Frequently Asked Questions on Executive Order 79 (Mining Reform)
What are the benefits of Executive Order 79?
The Executive Order:
Sets the policy framework
that will guide government and other stakeholders in the
implementation and operationalization of mining laws, rules and
regulations. It also provides concrete steps and solutions to major
issues and concerns of the mining sector.
Sets the direction and
lays the foundation for the implementation of responsible mining
policies.
Aims to improve
environmental mining standards and increase revenues to promote
sustainable economic development and social growth, both at the
national and local levels.
What was the process in involved in the drafting of Executive Order
79?
In October 2011, a mining
study group was constituted, which included the Executive Secretary
and several members of the Climate Change Adaptation and Mitigation
Cabinet Cluster.
Input from different
stakeholders were obtained, including those from the following: mining
companies and allied industries and services; environmental CSO/NGOs;
church groups (e.g., CBCP, Association of Major Religious Superiors of
the Philippines); members of the academe; LGUs (e.g., major LGU
leagues and other local government officials); different government
agencies concerned with mining (i.e., through the Climate Change
Adaptation and Mitigation and Economic Development Cabinet Clusters.)
Numerous studies, positions
papers and commentaries were also secured and considered by the Study
Group and the Cabinet Clusters. All the recommendations and input
received were considered in the drafting of the provisions of EO 79.
Does the EO call for a ban or moratorium on mining?
No. Existing mining
operations and those with approved contracts before the effectivity of
the EO will not be affected, and the government will respect the
agreements it has entered into, provided that they comply with
existing laws and rules and the new mandates and directives of the EO
and mining policies, and that these existing mines are not in areas
expressly prohibited by existing laws, in which case appropriate
action for violators will be undertaken.
EO NO. 79 identifies
specific zones closed to mining applications, either for contracts,
concessions or agreements. These include:
Areas in the National
Tourism Development Plan
Critical 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 identified
under the existing 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)
Under the EO, no new mining
operations will be approved in Palawan, consistent with the following:
Existing laws such as RA
7942 (Mining Act) and RA 7586 (NIPAS Act)
Critical areas, island
ecosystems, and impact areas of mining that will be declared by the
DENR based on existing laws, rules and regulations
The ecological uniqueness
of Palawans flora and fauna and the need to protect the same is
recognized
RA 7611 or the Strategic
Environmental Plan for Palawan calls for the protection of Palawans
environment and natural resources
Recognition of its
potential for other forms of investments (eco-tourism such as the
Puerto Princesa Underground River)
While existing mining
operations will be allowed to continue, the government will be
suspending the granting of new mineral agreements until existing
mining laws are amended.
Mineral Agreements, as
provided for in the Mining Act of 1995, are any of the following: a)
Mineral Production Sharing Agreement (MPSA); b) Joint Venture
Agreement (JVA); and, c) Co-Production Agreement (CPA). The Mining Act
also provides for Financial and Technical Assistance Agreements (FTAA)
that the government may enter into. These agreements usually include a
permit to explore for mineral deposits as part of the provisions and
privileges granted in the contract in preparation for possible mining
operations.
Amendments to mining laws
will allow for the rationalization of existing revenue-and
benefit-sharing schemes and incentives given to mining companies to
ensure that the country benefits from the rich mineral resources in
its territory. The additional revenues will allow government to have
additional funding for other social services such as education and
health, in addition to having funds for measures to mitigate the
impact of mining on the environment.
While the granting of
mineral agreements has been suspended, Exploration Permits may still
be granted by the DENR.
An Exploration Permit is an
authority granted by the DENR-MGB to allow a person or entity to
conduct exploration for minerals in a specified area. This is limited
to exploration works only and does not include authority to conduct
actual mining or extraction of minerals. However, those who are
granted Exploration Permits and who actually discover minerals shall
be given preferential option in the grant of a mineral agreement
should they wish to pursue the same.
Why cant the government enter into new mineral agreements since
amendments to the existing mining laws have yet to be legislated?
Entering into mineral
agreements now in the absence of amendments to mining laws will bind
the government to possible 25- to 50-year terms that will not give us
maximum benefits from the mineral resources. This will allow future
administrations and future generations to realize the full benefits of
mineral resource utilization and not be bound by decisions and
agreements made in the past.
What will happen to existing and pending applications for mineral
agreements?
