A Briefer on Minerals Management Bill

A BRIEFER ON THE MINERALS MANAGEMENT BILL
[House Bill No. 3763-Phil. Mineral resources Act of 2010]

 MANUEL P. QUIBOD
(UCEAC Member)

 The country’s natural resources form a great part of the nation’s wealth. Consequently, all activities which have the propensity to impair the quality of our natural resources should be subjected to scrutiny before being allowed to continue. One of the industries which have a massive societal and environmental impacts is the mining industry. Mining is essentially an extractive industry which results in the depletion of nonrenewable resources.[1]

The Philippines is said to be one of the most mineralized countries in the world. According to the Chamber of Mines of the Philippines (COMP), the Philippines has a potential mining wealth estimated to reach US$840 Billion Dollars or P47 Trillion Pesos. It is 10 times the country’s annual gross domestic product (GDP). The Philippines ranks 3rd in total gold deposits, 4th in copper, 5thin  nickel and 6th in chromite.[2]

Minerals are essential resources that are part of our national patrimony. While necessary for national development and important to the economy, the extraction of mineral resources must be done judiciously because mineral areas are part and parcel of ecosystems that includes forests, watershed, riverine systems, coastal habitats and communities of people—all of which are intrinsically linked with biodiversity, the environment, food security, livelihoods and survival. Specially now in the era of undeniable climate change, it is our responsibility to make sure that minerals governance do not sabotage efforts to mitigate the impact of climate change as well as our capability to move towards low carbon global economy. Since minerals are essentially non-renewable resources, we have an inter-generational responsibility towards its conservation and preservation— mineral extraction should only be done as a last resort out of the utmost necessity and with the least impact on communities and the environment.[3]

The law that currently regulates and governs the mining industry is RA 7942, otherwise known as the Philippine Mining Act of 1995. It was signed into law by President Fidel V. Ramos in March 3, 1995. Under the law, the government has the power to grant three (3) types of mining rights: (1) exploration permit[4], (2) mineral agreements thru (a) mineral production sharing agreement (MPSA), (b) co-production agreement, and (c) joint-venture agreement[5]; and (3) financial or technical assistance agreement (FTAA)[6].

On March 30, 1995, less than a month from the passage of the law, President Ramos entered into an FTAA with Western Mining Corp. Phils. (WMCP), Inc. (a fully foreign-owned corporation) which covered 99,387 hectares of land in Mindanao (covering the areas of Davao del Sur, South Cotabato and North Cotabato in Central Mindanao). In 1997 the constitutionality and validity of the RA 7942, its IRR and the FTAA between the government and WMCP were challenged before the Supreme Court which case became known as “La Bugal-B’laan Tribal Association, et. al   vs. Sec. Victor O. Ramos, et. al.[7]

In January 27, 2004 the Supreme Court declared the Mining Act of 1995 unconstitutional including the FTAAs. On motion for reconsideration filed by the aggrieve parties, including the government, the Supreme Court in December 1, 2004 reversed its decision and upheld the constitutionality of RA 7942[8]. In February 1, 2005, the High Court issued its final ruling upholding its constitutionality[9].

In December 2004 Senator Sergio R. Osmena III filed Senate Bill 295 for the repeal of the Philippine Mining Act of 2005 due to the large scale damage and disaster that mining will inflict[10].

The Catholic Bishops Conference of the Phils. (CBCP) also called for the repeal of the Mining Act of 1995. The said law destroys life. The right to life of people is inseparable from their right to sources of food and livelihood. Allowing the interests of big mining corporations to prevail over people’s right to these sources amounts to violating their right to life. Furthermore, mining threatens people’s health and environmental safety through the wanton dumping of waste and tailings in rivers and seas[11]. The repeal of the law has been also called by other legislators in Congress and by civil society.

