THE Philippines is the fifth most mineral-rich country in the world for gold, nickel, copper, and chromite. It is home to the largest copper-gold deposit in the world. The Mines and Geosciences Bureau (MGB) has estimated that the country has an estimated $840 billion worth of untapped mineral wealth, as of 2012.
About 30 million hectares of land areas in the Philippines is deemed as possible areas for metallic minerals. According to the Mines and Geosciences Bureau (MGB), about nine million hectares of land areas is identified as having high mineral potential. The Philippines metal deposit is estimated at 21.5 billion metric tons and non-metallic minerals are at 19.3 billion metric tons, as of 2012.
How mining in the Philippines started
When the Philippines inhabited by pre-colonial settlers 67,000 years ago, the traditional place and lode mining were part of the activities of the natives. This was the time of Negrito tribes. These groups traded with what is now China, India, Japan, Thailand, Vietnam and Indonesia. Raw gold was a commodity that was sold or bartered to these trading partners.
The Spanish colonizers were not able to turn mining into an industry due to the fierce resistance they encountered from the Ygorotes of the Gran Cordillera Central. In 1837, a Royal Decree was issued creating the Inspeccion General de Manila with the stated purpose of administering to all the mining activities in the colony. In 1864, the Lepanto Mine was opened and marked the first full scale mining operation that produced gold and copper.
The Philippine Mining Bureau was set up in 1900 to process and administer claims and all related transactions pertaining to mining. The Benguet Mine was opened in 1907. It was the first modern gold mine in the Philippines. Seventeen other mining companies followed suit in Baguio and Benguet. Commercial mining was born in the Philippines.
The boom years of the Philippine mining industry was the pre-war period. The principal product was gold. There were forty gold mines in operation producing about 40 metric tons per annum before the outbreak of World War II. Year 1936 saw the passing of Commonwealth Act 137 or country’s third mining law. Gold had taken the third spot in the top commodities exported by the Philippines after sugar and coconut products.
The outbreak of World War II on December 7, 1941 with the Japanese attack on Pearl Harbor had destructive effects on the mining industry. Aside from gold, the Japanese utilized prison labor explore and mine for iron, copper, chromite and manganese. The same were shipped back to Japan to serve as raw materials for the war effort. Yamashita’s last stand in the hinterlands of Northern Luzon forced the Americans to bomb the area extensively resulting in extensive damage to the mines.
The end of the war in 1945 signaled the start of the reconstruction and rehabilitation of the mines damaged during the war.
The gold mines were rehabilitated and the exploration for copper began in earnest in the 1950s. New technologies such as open pit mining for large tonnage, low grade copper deposits were introduced. Gold and copper became the pillars of large scale mining with the establishment of three major mines; Atlas in Cebu in 1955, Sipalay in Negros Occidental in 1957 and Philex in Baguio in 1958.
From 1960 to 1980 the mining industry was at its peak. The expiration of parity rights in the Laurel-Langley Agreement in 1974 paved the way for Marcos and his cronies to take over existing mines and use existing claims to build new ones. Marcos’ Presidential Decree No. 463 issued in 1974 gave them blanket authority to impose their will on the industry.
In the early 80s, the mining industry was hit by a market crash of unprecedented proportions. Prices of gold and copper tumbled down. This triggered a domino effect which saw 14 large and medium-sized mines shut down their operations due to heavy losses. It was during this period that small-scale mining made a dramatic comeback. A small army of men, women and children descended upon and engaged in gold panning in Mt. Agtuganon/Diwata more popularly known as Mt. Diwalwal. Marcos immediately enacted Presidential Decree 1899 or the Small-Scale Mining Law to regulate these miners. In effect, the law served to ensure that the gold would still be sold to the State. However, it spawned a whole new industry of gold smuggling and had the adverse effect of environmental degradation.
The year 1986 in time of Marcos gave the mining industry a glimmer of hope. However the political situation from 1986-1992 had local and foreign investors watching on the sidelines for a clear mining policy initiative from the government which never came. They were not prepared to take on a huge risk in time of crisis of early 90s.
During this time, the Bureau of Mines and Geo-Sciences had been conducting major studies on the Philippines’ mineral potentials funded by foreign grants. After the victory of Fidel Ramos in the 1992 elections, a policy roadmap was formulated which led to the enactment of the Philippine Mining Act of 1995, the country’s fifth mining law. The Philippine mining industry had gone full circle with the impending resurrection of large scale mining by local and trans-national companies.
On June 19, 1995, the La Bugal-B’laan Tribal Association filed a petition before the Supreme Court questioning the constitutionality of the Philippine Mining Act of 1995 with particular reference to its implementing rules and regulations and the provision which allows foreigners to operate mining companies in the Philippines.
In January 2004 the Supreme Court ruled on the petition and nullified the provision of the Philippine Mining Act which allowed foreign mining firms to operate in the country. In December 2004 the Supreme Court reversed itself and once again allowed foreign mining companies to operate in the Philippines.
The contribution of mining industry in economic growth
In 2016, there are 236,000 workers in the mining industry. The mining industry’s contribution to the country’s GDP is at 0.6 percent in the same year. The contribution of minerals and mineral products to the country’s total exports is at 4 percent and 0.3 percent for non-metallic mineral manufacturers.
According to MGB, the mining industry’s gross production value declined in the last two years. From P208.2 billion ($4.2 billion) in 2014 to only P100.6 billion ($2 billion) in 2016.
The Mining Act of 1995 allows for foreign ownership of mining assets and exploration permits. The Supreme Court upheld the constitutionality of the foreign investors’ participation in mining activities in 2004.
Mining tax is low at 2 percent for metallic and non-metallic minerals. During the Aquino administration, a mining reform bill was drafted to increase revenues of the government. In the bill, companies will either pay 10 percent tax on gross revenues or 45 percent to 55 percent tax on adjusted mining revenues plus a percentage of windfall profit, whichever is higher.
As of August 2016, mining companies have already committed P13.1 billion for the development of their host and neighboring communities under their Social Development and Management Programs.
As of September 2016, there are about 40 metallic mines and 62 non-metallic mines operating in the country.There are a total of 1,473 mining applications under process in the country as of 2016.