Lecture on Philippine Mining and Resources Law for 2014 Geology Board Examinees given at the University of the Philippines National Institute of Geological Sciences on 23 July 2014

1. Puno
&
Peñarroyo
Law
Of7ices
Mining
and
Resources
Law
Atty. Fernando S. Penarroyo
Na$onal
Ins$tute
of
Geological
Sciences
Geology
Board
Review
23
July
2014

2. About
the
Lecturer
• BS
Geo,
Bachelor
of
Laws
(UP),
Master
of
Laws
(Univ.
of
Melbourne)
• Managing
Partner,
Puno
and
Penarroyo
Law
(www.punopenalaw.com)
• Trustee
and
Secretary,
Philippine
Mineral
Explora$on
Associa$on
• Trustee,
Na$onal
Geothermal
Associa$on
of
the
Philippines
• Director,
Interna$onal
Geothermal
Associa$on
• Professorial
Lecturer,
De
La
Salle-­‐FEU
MBA-­‐JD
Program
• hRp://www.philippine-­‐resources.com/

3. Contents
• The
Need
to
Know
the
Law
• Recent
Global
Trends
• Resources
Industry
Philippine
Update
• Mining
and
other
Resources
Laws
and
Regula$ons

4. WHY
THE
NEED
TO
KNOW
THE
LAW

5. Principles
for
Responsible
Exploration
• Adopt
responsible
governance
and
management
• Apply
ethical
business
prac$ces
• Respect
human
rights
• Commit
to
project
due
diligence
and
risk
assessment
• Engage
host
communi$es
and
other
affected
and
interested
par$es
• Contribute
to
community
development
and
social
wellbeing
• Protect
the
environment
• Safeguard
the
health
and
safety
of
the
workers
and
the
local
popula$on

6. Legal
Compliance
• IDENTIFY
the
legal
and
regulatory
requirements
of
the
host
country
for
the
project
that
are
relevant
to
explora$on
ac$vi$es,
including
int’l
commitments
made
by
host
country,
and
also
int’l
standards
and
good
prac$ce
• MEET
the
legal
requirements
of
the
host
country
• APPLY
interna$onal
good
prac$ce
where
na$onal
law
or
its
implementa$on
is
not
sufficient
to
meet
the
higher
standards
of
performance
• COMMUNICATE
the
relevant
requirements
for
compliance
to
employees
and
contractors

7. Project
due
diligence
and
risk
assessment
• Presence
of
indigenous
peoples
or
vulnerable
minori$es
• Presence
of
small
scale
and
ar$sanal
mining
ac$vity
• Proximity
to
parks,
reserves
and
areas
of
special
environmental
significance,
cultural
heritage
or
high
biodiversity
• Legal
and
regulatory
framework
with
IPs
• Character
of
na$onal
and
local
government
and
IPs
• Regimes
with
an
ac$ve
record
of
human
rights
abuse
• Presence
of
ac$ve
community
level
conflict
over
resource
development
or
mining
• Armed
conflict,
insurrec$on
or
civil
war

8. RECENT
TRENDS
IN
THE
RESOURCES
INDUSTY

9. Recent
Trends
in
the
Resources
Industry
China
• Despite
a
slowing
economy,
China
remains
Asia’s
largest
and
one
of
its
fastest-­‐growing
economies.
• China’s
rapid
economic
growth
has
posi$oned
it
as
the
world’s
second
largest
economy
and
it
is
likely
to
overtake
the
US
around
2025
to
become
the
world’s
largest
economy
• The
“old”
China
of
low-­‐cost
labor,
low-­‐value-­‐
intensive
industries
and
a
coastal-­‐based
export
economy
is
fading
away
• China’s
goal
is
to
shie
away
from
an
investment-­‐led
model
of
growth
to
a
more
stable
model
driven
by
domes$c
consump$on,
advanced
technology
and
environmental
efficiency.

10. Recent
Trends
in
the
Resources
Industry
China
• China
has
recently
become
the
world’s
largest
importer
of
oil
but
its
per
capita
oil
consump$on
lags
behind
the
levels
of
the
developed
world.
• As
China’s
consump$on
of
oil
ballooned,
it’s
state-­‐
owned
oil
and
gas
enterprises
have
developed
into
global
players
in
tapping
unconven$onal
resources
by
collabora$ng
with
other
interna$onal
firms.
• China’s
climb
in
the
global
value
chain
assures
steady
rise
in
demand
for
mineral
products
and
advanced
mining
technologies.

11. Recent
Trends
in
the
Resources
Industry
China
• Chinese
companies
are
also
increasingly
becoming
one
of
the
industry’s
leading
sources
of
capital.
Chinese
acquisi$ons
make
headlines
and
Chinese
companies
are
some
of
the
more
ac$ve
deal
makers
in
the
industry.
• In
addi$on
to
direct
equity
acquisi$ons,
Chinese
companies
are
also
inves$ng
in
mine
development
and
construc$on
and
suppor$ng
infrastructure.
• According
to
the
China
Mining
Associa$on,
up
to
80%
of
China’s
overseas
mining
investments
since
2005
has
failed.