What is wrong with mining and with the Mining Act of 1995? From the study made by the LRC-KSK[12], among others, it finds the following,

  1. Mining is a questionable development model. RA 7942 liberalized the mining industry to foreign investments allowing foreign mining players access and control to our mineral areas. But in exchange of the extraction and depletion made, it is problematic to look upon these mining companies as agents of change. Mining companies exist to make profits not to help communities.
  2. Mining imposes many costs. Mining intensively uses land and environmental resources often leading to significant and enduring environmental degradation. Economic benefits are not enough to meet the environmental costs. RA 7942 has no answer to the pollution in the mining industry as well as to serious mining accidents and has not provide solution to the devastating effects of mining  on the health of the environment and communities.
  3. Mining has never shown to drive national economic development. Despite the claim that our country has an estimated P47 Trillion Pesos of mineral wealth, the fiscal incentives regime under RA 7942 is a big lie. In July 2007 then DENR Secretary the late Angelo Reyes in a news report said that “the probability of the government getting an additional and fair share of its minerals from the mining companies is ‘somewhere from zero to nil’. Under the profit based sharing which most mining companies would opt, the additional government share will come if the profitability ratio of net income over gross income is higher than 40%. According to Sec. Reyes, there is no mining company in the history of the industry achieves that 40% income. Under the profit sharing formula the government will receive ‘somewhere from zero to nil’, not even a pittance, ni singkosin wala.[13]

Under Sec. 80 to 82 of RA 7942, the government share in the MPSA shall be the excise tax on mineral products and its share in other mineral agreements shall be negotiated plus the taxes; and for the FTAA, the government share shall consist also of taxes[14]. In other words, the government share will come from taxes.

In December 2010 members of the House of Representatives: Kaka Bag-ao, Walden Bello, Teddy Baguilat, Jr., Rufus Rodriguez, Maximo Rodriguez, Carlos Padilla and Roilo Golez submitted House Bill No. 3763 which has been called the “Minerals Management Bill”. This was brought about by the numerous criticisms on RA 7942 which puts into question the integrity of our natural resources and national patrimony.

HB 3763 or the Minerals Management Bill will replace the present Mining Act of 1995 (RA 7942). The bill seeks for the conservation of our mineral resources, which are non-renewable, intended for the benefit not only of the present generation but also of the future by adopting a sustainable, needs based minerals management geared towards effective utilization of our mineral resources to achieve economic development.

Among others this house bill addresses the following concerns:[15]

-Conservation of our mineral resources. The classification of public lands as mineral reservations shall hereby cease. All such lands shall be closed to mining. The President’s power to declare mineral reservations shall likewise cease. All existing mining permits, licenses and agreements are deemed cancelled. There shall be a moratorium on all mining activities.

Re-mining and recycling of mineral resources shall be prioritized as well as the rehabilitation of the abandoned mines.

Providing maximum areas for mineral agreements that a person can hold shall not exceed 500 hecs. and with a term not beyond 15 years including the period for rehabilitation and remediation of the mining area.

Priority use for water for domestic, municipal and agri purposes. Water used in mining shall be recycled

-For the Benefit of the Filipino People. Mineral resources development, utilization and processing shall be reserved for Filipino citizens and for Filipino corporations.

Access to justice provision on peoples and communities affected by mining

-Minerals Utilization Framework. The MGB is transformed into a scientific research institution under the DOST to conduct and develop research of mineral resources and mining technologies and training of local communities, LGUs and IPs.

-Creation of the MMC The Multi-Sectoral Mineral Council is established to determine allowable area for mining. The Council shall determine whether the land where mineral resources are found shall be opened to mining. The Bill lists the areas which the Council is prohibited to open for mining, i.e. water sheds, climate disaster-prone areas, traditional swidden farms, hunting grounds, and prime agri lands, key biodiversity areas, etc.

-Ownership of IPs. Mineral resources within ancestral domains/lands are collectively property of the IPs/ICCs. No mining shall be conducted unless there is free prior and informed consent (FPIC).

