Arbitration panel grants Lepanto claim

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Listed firm Lepanto Consolidated Mining Co. has won an arbitration case against the Philippine government over a dispute involving an application to renew its mining contract in Mankayan, Benguet.

In a disclosure to the Philippine Stock Exchange, Lepanto noted that in a ruling dated November 27, 2015, an Ad Hoc Arbitration Panel upheld the company’s rights to develop mineral resources under Mineral Production Sharing Agreement (MPSA) 001-90- CAR.

An MPSA is an agreement wherein the government shares in the production of the contractor as owner of the minerals, while the contractor gets the rest. In return, the contractor must provide financing, technology, management and personnel for the mining project.

Lepanto sought arbitration after it was required to seek the consent of indigenous peoples in Mankayan, as mandated by the Indigenous Peoples’ Rights Act (IPRA), before its application for a renewal to operate could be acted upon.


Under the IPRA, a company must acquire free and prior informed consent (FPIC) from indigenous peoples that will be affected by the mining operations as well as other matters involving their ancestral domain—including the renewal of contracts.

The company, however, claimed it was exempted from that provision because it obtained its contract seven years before the law was enacted in 1997.

Lepanto’s 25-year contract expired in March 2015. It filed for a renewal and in June last year.

The arbitration panel, in its decision, said requiring another FPIC may not be validly imposed as the MPSA should be renewed under the same terms and conditions, without prejudice to changes mutually agreed upon by the parties.

In a text message, Mines and Geosciences Bureau Director Leo Jasareno said his office, which is under the DENR, has yet to receive formal notice of the arbitration ruling.

Jasareno also did not elaborate further whether the decision would compel the agency to act favorably on the company’s application for renewal.

Earlier, the MGB chief said the agency was still processing Lepanto’s application for renewal of its contract.

“If they comply with all the regulatory requirements, then we will renew their contract. It not, then we will not given them the contract,” Jasareno previously said

The MPSA is for the Far Southeast Project, which is being developed by Lepanto and its South African partner Gold Fields Ltd.

Lepanto is also planning to convert portions of the subject MPSA into a Financial or Technical Assistance Agreement (FTAA), allowing Gold Fields to acquire a majority stake in the copper-gold project.

At present, Lepanto holds 60 percent of the FSP and the remaining 40 percent is owned by Gold Fields.

MPSAs are granted to mining firms that have at least 60-percent local ownership, while FTAAs allow 100-percent foreign ownership.

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