12. Recent
Trends
in
the
Resources
Industry
Petroleum
new
fron1ers
• Tight
oil
-­‐
hydraulic
fracturing
(US)
• Arc$c
offshore
• Presalt
deepwater
(Brazil)
• Oil
shale
–
shale
contains
kerogen
that
has
to
be
mined
and
then
reheated
to
separate
oil
from
shale
(US)
• Oil
sands
–
loose
sand
or
sandstone
saturated
with
bitumen
that
are
exploited
through
open
pit
mines
(Alberta,
Canada)

13. Recent
Trends
in
the
Resources
Industry
Unconven1onal
gas
resources
• Shale
gas
–
natural
gas
contained
in
low
permeability
shale
forma$ons;
gas
that
has
remained
trapped
in,
or
close
to,
its
source
rock
• Coalbed
methane
–
coal
seem
gas,
natural
gas
contained
in
coal
beds
• Tight
gas
–
low
permeability
gas
reservoirs
that
cannot
be
produced
economically
without
the
use
of
technologies
to
s$mulate
flow
of
the
gas
towards
the
well,
such
as
hydraulic
fracturing

15. GRAPHIC
OF
HYDRAULIC
FRACTURING

16. Recent
Trends
in
the
Resources
Industry
World
Energy
Outlook
(IEA,
2013)
• China
dominates
the
picture
within
Asia,
before
India
takes
over
from
2020
as
the
principal
engine
of
growth.
• China
is
about
to
become
the
largest
oil-­‐impor$ng
country
and
India
becomes
the
largest
importer
of
coal
by
the
early
2020s.
The
United
States
moves
steadily
towards
mee$ng
all
of
its
energy
needs
from
domes$c
resources
by
2035.
• Unconven$onal
gas
accounts
for
nearly
half
of
the
increase
in
global
gas
produc$on
to
2035,
with
most
of
the
increase
coming
from
China,
the
United
States
and
Australia.

17. Recent
Trends
in
the
Resources
Industry
World
Energy
Outlook
(IEA,
2013)
• The
role
of
OPEC
countries
in
quenching
the
world’s
thirst
for
oil
is
reduced
temporarily
over
the
next
ten
years
by
rising
output
from
the
United
States,
from
oil
sands
in
Canada,
from
deep-­‐water
produc$on
in
Brazil
and
from
natural
gas
liquids
from
all
over
the
world.
But,
by
the
mid-­‐2020s,
non-­‐OPEC
produc$on
starts
to
fall
back
and
countries
in
the
Middle
East
provide
most
of
the
increase
in
global
supply.
Overall,
na$onal
oil
companies
and
their
host
governments
control
some
80%
of
the
world’s
proven-­‐plus-­‐probable
oil
reserves.

18. Recent
Trends
in
the
Resources
Industry
BP
Sta1s1cal
Review
of
World
Energy
2014
• The
year
2013
saw
an
accelera$on
in
the
growth
of
global
energy
consump$on,
despite
a
stagnant
global
economy.
• Energy
produc$on
con$nued
to
be
impacted
by
geopoli$cal
events.
Oil
produc$on
in
Libya
suffered
the
world’s
largest
decline
in
the
face
of
renewed
civil
unrest
and
the
produc$on
of
oil
and
gas
was
disrupted
in
a
number
of
other
countries
as
well.
In
the
face
of
these
disrup$ons
and
heightened
risks
to
supply,
average
oil
prices
exceeded
$100
per
barrel
for
a
third
consecu$ve
year,
despite
massive
supply
growth
in
the
US.

19. Recent
Trends
in
the
Resources
Industry
BP
Sta1s1cal
Review
of
World
Energy
2014
• Driven
by
massive
investment
in
shale
and
other
‘$ght’
forma$ons,
the
US
saw
the
world’s
largest
increase
in
oil
produc$on
last
year,
offsemng
the
numerous
disrup$ons
seen
elsewhere
and
keeping
prices
stable.
• Coal
was
the
fastest-­‐growing
fossil
fuel,
with
China
and
India
combined
accoun$ng
for
88%
of
global
growth,
while
natural
gas
consump$on
growth
decelerated
and
grew
at
a
below-­‐average
rate.
As
was
the
case
for
total
energy,
gas
consump$on
growth
was
below
average
in
all
regions
except
North
America,
which
con$nues
to
enjoy
the
cheapest
prices
among
interna$onal
markets.

