MAC: Mines and Communities

Philippines: Another legal challenge to the Philippine Mining Act

Published by MAC on 2013-04-15
Source: Statement, Manila Times, Rappler, MindaNews

Local community representatives, supported by NGOs and left-wing political parties, are challenging the constitutionality of the 1995 Mining Act, with particular reference to its failure at sharing any benefits from mining.

This follows the earlier attempt by the La Bugal B'laan to overturn the 100% foreign ownership provision within the Act (see: Supreme Court Reaffirms Constitutionality Of Mining Act).

These are not the only challenges now faced by the country's mining sector. Despite the Presidential Executive Order, meant to 'kick-start' the industry, business confidence remains low.

The infamous Tampakan project could also be subjected to further delay, for a number of reasons (see articles below).

Finally, hundreds of citizens in the CARAGA region have protested at the failure to implement a Temporary Environmental Protection Order aimed at preventing MMDC from mining in a declared watershed forest reserve.

Supreme Court Oral Arguments on Mining Act Constitutionality

When: 16 April 2013 (Tuesday)
What time: 2:00 PM
Where: Supreme Court, Baguio City

"Cases questioning Mining Act constitutionality to be debated before Supreme Court"

What are the cases about?

The two petitions question the constitutionality of Sections 80 and 81 of the Mining Act of 1995, and DENR Adm. Order 2007-12 - which establish the taxes, duties, fees, and so-called income supposedly to be derived from Mineral Production Sharing Agreements (MPSA) and Financial or Technical Assistance Agreements (FTAA). The Mining Act and DAO limit supposed Government Share to the usual taxes, duties, and fees, hence, there is no provision for income. Taxes are different from income. Under DAO 2007-12, there is even possibility that government does not get "Additional" share. Also, the arrangement is unconstitutional because only Congress, and not the DENR, has the power to make laws to determine what "income" is and what "equitable distribution of opportunities, income, and wealth" is, from the exploitation of land and non-renewable mineral resources. Mining Act of 1995 is incomplete and insufficient.

If Not Sec. 80 and 81, and DAO 2007-12, what?

Congress has to enact an alternative mining law that does not limit to taxes, duties and fees the "Government Share" or the income from extraction of non-renewable mineral resources.

Who filed the cases?

Indigenous peoples, members of poor communities dependent on land and natural resources and affected by FTAAs and MPSAs issued, representatives from support organizations such as the Social Action Center of the Diocese of Marbel, people's organizations, as well as elected officials from the Liberal Party, and party-list groups Akbayan and Bayan Muna representing marginalized sectors, filed the petitions for prohibition and mandamus in March 2008 to defend their lives, dignity, livelihood, lands, territories, health, environment and rights.

Who are the Respondents in the Case?

The petitions are filed against the DENR Secretary, as well as companies that are MPSA and FTAA holders like SMI, OceanaGold, TVI, QNI, Hallmark, and Austral-asia Link.

Legal Rights and Natural Resources Center-Kasama sa Kalikasan/Friends of the Earth Phils.

24-A Malingap St., Teachers Village, 1101 Quezon City, Philippines
+63 02 920-7172 or +63 02 920-7172

Katribu slams lifting of mining moratorium

By Rubyloida Bitog

Sun Star Baguio

9 April 2013

THE Katribu Party-list criticized the Mines and Geosciences Bureau (MGB) for lifting the moratorium on the applications of new mining permits nationwide, saying the decision is politically-driven.

MGB-Central Office chief Leo Jasareno announced the lifting of the moratorium last Friday, April 5.

The indigenous group mocked the MGB moratorium, claiming that communities are "pretentious and are populist maneuvering."

"In one sense, this declaration of a moratorium lifting is a waste of energy for the MGB. Yet this action remains deeply deplorable," said Katribu Party-list secretary general Kakay Tolentino.

The party-list group finds the timing of these 'favors' to mining corporations as suspicious. "It's no secret that mining corporations are backdoor financiers of candidates. The Aquino administration must be desperate to rake in cash with their recent dealings in the mining sector. Of course, their candidates might be piling up cash to pay up for those campaign TV ads," Tolentino said.

Tolentino said: "Indigenous peoples are embattled by the incursion of mining corporations in their ancestral territories as it is. The moratorium did not ease off the threat to dislocate communities, nor did it stop the violations of our rights. But this lifting will further embolden mining corporations to force their way in our communities. Amid the killings and other atrocities committed against our people, this action of the MGB is like a warrant that violations of our rights are endorsed by the government."

On January 2011, the MGB-Central Office issued a ban on new mining applications after the industry received several criticisms from the environmental groups and human rights organizations.

