Royalty on mining operations outside reservations pushed

The Mines and Geosciences Bureau (MGB) said that mining operations outside mineral reservations must pay a royalty as part of the government’s rationalization of the country’s mining fiscal regime.

MGB OIC-assistant director Marcial Mateo said metallic operations outside mineral reservations must pay three percent of the market value of their gross output as royalty to the government.

Furthermore, non-metallic operations outside mineral reservations should pay a percentage of their gross revenue as royalty to the government, Mateo added.

Mateo disclosed the position of the MGB regarding the rationalization of the country’s mining fiscal regime during a recent hearing by the Senate committee on ways and means.

The MGB’s position is aligned with the Department of Finance’s proposal to impose royalties on mine operations outside mineral reservations. However, the DOF’s current proposal only covers metallic operations and not non-metallic mines.

The DOF proposed that metallic mine operations outside mineral reservations pay a royalty between 1.5 percent and five percent depending on their profit margin.

Mateo also said the current scheme of collecting five percent royalty from both metallic and non-metallic mines operating within mineral reservations must be retained.

Last year, the government collected P2.23 billion in royalties from mine operations within mineral reservation areas, according to the MGB.

Furthermore, MGB said the state earned P6.79 billion in excise taxes or P2.58 billion from nickel mines, P2.4 billion from gold mines, P1.76 billion from copper mines and P510 million from chromite and iron mines.

At present, there are 21 mining projects located within mineral reservation areas, of which 20 are nickel mining projects, the MGB added.

Earlier this month, the DOF unveiled its proposal for the rationalization of the mining fiscal regime.

The DOF’s proposal tweaked the House of Representatives’ approved bill, resulting in fewer tiers and rates for both royalty outside mineral reservations and windfall profit tax.

The DOF’s proposal is estimated to yield at least P10.23 billion annually starting 2025, higher than the P8.4 billion projected earnings based on the House version.