20. Recent
Trends
in
the
Mining
Industry
Impacts
• As
the
mining
industry
cools
from
its
2012
boom,
resource
na$onalism,
an
increase
in
price
vola$lity,
higher
opera$ng
costs
and
declining
mineral
grades
will
increase
risk
and
complexity
in
the
global
mining
sector.
• 2013
was
par$cularly
challenging
for
the
mining
sector
–
falling
number
of
M&As,
a
record
low
number
of
IPOs
in
both
the
Toronto
and
Australian
stock
exchanges.
• Low
demand
for
professionals
in
the
resources
industry

21. RESOURCES
INDUSTRY
PHILIPPINES
UPDATE

22. Developments
in
the
Philippine
Resources
Industry
• 100%
foreign
ownership
allowed
following
the
December
2004,
Supreme
Court
decision
on
the
Philippine
Mining
Act
of
1995
but…..
-­‐
New
SC
case
against
the
Mining
Act
-­‐
Alterna$ve
Minerals
Management
Bill
• West
Philippine
Sea
conflict
• Benham
Rise
• Framework
Agreement
of
Bangsamoro
• Narra
Nickel
Mining
vs.
Redmont
Consolidated
Mines
–
Foreign
Ownership
• SR
Metals
vs.
Sec
Reyes
–
Small-­‐scale
Mining

23. Developments
in
the
Philippine
Resources
Industry
Mining
Act
revisited
• Pe$$oners
headed
by
then
Akbayan
party
list
Rep.
Risa
Hon$veros,
Bayan
Muna
party
list
Rep.
Teddy
Casiño
and
former
House
Deputy
Speaker
and
Quezon
Rep.
Lorenzo
'Erin'
Tañada
III
of
the
ruling
Liberal
Party
• “Inequitable
sharing
of
wealth”
• Sec.
80
limits
the
share
of
the
government
in
Mineral
Produc$on
Sharing
Agreement
(“MPSA”)
to
excise
taxes
• Sec.
81
confines
government's
share
to
taxes,
fees
and
royal$es
instead
of
lemng
it
have
full
control
over
the
explora$on,
development
and
u$liza$on
of
mineral
resources.

24. China’s
Nine-­‐Dashed
Lines

25. Benham
Rise
–
The
New
Frontier

26. Proposed
Bangsamoro
Core
Territory

27. Developments
in
the
Philippine
Resources
Industry
Tampakan
Gold
Mining
Project
–
• The
MICC
created
the
Inter-­‐Agency
Working
Group
(IAWG);
MGB
assumed
chairmanship.
• IAWG
presented
to
MICC
recommenda$ons
on
the
issues
involving
the
project.
Philex
Tailings
Spill
Incident
–
• MICC
endorsed
to
DENR
report
of
TWG
chaired
by
Sec.
Acosta
re:
Philex’s
compliance
with
clean
up
plan.
• Case
in
PAB
s$ll
pending
due
to
Philex’s
mo$on
for
reconsidera$on
re:
payment
of
fines;
suspension
order
s$ll
in
effect.
• MGB
suspension
order
s$ll
in
effect
pending
determina$on
of
compliance
with
clean
up
plan.
• Claim
of
NPC
for
payment
is
s$ll
unresolved.

28. REVIEW
OF
CURRENT
PHILIPPINE
RESOURCES
LAWS

29. Mining
Laws
and
other
Regulations
• Philippine
Cons$tu$on
of
1987
(“Cons$tu$on”)
• Philippine
Mining
Act
of
1995
(“Mining
Act”)
• Mining
Act
Revised
Implemen$ng
Rules
and
Regula$ons
• Small-­‐scale
Mining
Laws
• EO
79
• Other
Laws

30. Constitution
• All
lands
of
the
public
domain,
water,
minerals,
coal,
petroleum,
and
other
mineral
oils,
all
forces
of
poten$al
energy,
fisheries,
forests
or
$mber,
wildlife,
flora
and
other
natural
resources
are
owned
by
the
state.
• The
explora$on,
development
and
u$liza$on
of
these
natural
resources
are
under
the
full
control
and
supervision
of
the
State.

31. Constitution
• The
State
has
the
op$on
of
entering
into
co-­‐
produc$on,
joint
venture
or
produc$on
sharing
agreements
with
Philippine
ci$zens
of
Philippine
corpora$ons
or
associa$ons.
• At
least
60%
of
the
capital
of
a
corpora$on
or
associa$on
must
be
owned
by
Phil.
Ci$zen
to
qualify
as
a
Philippine
corpora$on
or
associa$on.

32. Constitution
• Excep$on
to
the
na$onality
requirement:
The
Cons$tu$on
authorizes
the
President
to
enter
into
agreements
with
foreign-­‐owned
corpora$ons
involving
either
financial
or
technical
assistance,
for
large-­‐
scale
explora$on,
development
and
u$liza$on
of
minerals,
petroleum
and
other
mineral
oils.