"Mining corporations have been reeling in the good favor of this administration. It has awarded SMI-Xstrata an ECC, and allowed the re-opening of Philex Mining Corporation. These corporations are human rights abusers and environmental violators yet are favored by the administration, Aquino has finally dropped the act. No more pretending that it is protecting the environment, patrimony, and people," said Tolentino.


Mining sector giving up on the Philippines

by Ben D. Kritz 

Manila Times

8 April 2013

It is probably welcome news to environmental activists but a disappointing turn of events for anyone who likes the idea of tapping the Philippines' imposing stockpile of mineral resources to attract tangible industrial investment and create jobs: Some subtle hints have recently been made by the companies behind the most promising planned mining operations that trying to move forward during the remaining three years of the Aquino administration is more trouble than it's worth, and that they have resigned themselves to wait until beyond 2016 or even 2022 before applying any more money or effort to projects in this country.

The two mining projects that have attracted the most attention are the Sagittarius Mines Inc. (SMI) Tampakan gold and copper mine in South Cotabato, and the Lepanto Consolidated Mining-Gold Fields gold and copper mine in Mankayan, Benguet. SMI was awarded an environmental compliance certificate for its Tampakan project in February after a delay of about a year, but recently announced it was pushing back the planned start of commercial operations at the controversial open-pit mine from 2016 to 2019, citing additional delays in obtaining licenses and permits.

In Lepanto's case, the first clue many observers had that something was amiss was the swan dive Lepanto stock (symbol: LC) took just after the Easter holiday, losing more than 15 percent between March 26 and April 2, with volume exploding from 4.5 million shares to more than 104 million. The apparent reason? A note buried in Lepanto's partner company Gold Fields' 2012 Integrated Annual Review moving the start date for production at the Mankayan project to 2022.

On the face of things there appear to be obvious reasons for the delays, particularly in the case of SMI, which is still facing aggressive resistance from environmental activists and cannot proceed until a ban on open-pit mining, a measure specifically passed to stop the Tampakan project, is lifted by the South Cotabato provincial government.

There is speculation [over] the planned merger of commodities trading firm Glencore and global mining giant Xstrata Plc, which has been delayed twice from its original March 15 deadline on concerns from governments (particularly China) about the merged company's likely dominance of the world copper market.

Xstrata owns about 62 percent of SMI, and is the majority owner of the Tampakan project; the merger with Glencore, which actually amounts to a Glencore takeover of Xstrata, would result in big management changes in SMI, some analysts believe.

In Lepanto's case, according to the Gold Fields 2012 review, a decision was taken in August 2012 to push back pre-feasibility work at Mankayan to allow for a period from January to June of this year to focus on finalizing the necessary Free Prior and Informed Consent (FPIC) and Financial and Technical Assistance (FTAA) agreements, a plan which was confirmed by an information filing with the Philippine Stock Exchange by Lepanto on September 13 of last year.

The real reason for the extended delays for Lepanto, SMI and a number of other mining projects, according to industry insiders, is a recent change in tax regulations.

On February 15, the Bureau of Internal Revenue (BIR) issued Revenue Memorandum Circular 17-2013, effectively rescinding the "recovery period" for "pre-operating expenses, exploration, and development expenditures," provided by the Philippine Mining Act of 1995 (Republic Act 7942).

In the Mining Act, collection of the government's share of mining revenues includes, among other things, corporate income tax, excise tax, special allowance, withholding tax on dividend or interest payments, and other such taxes and fees as required by law, but only commences after the expiration of the "recovery period." The BIR's new edict, however, stipulates that after the end of any "tax holiday," collection of taxes shall be enforced, regardless if the project is still within its "recovery period" or not.

To many in the mining industry, the BIR's action is the final straw; having been forced to virtually suspend all operations while the Aquino administration's new mining policy under Executive Order 79 was developed, then a difficult and time-consuming process of developing EO 79's implementing rules and regulations, most mining concerns see the decision of the BIR as further evidence of a hostile investment environment. While acknowledging that there are probably grounds to contest the BIR's ruling in court, no one in the industry seems to feel there is much point in it.

It took nearly nine years to settle all the legal challenges to RA 7942 and has taken nearly three years just to develop and implement EO 79; with the notoriously glacial pace of the Philippine legal system and the uncertainty whether the Aquino administration has any more surprises like the BIR's recent order in store for the mining industry, it seems better to wait for hopefully better circumstances under the next administration, or even the one after that, should Mar Roxas become president in 2016.

From a business perspective, waiting makes sense. The uncertain environment created by EO 79 presents a lot of risk while on the other hand, sitting on a mining lease - which runs for a minimum of 25 years - can be done at virtually no cost. Unfortunately, there are no benefits, either; no job creation, investment flows, or production revenue shares for the Philippines.

In aggressively chasing every centavo it could conceivably gain from mining before so much as a shovelful of earth is turned, the government may very well have ensured it gets none, at least not in the foreseeable future.

