 Private sector should help build the capacity of Indigenous Peoples. 2012 RATING 2011 RATING Started StartedThere are numerous organizations that work with Indigenous Peoples. ARANGKADA PHILIPPINES SECOND ANNIVERSARY ASSESSMENT | 125
  9. 9. RECOMMENDATION 16 Increase the budget and technical capacity of the National Commission on Indigenous Peoples (NCIP). 2012 RATING 2011 RATING Backward / Regression Not OngoingThe new guidelines for Free and Prior Informed Consent are unworkable and released with noindustry consultation.RECOMMENDATION 17 When resettling people, find habitation as close as possible to their traditional lands. 2012 RATING 2011 RATING No Longer Relevant Backward / RegressionThe World Bank has issued clear guidelines for this purpose.RECOMMENDATION 18 Companies should not pay stipends or occupation fees to local member of the New People’s Army (NPA). 2012 RATING 2011 RATING Not Ongoing Not OngoingPayments to NPA are illegal, but reportedly still exist. Companies continue to be victims ofattacks on equipment, apparently motivated by extortion cloaked in environmental rhetoric.RECOMMENDATION 19 Private sector should work closely with the MDC committee and the Armed Forces of the Philippines (AFP) to establish a joint mining security protocol. 2012 RATING 2011 RATING Not Ongoing Not OngoingMDC was abolished, but the need for coordination on local security issues remains.126 | PART 3: MINING
  10. 10. RECOMMENDATION 20 Exploration companies should conduct security and social assessments in their areas. 2012 RATING 2011 RATING Started StartedMining companies have internal procedures for security and social assessments. GPH has beenquite proactive protecting resource interest.RECOMMENDATION 21 Mining industry should work closely with MGB. 2012 RATING 2011 RATING Started Not OngoingAs much as practical, this is the case. Unfortunately, industry is excluded from MICC.RECOMMENDATION 22 Students following graduation who enter government service should be assigned to work with a local exploration or mining company. 2012 RATING 2011 RATING Not Ongoing Not OngoingRECOMMENDATION 23 Encourage more students to study subjects needed in the mining community. 2012 RATING 2011 RATING Substantial Progress StartedAusAID supported a scholarship program in its fourth year. ARANGKADA PHILIPPINES SECOND ANNIVERSARY ASSESSMENT | 127
  11. 11. RECOMMENDATION 24 Encourage mergers of local mining companies and list more on PSE. 2012 RATING 2011 RATING Started StartedPSE has been proactive and there are more mining firms listing. But the fact remains that itis not simple to list on PSE, particularly by way of introduction. There have been numerouschanges of the rules over the last few years.RECOMMENDATION 25 Carry out a public information campaign regarding mining and increase dialogue with concerned groups. 2012 RATING 2011 RATING Substantial Progress Substantial ProgressThere have been significant campaigns carried out by the Chamber of Mines.RECOMMENDATION 26 Support the Mining Museum project in Baguio to establish a museum to educate Filipinos. 2012 RATING 2011 RATING Substantial Progress Substantial ProgressThere has been some progress, as demonstrated by the 2011 Baguio Mining Safety Conferencefocus on the Mining Museum.RECOMMENDATION 27 Endorse the Extractive Industries Transparency Initiative (EITI). 2012 RATING 2011 RATING Substantial Progress StartedIndustry has substantially endorsed EITI. GPH is seriously studying participation and support.128 | PART 3: MINING

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