THE PHILIPPINE MINING INDUSTRY:

LEGAL AND ENVIRONMENTAL

FRAMEWORK,

Mining, in its broadest sense, the process of obtaining economic minerals from the earth’s crust. The process includes excavations in underground mines and surface excavations in open-pit, or open-cut (strip) mines. In addition, recent technological developments may soon make economically feasible the mining of metallic ores from the seafloor. Mining normally means an operation that involves the physical removal of rock and earth. Sand and gravel extraction is a mining method along rivers/streams. Natural gas (LPG), petroleum (gasoline, diesel, kerosene, gaas and asphalt), and some sulfur (fertilizer) are products of mining.

What is Mining?

HISTORY OF MININGStarted on Pre-Historic Time-----They used sharp edges of flint-stone (chert) for:

1.Animal Hunting by Spearing and Arrows2.Cutting as a Knife

IMPORTANCE OF MINING IN MODERN SOCIETY

1. Housing/Building/Hospital constructions2. Road/Bridges/Wharfs/airports/other man-made infrastructures3. Automobiles(vehicles)/Aircraft/Weapons/Ships Manufacturing4. Clothes/Housewares Manufacturing5. Vitamins/Cosmetics/Medicines Manufacturing6. Gadgets (mobilephones, computer,ipads,tablet) Manufacturing7. Agricultural/Aquaculture/Fishing Applications

MINING IS A BASIC NEED OF HUMANKIND

Stages of Mining Operations1. Prospecting, or the search for mineral deposits2. Exploration, or the work involved in assessing the size, shape, location, and economic value of the deposit3. Development, or the work of preparing access to the deposit so that the minerals can be extracted from it4. Exploitation, the work of extracting the minerals.

STAGES OF MINING OPERATIONS

HOW CAN YOU IMAGINE THE WORLD TODAY WITHOUT MINING

STAGES OF MINING OPERATIONSStages of Mining Operations1. Prospecting, or the search for mineral deposits2. Exploration, or the work involved in assessing the size, shape, location, and economic value of the deposit3. Development, or the work of preparing access to the deposit so that the minerals can be extracted from it4. Exploitation, the work of extracting the minerals.

TYPES OF MINING PERMITS/CONTRACTS

1. Mining Lease Contracts (MLCs)2. Exploration Permits (EPs)3. Mineral Agreements4. Financial or Technical Assistance Agreement5. Mineral Processing Permit6. Quarry Permit7. Small-Scale Mining Permits8. Sand and Gravel Permits9. Ore Transport Permits

EXPLORATION=the testing of a number of places for natural resources, e.g. drilling or boring/collecting soil for samples that will be examined for possible mineral deposits. Types of Exploration Techniques are geophysical and geochemical.A.Geophysical(geophysics): using gravity, magnet, electricity, seismic wave, thermal, radiation, and remote sensing.

B.Geochemical(geochemistry): soil, stream sediment, pan concentrate (wooden pan/spiral type), botanical (geo-botanical), water and rocks.

Exploration can be undertaken only either through an EP or an FTAA. For projects that have concluded a Mining Project Feasibility Study, the proponent may apply for an MPSA. Projects that require processing only of minerals may apply for a Mineral Processing Permit (MPP).

R.A. 7942 REVISED IMLEMENTING CODE

KNOWN AS “PHILIPPINE MINING ACT OF 1995”

----------RESPONSIBLE MINING----- PRO-PEOPLE AND PRO-

ENVIRONMENT

Mining Act of 1995

1. EXPLORATION PERMITSAllows the permittee to conduct exploration work for a limited period only.

With a term of two (2) years, renewable for like periods, up to 8 yrs for metallics and 6 yrs. for non-metallics;

Maximum area: 16,200 hectares/province; 32,000 has in the entire country. Area relinquishment: 25% for the first 2 years;

Thereafter, 10% of area/year; Open to 100% foreign ownership; Priority to enter into either an MPSA or FTAA after

submission and approval of Declaration of Mining Project Feasibility;

Can be transferred or assigned to other qualified individuals/corporations.

Mining Act of 1995

2. Mineral Agreements

a) Mineral Production Sharing Agreement (MPSA)Contractor has the exclusive right to conduct mining operations within a specified contract area.

• Limited to Filipinos or Filipino-owned corporation (Foreign equity not to exceed 40%);

• Minimum authorized capital of PhP 10 M and PhP 2.5 M paid-up• Maximum area: 8,100 Hectares/Province; 16,000 Has for the

entire country;• 2 years Exploration Period (renewable); 3 years Construction

and Development Period; the rest for production;• Contract period of 25 years; renewable for another 25 years;• Can be transferred or assigned to any qualified

individuals/corporations;• Can be converted into an FTAA

TAXES AND FEES 

National Government Income Tax = 35 % of Taxable Income; Excise Tax = 2 % of actual value of minerals extracted; Customs Duties and Fees= prescribed under Tariff and Customs Code Value Added Tax = 10 % of Purchase Value of

Goods/Services; Capital Gains Tax = 10-20 % of the gain; Tax on Interest Payments to Foreign Loans = 15 % of Interest; Tax on Foreign Stockholders Dividends = 15 % of dividend Royalties, if extracted from government Mineral

Reservation = 5% of market value; Documentary Stamp Tax = graduated, depending on type of business

transaction 

Local Government Local Business Tax: usually minimal, rate depends on LGU; Real Property Tax: Max. of 2 % on Fair Market Value of Property; Occupation Fee: PhP 50.00/hectare/year (for non-mineral

reservation) ; PhP 100.00/hectare/year (for mineral reservation) Community Tax : Approx PhP 15,000

Other Permits:

MINERAL PROCESSING PERMITS

A 5-year Permit, renewable for like periods, up to a maximum of 25 years;

Allows both local and up to 100% foreign-owned corporations;

Requirement to submit adequate ore supply contract to justify the establishment of the processing plant;

Can be granted for cement plants, smelters and refineries; beneficiation plants; marble cutting and processing plants, and others of similar nature.

Environmental and Social Provisions 

Environmental Work ProgramIn lieu of the ECC requirement during the exploration period, all companies have to submit an Environmental Work Program (EWP) to correspondingly address any and all environmental impact that the exploration activities may incur. This EWP has to have a definitive financial commitment that has to be included in the annual exploration budget of the concerned company.

Exploration Activity at Gerali

SPIRAL MACHINE FOR PANNING

OLD RIVER SCOURINGNABILID CREEK

MITIGATION OF RIVER-SCOURING

Dumping of sand and gravel bags on scoured section near the Spiral

Scoured Section