Alternative Minerals Alternative Minerals Management PolicyManagement PolicyLegal Rights and Natural Resources Center-Kasama sa Legal Rights and Natural Resources Center-Kasama sa KalikasanKalikasan(LRC-KsK/Friends of the Earth-Philippines)(LRC-KsK/Friends of the Earth-Philippines)

February 2011February 2011

Community Community ResourcesResources

EcosystemsEcosystems

CommunitiesCommunities

MineralsMinerals

The Law and Natural The Law and Natural ResourcesResources

Our law views that all natural Our law views that all natural resources are owned by the state, resources are owned by the state, regardless of who holds or owns regardless of who holds or owns the surface rightsthe surface rights

The government reserves for The government reserves for itself the power how and to whom itself the power how and to whom mineral rights are allocatedmineral rights are allocated

Philippine Philippine Minerals PolicyMinerals Policy

Small Scale Mining ActSmall Scale Mining Act

Mining Act of 1995Mining Act of 1995

Mineral Action PlanMineral Action Plan

Revitalization of the Revitalization of the Philippine Minerals Philippine Minerals Industry ProgramIndustry Program

PPPPPP

Council on Foreign Council on Foreign Relations, September 23, Relations, September 23,

2010, New York2010, New York

P’NOY says . . .P’NOY says . . .

I came here to declare that the Philippines is open I came here to declare that the Philippines is open for business under new management.for business under new management.

Our doors are wide open for investors, particularly Our doors are wide open for investors, particularly in tourism, business process outsourcing or BPO, in tourism, business process outsourcing or BPO, mining, electronics, housing and agriculture sectors.mining, electronics, housing and agriculture sectors.

The Philippines has vast minerals resources that are The Philippines has vast minerals resources that are still untapped. It has one of the world's largest still untapped. It has one of the world's largest deposits of gold, nickel, copper and chromite. deposits of gold, nickel, copper and chromite. Through responsible mining, we intend to generate Through responsible mining, we intend to generate more revenues from the extraction of these more revenues from the extraction of these resources.resources.

Overly generous fiscal and non-fiscal Overly generous fiscal and non-fiscal incentive regimeincentive regime..

From 1999 to 2004,From 1999 to 2004, foregone revenues as a result of these incentives amounted to 100 to 150% of current foregone revenues as a result of these incentives amounted to 100 to 150% of current fiscal deficit (DOF, MGB)fiscal deficit (DOF, MGB)

An example: Lafayette Rapu-Rapu reduced its tax obligations by 91% (2006 Rapu-Rapu Fact Finding An example: Lafayette Rapu-Rapu reduced its tax obligations by 91% (2006 Rapu-Rapu Fact Finding Commission)Commission)

Tax foregone from mining.doc

From 1999 to 2004,From 1999 to 2004, foregone revenues as a result of these incentives amounted to 100 to 150% of current foregone revenues as a result of these incentives amounted to 100 to 150% of current fiscal deficit (DOF, MGB)fiscal deficit (DOF, MGB)

An example: Lafayette Rapu-Rapu reduced its tax obligations by 91% (2006 Rapu-Rapu Fact Finding An example: Lafayette Rapu-Rapu reduced its tax obligations by 91% (2006 Rapu-Rapu Fact Finding Commission)Commission)

Tax foregone from mining.doc

Omnibus Investments Act Mining Act

Income tax holidays Incentives for pollution control devices

Tax exemptions on imported spare parts, wharfage dues, export tax, duty and impost fees

Income tax carry forward losses; income tax accelerated depreciation on fixed assets

Tax credit on raw materials and supplies Tax holidays for national taxes

Deductions from taxable income for labor expense and necessary and major infrastructure works

Projected excise tax – $70.6 M; Projected income tax –$461.88M Figures are misleading because of numerous incentives given out by Mining Act and Omnibus Investments Act. Export Development Act and Special economic Zone Act of 1995 also provide other incentives.