Pending applications for
mineral agreements will not be granted and approved by the DENR-MGB.
These may, however, be converted into Exploration Permit applications
to allow them to conduct initial exploratory work.
Why did the law impose only a 2% excise tax on mining?
The 2% excise tax on mining,
implemented through a revision of the National Internal Revenue Code,
was meant to spur and attract mining investments in the country at a
time when mineral prices were down and the industry was at a
stand-still. The current rate needs to be reviewed to allow the
government to maximize returns from mining, and legislation should
explore the possibility of providing flexibility in the imposition of
excise tax rates through a progressive tax system similar to what is
implemented in other mining countries.
What is the impact of the new EO on current government mining
revenues?
Current revenues from mining
will be maintained since the EO allows existing mines and operations
to continue. In fact, because of other revenue-raising measures in the
EO and directives, mining revenues should increase despite the
deferment on the grant of new agreements as provided for in the EO.
Is there already a draft bill/legislation on these revenue measures?
The DOF has been crafting
the proposed legislation to rationalize the revenue and benefit
sharing-schemes and incentives given to mining companies. The DOF is
also considering inputs from an IMF Technical Assistance Study and
mission on mining taxes and fees in the Philippines. Once finished,
the Administration plans to prioritize the passage of this legislative
measure.
What measures were put in place to address the country's economic or
revenue-related concerns?
Establishment of Mineral
Reservations for strategic mineral reserves to be able to collect 5%
additional royalties, or higher (Sec 5, EO)
Opening of mining areas
through competitive public bidding (Sec. 6, EO)
Disposition of abandoned
ores and valuable metals in mine wastes and mill tailings (Sec. 7, EO)
Value-adding activities
and development of downstream industries (Sec. 8, EO)
Demand operational and
financial reports from both large- and small-scale miners at all
stages of the mining cycle (Directives to MICC)
Conduct of verification at
the national, regional and local levels of taxes and fees payable and
monitoring of all entry and exit points of minerals in the country
(Directives to MICC)
Fast-track release and
access of LGUs to their share from mining revenues (Directives to MICC)
Updating of mineral
commodity profile and database on new products, markets and available
technologies (Directives to MICC)
Conduct a study on
existing mechanisms for benefit sharing and review of existing taxes,
fees and incentives receive by mining companies (Directives to MICC)
Study the terms and
conditions of service contracts entered into by the Department of
Energy (DOE) for energy resources for possible application for mining
agreements (Directives to MICC)
Study the imposition of
higher export fees for metallic and non-metallic minerals in the
country (Directives to MICC)
Consider tapping 3rd party
international auditors to validate the volume and value of mineral
exports from the Philippines (Directives to Good Governance Cluster)
Increase mine wastes and
tailings and occupation fees and impose processing fees for all mining
applications (Directives to DENR)
Provide benchmarks for the
valuation of minerals based on prevailing international minerals
market prices (Directives to DENR)
Prepare and maintain
revenue baseline data and properly account for all taxes and fees
generated from mining (Directives to BIR)
What specific legislative measures will the government pursue in light
of the EO?
The following steps will be
studied and undertaken for inclusion in the legislative measures:
Rationalization of
revenue-sharing schemes and mechanisms and incentives given to mining
companies
Bigger LGU shares from
mineral resource utilization and providing better mechanisms for the
faster release of their share
Stiffer penalties for
mining-related offenses
Possible inclusion of
medium-scale mining among the categories of mining
Stronger regulatory rules
over traders and middlemen to improve mineral production monitoring
and collection of taxes and fees from mining
What measures were put in place to address the impact of mining on the
environment?
Stricter enforcement of
environmental laws and rules, and holding violators accountable (EO
and Directives to DENR)
Identifying additional
areas closed to mining
Review of the performance
of mining operations and cleansing of non-moving mining rights holders
(Sec. 3, EO)
Assess and improve
small-scale mining conditions (i.e., establish minahang bayan, enforce
compliance with environmental impact assessment requirements, limit
mining to specific metallic minerals, prohibit the use of mercury)
(Sec. 11, EO)
Use of integrated maps and
Programmatic Environmental Impact Assessment (Sec. 16 and 17, EO)
Proper accounting of
Environmental Protection and Enhancement Programs (EPEP) of mining
companies (Directives to DENR)
Use of geo hazard and
multi-hazard maps and climate change forecasts in determining go and
no-go areas (Directives to DENR)
Explore use of mandatory
and compulsory insurance coverage for mining affected areas and
adoption of Comprehensive Environmental Response, Compensation and
Liability Act of the USA (Directives to MICC)
Resource accounting or
full-cost benefit analysis (Directives to MICC)
What are the benefits of opening areas with known and verified mineral
resources and reserves for mining through competitive bidding?