Xstrata-Glencore merger issues may delay Tampakan mine

by Edwin Espejo

3 April 2013

MINING OPERATIONS. It took over a year for the government to grant the operator of the Tampakan mine in Mindanao its environmental clearance.

GENERAL SANTOS CITY, Philippines - The contractor for the $5.9 billion Tampakan copper-gold project is facing further delays due to concerns over a large-scale international mining merger.

Sagittarius Mines Inc. (SMI) earlier set a target to start commercial operations for Tampakan in 2019. The start date, which was initially set for 2016, was moved back due to difficulties in obtaining licenses and permits.

Now SMI may encounter more delays to the repeated deferment of the merger between commodities trading firm Glencore and global mining giant Xstrata Plc.

In a report aired on Monday, April 1, the Australian Broadcasting Corporation (ABC) said that the merger between the two giant Anglo-Swiss companies was moved further to May as concerns over their combined global market continue to give China jitters.

The anticipated US$76 billion union between Xstrata Plc, the world's fourth largest copper producer, and Glencore will make them the world's fourth largest diversified mining company. The merger will also make the two companies the world's largest commodities trading firm.

The merger was first announced in February 2012. In March 2013, both companies announced that the union was to be formalized in April after it did not push through on March 15.

The Glencore-Xstrata union is so huge several countries raised concerns, among them Qatar and South Africa. But after hurdling obstacles from regulators from both countries, it is yet to obtain approval from the Chinese government.

China is the world's largest consumer of copper concentrates and it is raising concerns over the market dominance of the merged companies in the trade of copper concentrates.

Xstrata Plc has a 62.75% stake in SMI. XStrata Plc also owns the Tampakan Copper and Gold project through its Australia-based subsidiary Xstrata Copper.

The possible union between Glencore and Xstrata could cause a major shake-up in the top management of SMI. Xstrata Plc chief executive officer Mick Davis earlier said that the deal is already "a takeover and no longer a merger."

The possible deal also affect the marketing strategy of SMI since Glencore owns the Philippine Associated Smelting and Refining Corporation (PASAR), the country's sole copper smelter and refinery plant. The facility is located in Leyte.

SMI said that it would export copper concentrates to Australia where it will be smelted and refined. The mining company had already pushed forward its planned commercial production from 2016 to 2019 following delays in securing government permits.

In February this year, it finally was granted an environment compliance certificate although it still needs to get the approval of host local government units.

In 2010, the local government of South Cotabato passed an ordinance banning open pit mining in the province. Re-electionist Gov. Arthur Pingoy and his closest rival Rep. Daisy Avance-Fuentes have vowed to implement the ordinance "unless ordered by the court."

SMI has already declared it will employ an open pit mining method to extract copper and gold ore deposits in its mining site in the remote mountain village of Tablu in Tampakan, South Cotabato.

The Tampakan project is touted as having the world's largest untapped copper and gold deposits with a potential annual average production of 375,000 tons of copper in concentrate for at least 17 years. -

Mining reform bill a priority - Purisima

by Lean Santos

2 April 2013

PRIORITY. Reforming the Mining Act is on top of the list of measures the Aquino government will push for in 2013PRIORITY. Reforming the Mining Act is on top of the list of measures the Aquino government will push for in 2013

MANILA, Philippines - The mining reform bill is among the list of priority measures that the Aquino administration will push for in the next Congress, according to Finance Secretary Cesar Purisima.

"We're focusing on several bills. The mining, we will push for it," Purisima said in an interview on Rappler's #TalkThursday Monday, April 1.

The Mining Industry Coordinating Council (MICC), the agency tasked to finalize the provisions of the bill, aims to finish the draft before the May elections. The Department of Finance and the Department of Trade and Industry are still finalizing a new revenue-sharing scheme between government and mining firms.

The new revenue scheme is one of the contentious provisions of the Aquino administration's mining policy, Executive Order 79.

Before the EO, various mining reform bills were pending in Congress. In the House of Representatives, a consolidated version sought to increase government share in mining revenues to 10% from 2%.

Purisima said raising government's share is in line with their stand on environment protection and responsible mining.

"The revenue sharing has to be clear. We don't want miners laughing all the way to the bank where as we have to carry the burden of an environmental disaster and not getting any amount," he said.

The reform bill is also seen to boost the country's mining industry.

The industry suffered a contraction in 2012 due to the moratorium on applications for mineral production sharing agreement. The moratorium, which was imposed under EO 79, will only be lifted once a new revenue scheme is approved.

Purisima said other provisions of the EO like the no-go areas or areas where mining is prohibited would also be included in the reform bill.

"Mining is good, but... we're trying to define no-go areas," he said.