-Establishment of No Go Zones. There will areas closed to mining. Open-pit mining is prohibited. Use of mercury in small scale mining is prohibited. Adoption of precautionary principle, when threats of harm to health or environment arises even not fully scientifically established. Adoption of polluter pays principle. Dumping of waste or tailings is prohibited. Acid mine drainage prohibited.

 

-Equitable Sharing. Aside from fees and taxes, the government shall have at least 10% share from the gross revenues. LGUs shall also have a share from net revenues. IPs/ICCs shall a share of 10% of gross revenues on mineral operations within ancestral domains/lands.

 

Why is this bill important to us especially to the people of Mindanao? A substantial portion of this P47Trillion mineral wealth is found in Mindanao where “80% of the country’s deposits of copper, nickel and gold are found here in Mindanao”[16]. Our “1987 Constitution mandates the State to exploit our mineral resources through direct undertaking, joint venture, or co-production arrangements.  The purpose is to for the State, as owner of the mineral resources, to receive its fair share in the profits from the exploitation of our mineral resources.  Sadly, for the last 20 years the State has not received a single centavo from the profits of mining companies.”[17]

 

Perhaps you would “remember in the 1950s and 1960s seeing almost daily huge trucks filled with logs negotiating the then narrow highways of Davao. People did not mind the indiscriminate logging because our forests then seemed inexhaustible. Our nation’s population at that time was only 20 million. Now we regret bitterly how we squandered our finite forest resources and how indiscriminate logging has destroyed our environment. And with all that logging, did the people of Mindanao receive their fair share in the profits from the exploitation of this precious natural resource?  How much did the State earn from all that logging?  Only a pittance consisting of minimal forest fees and charges.”[18]

 

Thus, this afternoon’s activity is to undertake a discussion of this house bill to help us make a strategic position and draw out possible recommendations on how the bill can best address our peculiar needs in this island of Mindanao. We shall look at the bill whether it is able to address what the Mining Act of 1995 has failed.

Daghang salamat ug Ma-ayong Hapon Kaninyung tanan.



[1] Explanatory Note from HB 3763-Minerals Management Bill, Hon. K Bag-ao & Hon. W. Bello, Akbayan Partylist

[2] Philippine Mining Wealth Seen at $840B, by Riza T. Olchondra, Phil. Daily Inquirer, Oct. 22, 2011, Business section, p. B2-1.

[3] http:/lrcksk.org/main/campaigns/minerals-management-bill/

[4] Sections 20-25, RA 7942

[5] Sections 26-32, RA 7942

[6] Sections  33-41, RA 7942

[7] La Bugal v. Ramos, G.R. No. 1278821, Jan. 27, 2004, Supreme Court of the Phils.

[8] La Bugal v. Ramos, G. R. No. 1278821, Dec. 1, 2004

[9] La Bugal v. Ramos, G. R. No. 1278821, Feb. 1, 2005

[10] Business World Online, December 30, 2004

[11] CBCP Statement on Mining Issues and Concerns, January 29, 2006

[12] Legal Rights and Natural Resources Center-Kasama sa Kalikasan/ Friends of the Earth – Phils.

[13] Closing the Gaps Between Law and Justice, Justice Antonio T. Carpio, Keynote Speech during the Regional Convention of Mindanao Lawyers-IBP, Nov. 21, 2007.

[14] Sections 81-82, RA 7942

[15] http:/lrcksk.org/main/campaigns/minerals-management-bill/; and

Phil. Mining Act of 1995 vs. Alternative Mining Bill, Dr. Emelina G. Regis, Director, INECAR, Ateneo de Naga University

[16] Mining Mindanao, March 6, 2007, Digging Minds. adzx.wordpress.com

[17] Closing the Gaps Between Law and Justice, Justice Antonio T. Carpio, Keynote Speech during the Regional Convention of Mindanao Lawyers-IBP, Nov. 21, 2007.

[18] Ibid.