Absence of forward and backward Absence of forward and backward linkageslinkages

Mining has almost non-existent forward linkages with the Philippine economy

Mining has almost non-existent forward linkages with the Philippine economy

Most mining operations involve extraction and immediate exportation of minerals for processing abroad.

In fact, 85% to 90% of mining gross production value is export value of minerals.

Most mining operations involve extraction and immediate exportation of minerals for processing abroad.

In fact, 85% to 90% of mining gross production value is export value of minerals.

There is only 1 smelter and refinery in the country i.e. Philippine Associated Smelting and Refining Corporation. Its Leyte plant smelts raw copper in copper cathodes, which is again exported (to Japan)

There is only 1 smelter and refinery in the country i.e. Philippine Associated Smelting and Refining Corporation. Its Leyte plant smelts raw copper in copper cathodes, which is again exported (to Japan)

In 2000, for every peso of output from the mining sector (and this includes quarrying), only 36 centavos of input is sourced locally.

In 2000, for every peso of output from the mining sector (and this includes quarrying), only 36 centavos of input is sourced locally.

Conflicting / competing Conflicting / competing LawsLaws

RA 7942 – Local Government CodeRA 7942 – Local Government Code

RA 7942 – Indigenous Peoples Rights RA 7942 – Indigenous Peoples Rights ActAct

RA 7942 – Environmental Impact RA 7942 – Environmental Impact AssessmentAssessment

RA 7942RA 7942

It promotes the exportation of raw minerals It promotes the exportation of raw minerals without maximizing the benefits of such without maximizing the benefits of such resources for the Filipino people;resources for the Filipino people;

It fails to take into consideration externalities or It fails to take into consideration externalities or negative impacts, thus leaving the communities negative impacts, thus leaving the communities and the local government units to bear the and the local government units to bear the brunt of such impacts;brunt of such impacts;

It prioritizes exploration, development and It prioritizes exploration, development and utilization of mineral resources over and above utilization of mineral resources over and above food security and environmental conservation;food security and environmental conservation;

RA 7942RA 7942

It grants too much power for decision-making to It grants too much power for decision-making to the President, when resources are the only the President, when resources are the only heritage of the Filipino people, meanwhile heritage of the Filipino people, meanwhile disempowering local communities through disempowering local communities through lack lack of participatory mechanisms;of participatory mechanisms;

The law is not consistent with sustainable The law is not consistent with sustainable development;development;

It grants too many incentives for investments, It grants too many incentives for investments, including confidentiality of information, return including confidentiality of information, return of investments, tax-breaks, etc.;of investments, tax-breaks, etc.;

RA 7942RA 7942

It lacks It lacks systemssystems that would ensure payment that would ensure payment and and compensation of affected communities compensation of affected communities and local government units;and local government units;

It fails to provide for punishment and It fails to provide for punishment and accountability on social impacts, including accountability on social impacts, including human rights violations;human rights violations;

It fails to provide a rational and It fails to provide a rational and comprehensive benefit-sharing among the comprehensive benefit-sharing among the stakeholders;stakeholders;

RA 7942RA 7942

It fails to consider the physical It fails to consider the physical characteristics of the Philippines that is not characteristics of the Philippines that is not conducive to industries like these, despite conducive to industries like these, despite claims that the Philippines has a rich mineral claims that the Philippines has a rich mineral resource, when the country in fact is also a resource, when the country in fact is also a rich agricultural country; andrich agricultural country; and

It allows 100% ownership and control of It allows 100% ownership and control of natural resources to foreigners.natural resources to foreigners.

DAPITAN INITIATIVEDAPITAN INITIATIVE20022002

““uphold indigenous people's rights and uphold indigenous people's rights and achieve a more ecologically sound, gender-achieve a more ecologically sound, gender-fair, equitable system of fair, equitable system of resource resource managementmanagement.”.” and to and to

““work for a democratic and consultative work for a democratic and consultative process in enacting a new legal framework to process in enacting a new legal framework to achieve a wise stewardship of our achieve a wise stewardship of our natural natural resourcesresources.”.”