Philippine tribal protest forces mine closure

Ronald O. Reyes

12 April 2013

Manila - A mining company announced today it has shut down operations at a nickel mine in the southern Philippine province of Surigao del Sur, after locals blocked the entrance, citing environmental concerns.

Members of the Badjao tribe in the village of Cabangahan, Catilan town, formed a human barricade on Monday to prevent Marcventures Mining and Development Corporation (MDCC) from entering the area, a federally designated watershed.

"We got support from the local police and military," said village leader Jimmy Bat-ao. The area is also a burial and hunting ground, he said.

On Wednesday, a group of security guards tried to demolish the barricade and disperse the people, but about 300 tribesmen stood their ground. Bat-ao said no one was hurt in the incident.

The nickel mines, which started operation last year, cover about 4,779 hectares of land in the town.

The mining company has a permit to operate, according to Roger de Dios, director of the Mines and Geosciences Bureau in the region.

"Based on our monitoring and inspection, no violation has been observed to warrant suspension," de Dios said. "The company voluntarily suspended its operation."

Chito Trillanes, spokesman of the Catholic Church's Social Action Center in Cantilan town, however, said tribal people have reached an agreement with the local environmental bureau to look into alleged violations committed by the mining company.

Trillanes said the mining area is the source of irrigation for 3,000 hectares of land.

The parish social action office earlier filed an appeal before a local court to issue a temporary restraining order to stop the mining operation.

Hundreds protest MGB Caraga to push anew TEPO implementation

By Erwin Mascariñas


23 March 2013

SURIGAO CITY (MindaNews/22 March) - The protesters from various civil society groups, lambasted MGB regional director Roger de Dios for apparently disregarding a new directive from the MGB main office in Manila to implement the court order.

The MGB main office, in a letter dated March 15 issued by acting assistant director Elmer Billedo, reminded De Dios that he should not disregard the TEPO [Temporary Environmental Protection Order] issued by the Regional Trial Court of Cantilan, Surigao del Sur in 2010

Since March 11, residents from Surigao del Sur and Surigao del Norte provinces have been picketing the MGB regional office to demand the TEPO's implementation.

"The regional director [De Dios] promised us during our dialogue last March 13 that he will inform us of any order that will come from Manila on the matter of the TEPO. But he hid this new order from us, It is only recently that we've discovered the [new] letter addressed to his office. This is a clear sign of how treacherous he is," said Chito Trillanes, Diocesan Social Action Center spokesperson.

At the time of the dialogue, De Dios declined the protesters' demand to implement the TEPO because he has not received any direct order from the court or the MGB main office. He then promised the protesters he will inform him them of any order from the main office.

Trillanes said they felt cheated by De Dios when he did not inform them about the March 15 letter from the MGB main office.

On March 19, De Dios decided to conduct a community inspection, inviting leaders of the protesters, whom he later left behind in Carrascal town "because of the bad road condition," Trillanes recalled.

Trillanes said they later found out that De Dios did not visit the affected area and did not interview community members.

Citing farmers, irrigators and the people waiting for the MGB official in the area, Trillanes added that De Dios reportedly went instead with MMDC personnel who guided him to "areas the company only wants to be inspected."

Outraged by what they described as betrayal by the MGB regional officials, an estimated 300 people from various organizations joined Friday those who have been picketing the agency's office for two weeks now.

Dr. Isidro Olan, executive director of Lovers of Nature Foundation, Inc. called De Dios' action a "clear sign of disregarding the law."

"The court order has been given, and an order from the MGB central office has been forwarded, but De Dios had remained steadfast on his stand not to facilitate and implement the TEPO. For someone who is supposed to be protecting the environment, this is a clear disregard [of the law]," said Olan.

Olan, who survived an ambush last year, called for various sectors to join in and condemn De Dios' action.

"This is abuse of authority, a court ruling has been made but he has taken us for a fool. It is very obvious what he is doing, and the reasons his office had given for not implementing the TEPO are very shallow and he should be investigated," said Olan.

Rogelio Montero, provincial chairman of Kapunungan sa mga Mag-uuma sa Surigao del Norte or KAMASS, stressed the need for the TEPO's implementation to avoid threatening the food security in the area.

"Laterites have been creeping into farm lands in the area, affecting our farmers' annual yields. This is not only a threat to the farmers but to the people who rely their food supply from us," Montero said.

Elvie Arrubio, president of the Cantilan Irrigation System Federation of Irrigators Association, backed his claims, noting that because of laterite siltation, only 1,555 hectares (ha) can now be irrigated from the previous 2,000 ha.

De Dios did not face the protesters and was not responding despite repeated phone calls.

But earlier, he said the MGB regional office cannot implement the TEPO because it is not a party to the case.

On Nov. 11, 2010, the court issued a TEPO against MMDC for operating in a declared watershed forest reserve. (Erwin Mascarinas/MindaNews)

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