33. Constitution
• Ownership
of
natural
resources
(Regalian
doctrine)
–
if
an
investor
wishes
to
acquire
the
right
to
extract
or
develop
natural
resources,
he
must
enter
into
an
agreement
with
State

34. Mining
Act
• Explora$on
Permit
• Mineral
Agreements
-­‐
MPSA
-­‐
Co-­‐Produc$on
Agreement
-­‐
Joint
Venture
Agreement
• Financial
and
Technical
Assistance
Agreement
• Mineral
Processing
permits

35. Exploration
Permit
• Grant
gives
holder
the
right
to
conduct
explora$on
for
all
minerals
within
a
specified
area
• Valid
for
2
yrs,
can
be
renewed
for
another
two
but
cannot
exceed
6
yrs
• If
explora$on
results
reveal
economic
mineral
deposits
and
technically
feasible
for
mining,
holder
can
file
a
declara$on
of
mining
project
feasibility
(MPF)
• Approval
of
MPF
shall
grant
the
holder
exclusive
right
to
Mineral
Agreement
or
FTAA

36. Mineral
Agreements
• Mineral
Produc$on
Sharing
Agreement
(“MPSA”)
• Co-­‐Produc$on
Agreement
• Joint
Venture
Agreement
• All
agreements
grant
the
contractor
the
exclusive
right
to
conduct
mining
opera$ons
and
to
extract
all
mineral
resources
in
the
contract
area

37. MPSA
• Contractor
provides
the
financing,
technology,
management
and
personnel
necessary
for
the
implementa$on
of
the
MPSA
• Valid
for
25
yrs
and
renewable
for
another
25
• Government
is
en$tled
to
a
share
in
the
gross
produc$on
of
the
mining
opera$on
in
the
form
of
excise
tax

38. Co-­‐Production
Agreement
• An
agreement
where
the
government
provides
inputs
to
the
mining
opera$ons
other
than
the
mineral
resource

39. Joint
Venture
Agreement
• An
agreement
under
which
the
Philippine
government
and
the
contractor
organize
a
joint
venture
company
in
which
both
par$es
have
equity.
• The
government
takes
a
share
from
equity
earnings
as
well
as
from
the
gross
output
of
the
mining
opera$ons.

40. Financial
and
Technical
Assistance
Agreement
(“FTAA”)
• Pursuant
to
the
Cons$tu$on,
the
Mining
Act
provides
that
the
President
may
enter
into
an
FTAA
with
100%
foreign-­‐owned
corpora$on
for
the
large-­‐scale
explora$on,
development
and
u$liza$on
of
mineral
resources.
• Minimum
investment
of
US$50M
• Not
applicable
to
cement
raw
materials,
marble,
granite,
sand
and
gravel,
and
construc$on
aggregates

41. Mineral
Processing
Permits
• Under
the
Mining
Act,
mineral
processing
means
the
milling,
beneficia$on
or
upgrading
of
ores
or
minerals
and
rocks
or
by
similar
means
to
convert
the
same
into
marketable
products.
• Valid
for
5
yrs,
renewable
for
like
periods
up
to
25
yrs
• Can
be
100%
foreign
ownership

42. Fiscal
Regime
-­‐
MPSA
and
FTAA
• Under
RA
7942,
government’s
take/share
in
the
MPSA
is
the
excise
tax
on
minerals
plus
all
other
payable
taxes
and
fees
(na$onal
and
local,
as
well
as
payment
to
other
Filipinos)
termed
as
Basic
Share
Basic
share
+
other
taxes
and
fees
• Under
the
FTAA,
aside
from
the
basic
share,
the
government
is
assured
of
an
addi$onal
share
if
the
basic
government
share
is
less
than
50%
of
the
net
mining
revenue
(DENR
AO
No.
2007-­‐12).
Basic
share
+
addi1onal
gov.
share
(if
basic
share
is
less
than
50%
of
NMR)

43. Small-­‐Scale
Mining
• PD
1899
“A
Decree
Establishing
Small
Scale
Mining
As
a
new
Dimension
in
Mineral
Development”
allowed
local
government
units
to
issue
mining
permits
• RA
7076
“People's
Small-­‐Scale
Mining
Act”
(1991)
mandates
that
all
applica$ons
for
small
scale
mining
will
now
be
under
the
approval
of
the
Secretary
of
the
DENR
• PD
No.
1899
and
RA
No.
7076
shall
con$nue
to
govern
small-­‐scale
mining
opera$ons.
For
areas
not
declared
as
People’s
Small-­‐Scale
Mining
area
(PSSMA)
under
RA
No.
7076,
the
per$nent
rules
and
regula$ons
of
PD
1899
shall
apply.

44. Recent
Supreme
Court
Decisions
Narra
Nickel
Mining
vs.
Redmont
Consolidated
Mines
• The
"control
test"
is
s$ll
the
prevailing
mode
of
determining
whether
or
not
a
corpora$on
is
a
Filipino
corpora$on,
within
the
ambit
of
Sec.
2,
Art.
II
of
the
1987
Cons$tu$on,
en$tled
to
undertake
the
explora$on,
development
and
u$liza$on
of
the
natural
resources
of
the
Philippines.
When
in
the
mind
of
the
Court
there
is
doubt,
based
on
the
aRendant
facts
and
circumstances
of
the
case,
in
the
60-­‐40
Filipino-­‐equity
ownership
in
the
corpora$on,
then
it
may
apply
the
"grandfather
rule."