Alternative Minerals Alternative Minerals Management PrinciplesManagement Principles

Conservation of mineral wealthConservation of mineral wealth

Rational needs based utilization and Rational needs based utilization and domestic use oriented mineral domestic use oriented mineral managementmanagement

Link to national industrialization and Link to national industrialization and development of agriculturedevelopment of agriculture

Link to larger natural resources Link to larger natural resources management and economic developmentmanagement and economic development

Establishment of no-go zonesEstablishment of no-go zones

Alternative Minerals Alternative Minerals Management PrinciplesManagement Principles

Prioritization of more beneficial land use Prioritization of more beneficial land use over mining as well as prioritization of over mining as well as prioritization of remining, recycling and rehabilitationremining, recycling and rehabilitation

Respect and protection of Respect and protection of human rightshuman rights

Recognition and establishment of Recognition and establishment of ownership of ownership of indigenous peoples indigenous peoples over over their mineral resourcestheir mineral resources

Watershed system framework Watershed system framework in looking in looking at affected communitiesat affected communities

Alternative Minerals Alternative Minerals Management PrinciplesManagement Principles

Local empowerment and local governance Local empowerment and local governance through the multisectoral minerals councilthrough the multisectoral minerals council

Prohibition of 100% foreign owned Prohibition of 100% foreign owned corporations in mining operationscorporations in mining operations

Establishment of corporate transparency Establishment of corporate transparency and accountabilityand accountability

Equitable sharingEquitable sharing

Human rights protectionHuman rights protection

Steps takenSteps taken

2009 filing – HB 63422009 filing – HB 6342

2010 – HB 206, HB 37632010 – HB 206, HB 3763

HB 3763HB 3763in a Nutshellin a Nutshell

43 pages43 pages

16 chapters16 chapters

163 sections163 sections

HB 3763HB 3763in a Nutshellin a Nutshell

ConservationConservation

National Development Plan: National National Development Plan: National Industrialization and Modernization Industrialization and Modernization

of Agricultureof Agriculture

To serve local development needsTo serve local development needs

HB 3763 in a NutshellHB 3763 in a Nutshell

Identification of Strategic MineralsIdentification of Strategic Minerals

Identification of Mineral Areas by the MGBIdentification of Mineral Areas by the MGB

Identification of corresponding Watershed Identification of corresponding Watershed ContinuumsContinuums

HB 3763 in a NutshellHB 3763 in a Nutshell

Establishment of Multi-Sectoral Establishment of Multi-Sectoral Mineral Council Mineral Council composed of composed of representatives of the national government representatives of the national government (DENR and MGB), representatives from the (DENR and MGB), representatives from the affected local government units, peoples’ affected local government units, peoples’ organizations and the local indigenous organizations and the local indigenous communities communities

(based on the watershed continuums)(based on the watershed continuums)

HB 3763 in a NutshellHB 3763 in a Nutshell

NO-GO ZONESNO-GO ZONES

The following areas shall not be opened to mining: The following areas shall not be opened to mining: protected areas, including buffer zones; protected areas, including buffer zones; protection forests; old growth or primary forests; protection forests; old growth or primary forests; head waters of the watershed; densely head waters of the watershed; densely populated areas; critical habitats; Critical populated areas; critical habitats; Critical watersheds; High conflict areas; Climate watersheds; High conflict areas; Climate disaster-prone areas; geohazard areas; Historical disaster-prone areas; geohazard areas; Historical and cultural heritage, CARP lands, Prime and cultural heritage, CARP lands, Prime agricultural lands, Small Islands Ecosystems, and agricultural lands, Small Islands Ecosystems, and provinces / areas with ordinances against mining provinces / areas with ordinances against mining activities e.g. Palawan activities e.g. Palawan

HB3763 in a NutshellHB3763 in a Nutshell

If MMC OKs mining -it could enter into either a mineral If MMC OKs mining -it could enter into either a mineral production sharing permit; a joint venture agreement: production sharing permit; a joint venture agreement: or a co-production agreement - with an interested party or a co-production agreement - with an interested party that has submitted a mine development proposal that has submitted a mine development proposal including an Environmental and Social Impact including an Environmental and Social Impact Prevention and Mitigation Plan. (ESIPMP) which will Prevention and Mitigation Plan. (ESIPMP) which will contain a Social Development Management Plan.contain a Social Development Management Plan.

