January 9, 2019 | 9:16 pm
MINING COMPANIES
expressed “guarded optimism” about their prospects in 2019 as global metal
prices stabilize due to balanced supply and demand, though the equilibrium
could be disrupted by a worsening of the trade war between the United States
and China, proposed tax laws for the Philippine mining industry, as well as ban
on open pit mining.
“CoMP (Chamber of Mines
of the Philippines) views 2019 with guarded optimism. Global metal prices are
expected to be generally stable, reflecting the assumption of balanced supply
and demand conditions. However, China remains the major force behind the metals
and mining industry worldwide. Any fluctuations will likely be related to
developments in this market and its ongoing trade war with the US,” Rocky G.
Dimaculangan, VicePresident for Communications of CoMP, told BusinessWorld
in an e-mail on Wednesday.
“The bigger cause for
concern for the Philippine mining industry is the ongoing moratorium on mining
permits under Executive Order (EO) 79 and the ban on open pit mining under DENR
Administrative Order 2018-19. EO 79 states that the moratorium will not be
lifted until a new mining tax regime is legislated, but despite the doubling of
mining excise tax from 2% to 4% of gross output, the moratorium remains in
place,” Mr. Dimaculangan told BusinessWorld in an e-mail on Wednesday.
Mr. Dimaculangan said
that CoMP believes that a profit-based royalty and windfall profits tax
structure wherein rates are tied to operating margins, a bill outlining which has
passed in the House of Representatives, is the most equitable way to increasing
mining taxes.
Mr. Dimaculangan said
that CoMP hopes a similar bill will be passed in the Senate to encourage
quality investment, as well as help existing mining companies.
“The Chamber hopes this
same structure will be approved by the Senate to help sustain existing mining
operations, encourage quality investments in the hugely untapped Philippine
minerals sector, and finally lift the moratorium on mining permits,” Mr. Dimaculangan
said.
Last month, in a
year-end news conference, the Department of Environment and Natural Resources
(DENR) said that it has a positive outlook for the mining industry in 2019
under the new fiscal regime which is to be implemented in the Tax Reform for
Acceleration and Inclusion (TRAIN) 2 bill.
“We see a positive
outlook for the mining industry. What the MICC (Mining Industry Coordinating
Council) is saying was the new fiscal regime will happen once the second
package of the TRAIN Law is passed and that will really provide a more
advantageous package for the government,” DENR Undersecretary Analiza A.
Rebuelta-Teh said last Dec. 20.
“In that case, although
there is the current version of the pending bill where there will be a decrease
in the royalty tax for the mineral reservations, it can be offset in other
forms in the new fiscal regime,” Ms. Teh added.
Mr. Dimaculangan,
however, noted that with the order issued by DENR to close and suspend 26
mining companies “has caused a significant loss of potential export receipts,
tax revenues, and social progress unless the open pit issue is resolved.” The
order was made by former DENR Secretary Regina Paz L. Lopez, and was continued
by current Secretary Roy A. Cimatu.
Mr. Dimaculangan said
that the Tampakan Copper Project, the King-King Gold-Copper Project, and the
Silangan Gold Copper Project are on hold due to the DENR Administrative Order
(DAO) 2018-19 signed on Aug. 17, 2018.
The DAO sets a maximum
area of extraction of ore at any given time depending on the scale of mining,
which are: 50 hectares for one million metric tons (MT) or less; 60 hectares
for more than one million MT but less than three million; 70 hectares for three
million MT but less than five million; 80 hectares for five million MT but less
than seven million; 90 hectares for seven million MT but less than nine
million; and 100 hectares for nine million and up.
Mr. Dimaculangan said
that a total of P303 billion worth of national government revenue and P47.6
billion next export commitment are the potential losses due to the suspension
of these open pit mining projects.
Mr. Dimaculangan said
that open pit mining is “an internationally accepted, environmentally safe
method of extracting minerals.” — Reicelene Joy N. Ignacio
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