45. Recent
Supreme
Court
Decisions
SR
Metals
vs.
Sec.
Reyes
• In
its
ruling,
the
high
court
noted
the
firms’
summary
of
shipments
showed
it
took
151,612
DMTs
of
ore
to
extract
1,699.66
DMTs
of
nickel
and
cobalt
(Ni-­‐Co).
• “This
means
that
if
we
are
to
subscribe
to
the
mining
corpora$ons’
interpreta$on
of
how
to
measure
mined
ore
by
measuring
only
the
Ni-­‐Co
and
excluding
the
gangue,
small-­‐scale
miners
are
virtually
given
the
license
to
con$nuously
collect
large
volumes
of
ore
un$l
the
50,000
DMTs
of
Ni-­‐Co
limit
is
met.”

46. Important
Laws
Related
to
Mining
• Indigenous
Peoples
Rights
Act
(“IPRA”)
• Environmental
Impact
Statement
(“EIS”)
System
• Local
Government
Code
of
1991

47. IPRA
• Grants
to
indigenous
cultural
communi$es
certain
preferen$al
rights
to
their
ancestral
domains
and
all
resources
found
therein.
• Royalty
and
right
to
benefits
• No
agreement
shall
be
approved
unless:
-­‐
There
is
prior
cer$fica$on
from
NCIP
that
area
does
not
overlap
ancestral
domain
or
-­‐
Prior
free
and
informed
consent
has
been
obtained
from
the
ICC/IP
concerned

48. BASIC
PROCESS
OF
CP
ISSUANCE
AGENCY
ENDORSEMENT
CP ISSUANCE
FPIC
MOA
FBI

49. FPIC MANDATORY ACTIVITES
UNDER SEC 6 (A)
POSTING OF NOTICES
AND SERVING OF
INVITATION TO IP
ELDERS/LEADER
CONSULTATIVE
COMMUNITY
ASSEMBLY
DECISION MEETING
CONSENSUS
BUILDING
AND FREEDOM PERIOD

50. FPIC PROCESS FLOWCHART
ENDORSING
GOVERNMENT
AGENCY
APPLICANT
NCIP
REGIONAL
OFFICE
PRE-FBI
CONFERENCE
OVERLAP PER
MASTERLIST OR
MASTERLIST
NOT AVAILABLE
FBI - Field – Based investigation
CNO – Certificate of non-Overlap issued by Regional Director
MOA – Memorandum of Agreement
PAYMENT OF
FBI FEE
FBI
PROJECT
REJECTED
MOA &
SUPPORTING
DOCUMENTS
PROJECT
ACCEPTED
FPIC
MANDATORY
ACTIVITIES
PAYMENT OF
FPIC FEE
FBI REPORT
OVERLAP
COMMISSION EN
BANC
PRE-FPIC
CONFERENCE
NO OVERLAP
CNO ISSUED
BY REGIONAL
DIRECTOR
NO OVERLAP
PER
MASTERLIST
CNO ISSUED
IN 3 DAYS
Major Projects (Sec. 6A)- 70 days processing
Small Scale Projects (Sec. 6B)-50 days processing

51. Local
Government
Code
• Proponents
applying
for
mining
applica$ons
intended
for
explora$on
ac$vi$es
are
required
to
conduct
consulta$on
with
all
LGUs
concerned,
or
the
legisla$ve
councils
(sanggunian)
at
the
provincial,
city/municipal,
and
barangay
levels.

52. Results
of
Anti-­‐Mining
Sentiment
• LGUs
issuing
ordinances
and
resolu$ons
against
mining:
Leyte
Mindoro
Provinces
Romblon
An$que
Zamboanga
Sibugay
Bohol
Zamboanga
del
Norte
Samar
Marinduque
South
Cotabato
Bukidnon
La
Union
Capiz
Negros
Occidental

53. Results
of
Anti-­‐Mining
Sentiment
• Congress
passing
resolu$ons
and
considering
House
Bills
declaring
mining
free
provinces
and
ci$es:
Catanduanes
Sorsogon
Romblon
Southern
Leyte
Eastern
Samar
Nueva
Viscaya
Cagayan
de
Oro
Davao
City

54. EIS
System
under
Presidential
Decree
No.
1586
• Project
proponent
of
environmentally
cri$cal
projects
and
projects
within
environmentally
cri$cal
areas
must
obtain
an
environmental
compliance
cer$ficate
prior
to
commencement
• EMB/DENR
as
lead
agency
• DAO
2003-­‐30
Implemen$ng
Rules
and
Regula$ons

