DENR eyes lifting of ban on new mining projects

The Department of Environment and Natural Resources (DENR) knew it's going to be a long shot but it will still attempt to lobby for the lifting of the ban on the approval of new mining projects.

It's been nine months since the first phase of Tax Reform for Acceleration and Inclusion (TRAIN), which doubles the excise tax rate on mining from 2 percent to 4 percent, took effect. In 2012, former President Benigno Aquino III signed an Executive Order (EO) 79 on mining wherein no new mineral agreements shall be approved until a legislation that would impose a new fiscal regime in mining shall have taken effect.

Some believe that the additional 2 percent mining tax is enough to be considered a "new fiscal regime" and the DENR thought, so, too.

DENR Undersecretary Analiza Teh in particular said the agency already submitted a proposal to the Mineral Industry Coordinating Council (MICC) to start the discussion on the lifting of the moratorium on new mining projects under EO 79.

MICC is a recommendatory body co-chaired by the Secretaries of the DENR and Department of Finance (DOF), the government agency leading the country's tax reform initiatives.

Mines and Geosciences Bureau Assistant Director Danilo Uykieng said his agency already brought this particular issue to the DOF but the latter said a 2 percent adjustment in excise tax in mining could not be considered a "new fiscal regime."

The DOF is currently proposing to slap a 5 percent royalty in all mining companies. As of now, only those operating inside mineral reservations are required to pay a royalty.

The agency also proposed to retain the existing impositions such as corporate income tax, excise, indigenous people royalty and local business tax on all mines.

In drafting its mining tax reform proposal, the DOF based it on what was earlier proposed in Congress, which says the government, as owner of the minerals, should get a 10 percent share of the mining operations' gross revenue.

Right now, the agency's proposal is yet to get through the House of Representatives, with House Speaker Gloria Macapagal Arroyo even returning the measure back to DOF last week so the latter could include the inputs of the miners.

Chamber of Mines of the Philippines (COMP) Chairman Gerard Brimo, for his part, said the proposed fiscal regime on mining is seen to “punish” the already struggling mining sector.

Aside from metal prices, MGB sees TRAIN as one of the major "market forces" that will have an impact in the overall performance of the local mining industry — which has been registering a decline in output in the past months — moving forward.

“We are concerned particularly about mining tax bill that has been filed recently and we’ve taken a look at it and we analyzed and what we’ve done was compare that mining tax structures with large mining countries like Chile, Peru, South Africa, Canada, and Australia. It makes us more expensive than the five large mining countries,” Brimo said.

MGB, the government agency tasked to regulate and develop the mining sector, is now proposing a per commodity tax increase instead of unilateral tax increase, which it thinks could be detrimental to some commodities.

“We support the initiative to impose royalties to areas outside the declared mineral reservation but it should be on a mineral commodity basis. Why? Because what is applicable for nickel, for example, it isn’t applicable to other commodities. For gold and copper, a 5 percent royalty will be too big,” MGB Director Wilfredo Moncano said.