Canadian investors bat for more open mining sector

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THE Canadian Chamber of Commerce in the Philippines on Tuesday called for a strong statement from President Benigno Aquino 3rd supporting sustainable minerals development in the country in his upcoming State of the Nation Address.

In a recent forum on Minerals Development Policy at the Development Academy of the Philippines, CanCham President Julian Payne also called for action from the Aquino government to make investments in mining competitive with that in other country, stressing that minerals development is “a key element in the administration strategy of encouraging inclusive growth and economic development.”

Payne said that investors, particularly foreign investors, want to see the government commit to upholding and enforcing the current Mining Act (of 1995).

Summarizing the view of many foreign investors, Payne stressed that, despite the rhetoric by authorities supporting environmentally and socially responsible mining, foreign investors see many actions by national and local authorities that discourage mining.


“They see what is described as forward talk with backward walk,” the official said.

Likewise, CanCham appealed for the review of the final version of the “no-go zone” map, which identifies the areas not accessible to mining.
The no-go zone map published by the Mineral Industry Coordinating Council (MICC) makes 85 percent of the country off limits to new mineral explorations, he said.

“Despite the agricultural productivity in some rural areas and the beauty, as well as interest of some other locations, it is unrealistic to believe that the 85 percent of the total area of the Philippines—now to be covered by ‘no-go’ or ‘mining free’ zones—has such potential,” Payne said.

The official stressed that in many cases the declaration of no-go zones, especially by the local government units, appears to be based on local anti-mining lobbying rather than on a realistic assessment of the international market potential for agriculture and tourism.

The MICC, an inter-agency body tasked to oversee reforms in the mining sector, earlier approved the final version of the no-go zone map, which is a series of regional maps identifying areas closed to any mining exploration.

No-go zones include protected areas established under Republic Act 7586 or National Integrated Protected Areas System or NIPAS; prime agricultural land aside from land covered under the Comprehensive Agrarian Reform Law of 1988 as well as strategic agriculture and fisheries development zones; tourism development areas as identified in the government’s national and local tourism development plans as well as other critical areas, island eco-systems and impact areas of mining as determined by current and existing mapping technologies.

Payne also called for the review of the proposed revenue sharing scheme for the minerals industry, noting that a 2012 study by the International Monetary Fund (IMF) showed that the Philippines’ mining fiscal regime was already “tough” for foreign investors.

He added that with recent unilateral moves by the government to cancel the Investment Tax Holiday for national investors, and to cancel the cost-recovery period for foreign investors, the fiscal regime for mining has already become completely uncompetitive for both local and foreign investment compared with other countries.

Under the approved revenue sharing scheme submitted for consideration of President Aquino, mining companies will be levied 10 percent tax on gross revenues or a 55-45 percent share of the adjusted net mining revenues (ANMR)—whichever is higher.

“This could kill the mining industry and its great potential to contribute to inclusive growth and development,” he said.

“With such a proposed new fiscal regime, the feedback from potential foreign investors is that the current low level of investment in mining is unlikely to continue given other opportunities in other mining economies,” he said.

Payne said foreign investors support proposals for the creation of Mining Economic Zones, similar to the extremely successful Philippine Economic Zone Authority (PEZA) zones.

He also proposed that 50 percent of mining revenue received by the national government should immediately be allocated to the Local Government Units, where the mining projects operate and the impacts occur.

“Currently, 40 percent of direct taxation is earmarked for LGUs, but actual distribution to them has been very slow,” he said.

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