The public bidding of the
granting of mining rights and tenements over areas with known and
verified mineral resources and reserves will allow the government to
negotiate for better terms in mineral agreements and allow it and the
public to maximize potential benefits from mining. In addition, public
bidding will ensure transparency and allow the State to deal with
legitimate and serious mining investors and developers.
The specific parameters for
the public bidding will be provided for in the IRR, taking into
consideration existing best practices in current government bidding
procedures and the principles of transparency and accountability.
The old procedure was simply
done on a first-come, first-served basis, in that whoever applies or
files first for an application for a mineral agreement or mining
tenement; then he or she will exclude all others from that area
applied for. This procedure allowed speculators to flourish, giving
authority to sit and do nothing with their applications to the
detriment of those who seriously want to pursue mining operations, and
of the government for lost revenues and benefits for the people.
Are indigenous peoples rights vis-a-vis mining protected by the EO?
Yes. The EO reiterates the
State policy on the recognition of IP rights (Whereas clause, EO) and
the NCIP has drafted and issued its revised guidelines for the FPIC
process. Close coordination with the NCIP will be undertaken to ensure
its proper conduct and implementation for the benefit of all concerned
stakeholders. In addition to this, the NCIP, DSWD and the DENR are
directed to ensure that the social preparation for IPs to be affected
by mining will be conducted (Directives to DENR, DSWD, and NCIP).
Complete cultural mapping to
identify IP areas will also be undertaken to complete the ancestral
domain delineation process.
Aside from tackling issues related to large-scale mining, does the EO
address the concerns of small-scale mining?
Yes. Several measures were
undertaken to address the issues concerning small-scale mining. These
are:
Reiteration of RA 7076 as
the governing law in small-scale mining
The constitution and
operationalization of the P/CMRBs to ensure the proper management and
regulation of small-scale mining operations
The establishment of
Minahang Bayan to provide specific and exclusive areas for small-scale
mining to avoid overlaps and conflicts with other mining rights and
tenements holders
Small-scale mining of
metallic minerals shall be limited to gold, silver and chromite since
these are the most suitable for artisanal methods, which do not use
equipment, machinery and explosives (the definition of small-scale
mining per RA 7076 refers to mining activities which do not use
explosives or heavy mining equipment)
To help small-scale miners
and to recognize them as a formal sector; training and
capacity-building measures in the form of technical assistance will be
conducted by concerned agencies.
How does the EO reconcile the roles of the national government and
LGUs with regard to mining?
The National Government
shall coordinate and cooperate with the LGUs in ensuring the proper
implementation of mining related laws, rules and regulations,
especially as regards small-scale mining
Concerned government
agencies are directed to study possible legislation increasing LGU
shares from the utilization of resources and to provide mechanisms to
hasten the release of their shares through proper coordination between
and among agencies
The P/CMRBs will help LGUs
properly regulate small-scale mining and provide an appropriate forum
for the different stakeholders
LGUs shall be a part of
the MICC to ensure that their position and concerns are heard
What is the major role of the DILG in the implementation of the EO?
Sec. 12 of the EO directs
the National Government, through the DILG, to work with LGUs to ensure
that local ordinances are consistent with and conform to national
laws, issuances, and policies, to ensure the proper implementation
laws such as the mining act. Local ordinances should at all times be
consistent with the Constitution and national laws and Sec. 12
recognizes the need for national laws and local ordinances to be
harmonized to ensure the proper management and regulation of the
mining industry.
Will local ordinances against mining be overturned/annulled/voided by
the Administration pursuant to this Section 12 of the EO?
No, provided that they
comply and are consistent with national laws, rules and regulations.
If found to have violated
the law, the process of challenging an issuance through the courts
will be pursued by the appropriate authorities. In addition, dialogue
between the NG and LGUs will be crucial to avoid local ordinances
being challenged in court.