55. The Environmental Impact Assessment Process
SITE SCOPING
(Stake holder's perception of the Problems, Issues and Concerns of their present
Biophysical and Sociocultural Environment)
Baseline Data Collection
(Collection of Base-line data of the Bio-physical and
STAKE
Environmental
Sociocultural Environment)
HOLDERS:
Consultants • Direct and
Environmental Impact Assessment
Indirect Impact
(Analysis of the Impacts and Mitigations based on secondary and
base-line data collected.
Communities
I. Environment Management Plan
• LGU
II. Social Development Plan
• NGO’s
EIS Document Preparation
• PO’s
• GO’s
EIA Review by EMB
PUBLIC HE ARING
Appro ved Disapproved
Issuance of Environment Compliance
Certificate
DENR – EMB organizing of the
Multipartite Monitoring Team

56. EXECUTIVE
ORDER
NO.
79

57. Executive
Order
No.
79
• Sets
the
policy
framework
that
will
guide
government
and
other
stakeholders
in
the
implementa$on
and
opera$onaliza$on
of
mining
laws,
rules
and
regula$ons.
It
also
provides
concrete
steps
and
solu$ons
to
major
issues
and
concerns
of
the
mining
sector.
• Sets
the
direc$on
and
lays
the
founda$on
for
the
implementa$on
of
responsible
mining
policies.
• Aims
to
improve
environmental
mining
standards
and
increase
revenues
to
promote
sustainable
economic
development
and
social
growth,
both
at
the
na$onal
and
local
levels.

58. Speci7ic
zones
closed
to
mining
applications,
either
for
contracts,
concessions
or
agreements
(No-­‐go
Zones)
• Areas
in
the
Na$onal
Tourism
Development
Plan
• Cri$cal
areas
and
island
eco-­‐systems
• Prime
agricultural
lands
covered
by
RA
6657
• Strategic
agriculture
and
fisheries
development
zones
and
fisheries
development
zones
and
fish
refuge
and
sanctuaries
declared
as
such
by
the
Department
of
Agriculture
• Areas
already
iden$fied
under
the
exis$ng
laws
on
mining,
agrarian
and
protected
areas,
as
well
as
in
sites
that
may
be
determined
by
the
Department
of
Environment
and
natural
Resources
(DENR)

59. Measures
to
address
the
country's
economic
or
revenue-­‐related
concerns
• Establishment
of
Mineral
Reserva$ons
for
strategic
mineral
reserves
to
be
able
to
collect
5%
addi$onal
royal$es,
or
higher
• Opening
of
mining
areas
through
compe$$ve
public
bidding
• Value-­‐adding
ac$vi$es
and
development
of
downstream
industries
• Demand
opera$onal
and
financial
reports
from
both
large-­‐
and
small-­‐scale
miners
at
all
stages
of
the
mining
cycle

60. Measures
to
address
the
country's
economic
or
revenue-­‐related
concerns
• Conduct
of
verifica$on
at
the
na$onal,
regional
and
local
levels
of
taxes
and
fees
payable
and
monitoring
of
all
entry
and
exit
points
of
minerals
in
the
country
• Fast-­‐track
release
and
access
of
LGUs
to
their
share
from
mining
revenues
• Conduct
a
study
on
exis$ng
mechanisms
for
benefit
sharing
and
review
of
exis$ng
taxes,
fees
and
incen$ves
receive
by
mining
companies

61. Measures
to
address
the
country's
economic
or
revenue-­‐related
concerns
• Study
the
imposi$on
of
higher
export
fees
for
metallic
and
non-­‐metallic
minerals
in
the
country
• Consider
tapping
3rd
party
interna$onal
auditors
to
validate
the
volume
and
value
of
mineral
exports
from
the
Philippines
• Increase
mine
wastes
and
tailings
and
occupa$on
fees
and
impose
processing
fees
for
all
mining
applica$ons
• Provide
benchmarks
for
the
valua$on
of
minerals
based
on
prevailing
interna$onal
minerals
market
prices
• Prepare
and
maintain
revenue
baseline
data
and
properly
account
for
all
taxes
and
fees
generated
from
mining

62. Speci7ic
legislative
measures
gov’t
will
pursue
in
light
of
the
EO
• Ra$onaliza$on
of
revenue-­‐sharing
schemes
and
mechanisms
and
incen$ves
given
to
mining
companies
• Bigger
LGU
shares
from
mineral
resource
u$liza$on
and
providing
beRer
mechanisms
for
the
faster
release
of
their
share
• S$ffer
penal$es
for
mining-­‐related
offenses
• Stronger
regulatory
rules
over
traders
and
middlemen
to
improve
mineral
produc$on
monitoring
and
collec$on
of
taxes
and
fees
from
mining
• Stricter
enforcement
of
environmental
laws
and
rules,
and
holding
violators
accountable

