Monitoring the mines

The mining sector, long sidelined by government restrictions and a freeze on the issuance of new permits, is seeing the proverbial light at the end of the tunnel.

Speaker Gloria Macapagal Arroyo recently announced in a conference of miners that both chambers of Congress are working to pass a new fiscal regime for the mining industry before the
current joint session ends in June.

She said the Senate has adopted the House version of a bill that would impose a range of royalties on mining operations. That version imposes a 1- to 5-percent margin-based royalty tax on large-scale mines, and a 1- to 10-percent windfall profit tax on mining operations.

Once passed into law, the mining industry will be paying the government 9 percent in taxes, following the recent doubling of the excise on mining operations to 4 percent from 2 percent under the Tax Reform for Acceleration and Inclusion (TRAIN) law.

After the TRAIN law took effect in January last year, stakeholders have been lobbying for the lifting of the moratorium on the issuance of new mining permits, but the government wants a clearer fiscal regime or higher tax structure for the industry.

More than a dozen projects seeking mining permits have been pending in the Department of Environment and Natural Resources (DENR) since the previous regime. The Chamber of Mines of the Philippines has estimated that these projects could bring in $23 billion in investments and generate tens of thousands of new jobs.

However, more than the lure of money coming in and employment being generated, the government must remain vigilant in monitoring the industry. It must ensure that it will attract only the right investors with the capacity and track record to
responsibly mine here.

The government audited last year 26 mining companies that former environment secretary Regina Paz Lopez had ordered shut down or suspended due to “adverse findings.”

A November 2018 report showed that the majority of the mining companies that appealed their closure or suspension to the DENR failed the agency’s audit. Of the 13 companies involved, only one passed the review, while three were up for closure and nine for suspension.

Last January, the government announced that its plan to audit the remaining 15 to 17 active mining operations in the country would start this month, with the interagency Mining Industry Coordinating Council (MICC) tapping the same technical team that undertook the first review.

It said the second round of audit was expected to be finished by June and that this exercise would complete the audit of all active mining firms, as only about 40 remain operating to date.

The adoption of a new fiscal regime for mining and the subsequent lifting of a moratorium on the issuance of new permits must be accompanied by vigilance on the part of the regulatory agencies in monitoring the industry, so that the environment is protected and the communities around the mining areas are not exploited.

The work of the MICC should not stop with the audit of those companies ordered closed by the former environment secretary. It must be a continuing effort to review the environmental, economic, social, legal and technical aspects of mining operations in the country.

Failing in this task can result in a backsliding to the old ways, where smaller miners will forego investing in facilities and simply dump their mine waste in the nearest river or stream or sea.

Others could operate irresponsibly and cause the destruction of waterways and the communities around them due to siltation, soil erosion, lack of social development and rehabilitation projects, the decimation of forests by cutting trees without permits, and even potential fatalities due to inadequate facilities in the mining areas for emergency cases.

The casualties of irresponsible mining are inevitably the poor communities around the mining sites. These have happened many times before.

Any reset of the mining industry cannot set aside the concerns of these communities and the larger impact on the country’s environment, and dwell on only the fiscal and technical upgrades of the game.