HB3763 in a NutshellHB3763 in a Nutshell

TERM of mineral agreement = mine life + five TERM of mineral agreement = mine life + five years. years.

No term shall exceed 15 years.No term shall exceed 15 years.

The maximum area allowable will be 500 The maximum area allowable will be 500 hectares, no person shall be awarded in hectares, no person shall be awarded in excess of the total contract area of 750 has. excess of the total contract area of 750 has. in any given watershed area. Mandatory in any given watershed area. Mandatory consultations shall be made in each mining consultations shall be made in each mining phase.phase.

HB3763 in a NutshellHB3763 in a Nutshell

Ban on Open Pit MiningBan on Open Pit Mining

HB3763 in a NutshellHB3763 in a Nutshell

ON CONSENTON CONSENT

Mandatory consultations in each mining Mandatory consultations in each mining phasephase

FPIC process according to traditional and FPIC process according to traditional and customary practices and beliefscustomary practices and beliefs

For private owners – written consentFor private owners – written consent

HB3763 in a NutshellHB3763 in a Nutshell

ON TAXESON TAXES

The following shall be required of the contractor: The following shall be required of the contractor: contractor’s income tax; customs, duties and fees on contractor’s income tax; customs, duties and fees on imported capital equipment; value-added tax on imported capital equipment; value-added tax on imported goods and services; withholding tax on imported goods and services; withholding tax on interest payments on foreign loans; withholding tax on interest payments on foreign loans; withholding tax on dividends to foreign stockholders; documentary stamps dividends to foreign stockholders; documentary stamps taxes; capital gains tax; excise tax on minerals; local taxes; capital gains tax; excise tax on minerals; local business tax; real property tax; community tax; business tax; real property tax; community tax; occupation fees; registration and permit fees; water occupation fees; registration and permit fees; water usage fees; as well as - mine wastes and tailings fees; usage fees; as well as - mine wastes and tailings fees; Performance Bond for rehabilitation; Environmental Performance Bond for rehabilitation; Environmental Insurance. The incentives given to the contractor will Insurance. The incentives given to the contractor will be for pollution control or mitigation devices.be for pollution control or mitigation devices.

HB3763 in a NutshellHB3763 in a Nutshell

ON SHARESON SHARES

The national government share will be 10% of The national government share will be 10% of gross revenues on areas outside ancestral gross revenues on areas outside ancestral domains. domains.

Indigenous peoples shall be entitled to at least Indigenous peoples shall be entitled to at least ten per cent (10%) from gross revenues on areas ten per cent (10%) from gross revenues on areas that are within ancestral domains. that are within ancestral domains.

Local government units. The local government Local government units. The local government unit share shall be determined by taking into unit share shall be determined by taking into consideration the classification of the local consideration the classification of the local government, vulnerability and human government, vulnerability and human development index.development index.

Where are we at now?Where are we at now?

: filed at the lower house: filed at the lower house

: search for champions at the Senate: search for champions at the Senate

: CBCP endorsement: CBCP endorsement

: multi-sectoral campaign coalition: multi-sectoral campaign coalition

: round table discussions: round table discussions

: sectoral discussions – women, HR, : sectoral discussions – women, HR, environmentalists, religious, LGU, media ; environmentalists, religious, LGU, media ;

: geographical discussions : geographical discussions

Support neededSupport needed

More championsMore champions

More volunteersMore volunteers

More spaces for discussionMore spaces for discussion

More ideas!More ideas!

More resourcesMore resources

Maraming salamat.Maraming salamat.

PADAYON.PADAYON.. .