The Philippines is set to significantly increase royalties imposed on mining companies, under a new mining policy that will also impose stricter environmental protections.
The policy contained in a new executive order signed by President Benigno Aquino said no new mining permits would be approved until Congress passed a bill backing the increase.
The announcement follows months of heated debate between mining firms, environmentalists, tribal groups and church leaders.
The order seeks to impose a 5 per cent royalty on the companies’ gross earnings compared to the existing 2 per cent tax and extends a moratorium on mining permits that President Aquino imposed last year when he was still drafting the new executive order.
Environment Secretary Ramon Paje announced the order and said the government’s main intention was to increase revenues from mining.
He stressed the order would respect existing mining agreements with the 33 mining operations already in the country, but would be imposed on new entrants.
He said existing contracts would be reviewed to ensure the companies are complying with their obligations.
Paje said if the law was passed by 2016 the country could earn an additional 16 billion pesos ($US381 million) from the higher royalties.
In addition, the order designates all abandoned mine waste and tailings as state property, allowing the government to extract any remaining minerals.
The order also bans mining in 78 areas designated as “eco-tourism” sites and in “prime agricultural and fishing areas”, and imposes controls on poorly-regulated “small-scale mining industry”, particularly banning the use of mercury, which can poison the environment.
Leo Jasareno, director of the Philippines Department of Environment’s mines and geo-sciences bureau said the order was a response to concerns raised by conservation groups and local communities.
“There has to be no mining operations in these areas,” he told Radio Australia’s Asia Pacific programme.
“And second, it’s [the order] calling for a review of existing mining operations, and the cleansing of mining tenements that are non-performing. This will ensure compliance with environmental standards and the mining law.”
Boosting the coffers
Finance Secretary Cesar Purisima expressed confidence the new order would help the industry and boost revenues.
“We are confident that by investing in a stronger regulatory framework and a more equitable revenue sharing mechanism, we are improving mining’s long-term growth potential,” he said in a statement.
The Chamber of Mines of the Philippines said it welcomed the new rules, hoping it might end lengthy debates over the sector.
“We are hopeful that the policy will harmonise conflicting interests, encourage investments, and foster sustainable development especially in the countryside where it is greatly needed,” a chamber statement said.
The Philippines is believed to have some of the biggest mineral reserves in the world – the government estimates the country has at least $840 billion in gold, copper, nickel, chromite, manganese, silver and iron ore deposits.
However, the minerals have been largely untapped, partly because of a strong anti-mining movement led by the influential Catholic Church, while poor infrastructure and security concerns have also kept investors away.