63. Speci7ic
legislative
measures
gov’t
will
pursue
in
light
of
the
EO
• Iden$fying
addi$onal
areas
closed
to
mining
• Review
of
the
performance
of
mining
opera$ons
and
cleansing
of
non-­‐moving
mining
rights
holders
• Proper
accoun$ng
of
Environmental
Protec$on
and
Enhancement
Programs
(EPEP)
of
mining
companies
• Use
of
geo
hazard
and
mul$-­‐hazard
maps
and
climate
change
forecasts
in
determining
“go”
and
“no-­‐go”
areas
• Explore
use
of
mandatory
and
compulsory
insurance
coverage
for
mining
affected
areas
and
adop$on
of
Comprehensive
Environmental
Response,
Compensa$on
and
Liability
Act
of
the
USA
• Resource
accoun$ng
or
full-­‐cost
benefit
analysis

64. STATUS
OF
IMPLEMENTATION
OF
E.O.
NO.
79
1. On
the
No-­‐Go
Zone
Map
§ Integrated
map
submiRed
to
OP
on
October
27,
2013.
§ MICC
approved
the
adop$on
of
the
map.
§ The
MGB
is
now
accep$ng
and
processing.
applica$ons
for
Explora$on
Permits.;
accepted
136
mining
applica$ons
as
of
May
15,
2014.
Department of Environment and Natural Resources
Republic of the Philippines

65. 2. On
the
crea1on
of
One-­‐Stop-­‐Shop
§
OSS
to
be
created
in
the
DENR
Central
Office.
3.
On
the
par1cipa1on
in
the
Extrac1ve
Industries
Transparency
Ini1a1ve
(EITI)
§
The
Mul$-­‐stakeholder
group
was
created.
§
The
Philippines
was
officially
admiRed
as
a
candidate.
§
Execu$ve
Order
No.
147
was
issued
on
November
26,
2013.
§
Consulta$on
process
ongoing.

66. Developments
in
the
Philippine
Resources
Industry
Extrac1ve
Industries
Transparency
Ini1a1ve
(EITI)
• EITI
is
a
global
standard
for
transparency
in
the
extrac$ves
sector
that
involves
the
reconcilia$on
of
company
payments
with
government
receipts
by
an
independent
administrator
and
disclosure
of
that
informa$on
to
the
public
• EITI
is
a
voluntary,
mul$-­‐stakeholder
ini$a$ve
launched
in
2002,
in
response
to
Publish
What
You
Pay
(PWYP)
campaign;
• The
process
is
managed
by
government,
company
and
civil
society
stakeholders.
Civil
society
must
be
involved
in
the
process;

67. Developments
in
the
Philippine
Resources
Industry
Extrac1ve
Industries
Transparency
Ini1a1ve
(EITI)
• The
Philippine
and
Bri$sh
Governments,
along
with
NGO
Bantay
Kita,
are
embarking
on
a
partnership
that
will
push
the
Philippine
agenda
on
strengthening
transparency
and
accountability
in
extrac$ve
industries.
• The
collabora$on
will
help
the
Philippine
Government
fulfill
its
ini$a$ve
as
a
candidate
country
to
the
EITI
by
working
together
with
Bantay
Kita
in
the
PH-­‐EITI
mul$-­‐
stakeholder
group
with
support
from
the
Bri$sh
Government.
• The
process
is
managed
by
government,
company
and
civil
society
stakeholders.
Civil
society
must
be
involved
in
the
process.

68. 4. On
measures
to
improve
Small-­‐Scale
Mining
§
MICC
endorsed
the
revised
guidelines
to
the
DENR
on
January
8,
2014.
§
DENR
to
issue
the
per$nent
Administra$ve
Order.
5.
On
the
establishment
of
Mineral
Reserva1ons
§
15
Mineral
Reserva$ons
are
targeted
to
be
iden$fied
and
assessed
for
this
year.

69. 6.
On
the
new
Revenue
Sharing
Scheme
§
MICC
approved
the
proposed
legisla$on
during
the
17th
MICC
mee$ng
held
on
May
30,
2014.
DENR
to
issue
the
per$nent
Administra$ve
Order.
-­‐ contractor
shall
pay
the
government
(a)
10%
of
gross
revenue
or
(b)
55%
of
Adjusted
Net
Mining
Revenue
(ANMR),
whichever
is
higher,
plus;
if
ANMR
margin
exceeds
50%,
Government
share
is
60%
on
the
excess
ANMR
-­‐ Payment
to
the
Government
shall
be
inclusive
of
all
na$onal
and
local
taxes
§ The
bill
prescribes
that
mining
areas
be
declared
as
Mining
Industry
Zones.

70. 7. On
the
review
of
performance
of
exis1ng
mining
opera1ons
§
Mul$-­‐Stakeholder
Teams
created
in
every
Regions.
§
Cleansing
process
ongoing;
43
MPSAs
recommended
for
cancela$on.
8.
On
Illegal
Mining
§
Task
Force
on
illegal
mining
created.
§
Fact-­‐Finding
CommiRee
on
Illegal
Mining
created.
§
An$-­‐illegal
mining
opera$ons
launched.
§
MICC
adopts
measures
to
address
black
sand
mining.

