Mining in limbo till at least mid-2016

middle ground between what the government wants and what business is capable to give, it means there is a need to study deeply the complexities of the mining business.”

“New investments will be hard to come by and investors will remain on a wait-and-see attitude [sic] or look for better alternatives — as our competitiveness suffers and we lose opportunities.”

Ian W. Porter, vice-president of the Australian-New Zealand Chamber of Commerce of the Philippines (ANZCham), said separately that failure to pass the measure would force investors to look elsewhere. “There will be no new mining investment. Investors and mining companies will go elsewhere and the Philippines will be off the radar (screen) for decades.”

The ANZCham is home to a number of firms operating large-scale mining projects locally.

Mr. Porter pressed the government instead to fully implement Republic Act No. 7942, or the Philippine Mining Act of 1995. “The 1995 law is excellent. The problem is not the law but proper and full enforcement. Illegal mining is booming and will continue to do so under the present mining regime.”

Ms. Halcon shared Mr. Porter’s view, even describing the 1995 law as “one of the world’s best.”

The House committee now plans to start hearings on the bill when sessions resume in July.

The Constitution provides that all tax measures must emanate from the House before they can be picked up by the Senate.

But time is running out with only seven months left for the 16th Congress, as it is expected to close in early February to give way to campaigns for the May 9, 2016 national elections.

‘NOT INTENDED TO KILL THE INDUSTRY’

Sought for comment, Mines and Geosciences Bureau (MGB) director and MICC member Leo L. Jasareno described the delay in acting on the bill as “unfortunate.”

“That will mean no new mining contracts. That’s the sad consequence,” Mr. Jasareno said in a telephone interview.

“EO 79 was not intended to kill the mining industry,” he stressed.

“If the prospect of a new law is dim, there has to be alternatives,” Mr. Jasareno added, while refusing to disclose what steps the Executive would take to ease the prolonged uncertainty.

The Executive has been banking on the new measure to increase the state’s share in mining revenues and promote environmentally “responsible” practices, as the existing taxation scheme is deemed “disadvantageous” to the government.

Under the Philippine Mining Act, the government gets a 50% share in profits of foreign miners operating in the Philippines under Financial or Technical Assistance Agreements, and a 2% excise tax on actual market value of output under Mineral Production Sharing Agreements with local companies.

On April 2, however, the Environment department issued an order that allows area expansion for existing mining exploration projects. Mr. Jasareno said this was the solution “in the meantime” to allow existing largescale mining activities to continue despite the ban on new permits.

“We take the position of the MICC that its proposed bill is very competitive,” Mr. Jasareno said, adding that he was “still hopeful” that Congress will be able to come up with a “reasonable” law for the sector.

Latest available MGB data show mining investments totaled some $ 6.93 million in the first half of last year and amounted to an upwardly revised $1.453 billion in 2013, up 57.68% from $921.7 million in 2012 — the year EO 79 was issued.

That executive order’s impact on investments was graphically demonstrated by the fact that 2012’s haul was a 23% drop from 2011’s $ 1.197.3 billion. The same data show that, prior to 2012, mining investments had been on a general uptrend — except in 2008 — since 2006.

The sector contributed just 0.58% to gross domestic product in 2010- 2013, according to the first Philippine Extractive Industries Transparency Initiative Country Report last year that deemed this low “relative to its potential.” The Philippines ranks the fifth most mineralized country in the world with reserves estimated to be worth $1.387 trillion, the same report added. Some $840 billion of metallic ore, however, remain untapped.