LGUs stand to lose more than revenue from mine closures

Some of the local government units (LGU) whose bulk of their profit come from mining operations within their areas may lose revenues of more than R800 million because of the order of the Department of Environment and Natural Resources (DENR) to shut down and suspend 28 mine sites across the country.

Based on the updated estimates of the Bureau of Local Government Finance (BLGF), the closure and suspension orders of Environment Secretary Gina Lopez will cost 17 affected cities and municipalities in 10 provinces over R821 million annually in foregone revenues, instead of R600 million as earlier cited by Finance Secretary Carlos Dominguez III.

Dominguez, who earlier directed local treasurers to submit their respective reports on the complete revenue impact of the DENR closure and suspension orders, reiterated his concern for the LGUs that may lose nearly billions worth of revenues once the DENR's closure, suspension, and contract cancellation orders were implemented.

"My concern is really the LGUs because they provide services directly to the people in the communities. It means a lot of services will be disrupted," Dominguez told Business Bulletin.

"With the national, mining is a big portion but we can live without it. It's going to hurt but not as vital. Some of these guys are going to get knocked out. It will hurt but we can manage," he added.

The updated estimates showed that Carrascal (in Surigao del Sur) will lose R198.3 million of its mining revenues, which represent 62.3 percent of its total operating income, while Tagana-an (in Surigao del Norte) will lose R70.3 million or 54 percent of its total operating income.

Tubajon (in Dinagat Islands), on the other hand, will shed R38 million, or 55.4 percent of its total operating income if the DENR order is implemented.

The latest estimates, which is an increase from the initial R653 million submitted by the BLGF, is based on the 100 percent compliance to Dominguez’s directive of city and municipal treasurers in the affected LGUs.

BLGF's estimates do not include yet the projected income losses of the LGUs that host 75 mine sites whose mineral production sharing agreements (MPSAs) were ordered cancelled by the