71. Recent
Trends
in
the
Philippine
Mining
Industry
Resource
Na1onalism
• Governments
are
now
looking
at
different
strategies
to
extract
a
greater
share
of
the
value
from
mining
opera$ons.
• Strategies
include
increasing
taxes
and
royal$es
to
restric$ng
foreign
ownerships.
• Requiring
in-­‐country
processing
or
beneficia$on
prior
to
export
is
another
form.
• Encouraging
in-­‐country
processing
can
also
be
achieved
indirectly
by
imposing
export
restric$ons
and
increasing
export
levies
on
unrefined
ores.
• Con$nued
resource
na$onalism
from
governments
makes
the
countries
less
aRrac$ve
for
mining
investment.

72. The
State
of
the
Philippine
Mining
Industry
-­‐
Chamber
of
Mines
of
the
Phils.
• Impending
Change
in
Fiscal
Regime
–
Increase
taxes
• Expanding
No
Go
Zone
Areas
for
Mining
(Highly
mineralized
prospec$ve
areas
being
reduced)
• More
than
2
years
moratorium
in
the
grant
of
mining
permits
• No
new
mining
agreement
un$l
Congress
approve
a
new
sharing
scheme
bill
• Mining
investments
down,
explora$on
is
at
a
stand
s$ll
• Mining
industry
is
at
the
back
burner
of
the
Philippine
Development
Plan
although
it
is
promoted
under
the
Export
Development
Plan

73. Other
Laws
Related
to
Mining
• Ecological
Solid
Waste
Management
Act
• Toxic
Substances
and
Hazardous
and
Nuclear
Wastes
Control
Act
• Clean
Air
Act
• Clean
Water
Act
• Pollu$on
Control
Law
• Water
Code
• Na$onal
Environmental
User’s
Fee
of
2002

74. Why
does
mining
generate
con7licts
• Should
mining
prevail
over
current
land-­‐uses?
• Are
the
benefits
sufficient
and
fairly
distributed?
• Are
the
social
and
environmental
costs
fully
considered
and
compensated?
• Are
the
risks
of
adverse
impacts
reduced
to
a
minimum
and
socially
acceptable
to
those
who
bear
them?
• When
local
stakeholders
decide
that
the
risks
are
unacceptable,
can
the
na$onal
gov’t
override
that
decision?
• Does
small-­‐scale
mining
provide
more
equitable
access
to
resources?

75. Issues
in
the
Philippine
Mining
Industry
• Conflict
between
na$onal
and
local
governments
over
taxa$on
• Insurgency/peace
and
order
• “small-­‐scale”
mining
• Unavailability
of
a
good
digital
tenement
and
mineral
database
• Ancestral
domain
and
protected
areas

76. Issues
with
LGU
• Local
government
veto/moratorium
on
mineral
development
and
produc$on
• Integra$on
of
mineral
development
into
local
development
land
use
and
resources
use
plans
• Small
scale
mining
regula$on

77. Issues
on
Gov’t
Share
• Na$onal
government
should
develop
a
transparent
system
of
accoun$ng
for
and
alloca$on
of
sharing
of
revenues
and
taxes
with
LGUs.
• Expedite
and
streamline
the
release
of
LGU
share
on
revenues
and
taxes
through
a
simplified
process
with
$meframe
requirements
to
lessen
local
opposi$on
to
mining
projects.
• Local
taxa$on

78. Issues
with
IPRA
• Iden$ty
of
proper
IPs
• Lack
of
clear
cut
rules
on
how
to
arrive
at
a
decision
making
process
of
IPs
• Preferen$al
rights
of
IPs

79. Rules
of
Procedure
for
Environmental
Cases
• Introduced
new
remedies
for
the
“alleged”
viola$on
of
environmental
laws:
temporary
environmental
protec$on
order,
writ
of
con$nuing
mandamus,
writ
of
kalikasan
• TEPO
is
in
contraven$on
of
“no
injunc$on
rule”
under
PDs
605
and
1818
• harassment
suits?

80. Other
Laws
on
Resources
Development
• Presiden$al
Decree
(P.D.)
87,
as
amended,
"Oil
Explora$on
and
Development
Act
of
1972”
for
petroleum
service
contracts
• PD
972,as
amended,
introduced
the
coal
service
contract
system
and
established
the
guidelines
for
coal
opera$ons.
–
coal
opera$ng
contracts
• RA
9513 “Renewable
Energy
Law
of
2008”
for
renewable
energy
service
contracts

81. Conclusion
• Mineral
and
energy
explorers
must
carry
out
due
diligence
to
be
informed
as
to
the
laws,
regula$ons,
trea$es
and
standards,
and
also
interna$onal
standards
of
prac$ce
associated
with
human
rights,
social
and
environmental
management.
• Most
importantly,
they
should
follow
these
laws
and
if
the
legal
and
regulatory
frameworks
are
lacking,
explorers
should
self
regulate
u$lizing
interna$onal
standards
and
good
prac$ce.

82. Mining
and
Resources
Law
Atty. Fernando S. Penarroyo
Na$onal
Ins$tute
of
Geological
Sciences