Philippines' controversial mining rules suspended

Manila (Philippine Daily Inquirer/ANN) - The controversial implementing rules and regulations (IRR) of the Philippine government's new mining policy have been suspended amid industry clamour for clarification on certain provisions, including one on the review of mining contracts, Environment Undersecretary Demetrio Ignacio Jr. said.

The IRR for Executive Order No. 79, which embodies President Benigno Aquino III's policy on mining, was supposed to take effect today, 15 days after it was published.

Ignacio yesterday issued a memorandum to all concerned offices and the Mining and Geosciences Bureau, stating that Department of Environment and Natural Resources (DENR) administrative order 2012-07 or the IRR of EO 79 has been suspended, "pending the issuance and effectivity of amendments".

The decision to suspend the IRR, Ignacio added, was reached after a Philippine Palace meeting on Monday convened by the Mining Industry Coordinating Council (MICC), headed by Finance Secretary Cesar Purisima.

'Less ambiguous'

"It was decided to make the IRR less ambiguous," the undersecretary said, adding that the meeting had been called over concerns raised by the Chamber of Mines of the Philippines (COMP) on Section 9 of the guidelines, which it has described as "patently illegal."

The COMP said the government review of mining contracts would shorten the maximum 50-year period for projects by imposing a bidding scheme for its renewal after the first 25 years of a tenement.

The group further said that the provision contradicted the Philippine Mining Act of 1995, which provides that "mineral agreements shall have a term not exceeding 25 years to start from the date of execution, and renewable for another term not exceeding 25 years under the same terms and conditions, without prejudice to charges mutually agreed upon by the parties."

The COMP declined to comment on the suspension.

On Thursday, the group released a statement seeking clarification from the government on the implementing rules of the mining reforms to "appease investor apprehensions".

The COMP said it was addressing a letter to the MICC to voice concerns on the language reported in the media concerning the revised IRR. The group said, however, that it had "received instructions not to distribute the letter outside the MICC."

Last-minute insertion

In its statement, COMP said it acknowledged President Aquino's and the MICC's response to their concerns regarding "the unauthorised last-minute insertion made by Environment Secretary Ramon Paje" in the IRR of EO 79 on mining policy reforms.

"We are conscious of our government's difficult duty of balancing interests. As an industry clearly viewed by the Aquino administration as a key source of quality long-term investments, we recognise the efforts of the MICC to establish a consistent and stable business climate that fosters development as well as the integrity of the environment and the community," COMP said.

The COMP has earlier said that mining firms might opt to sue the government for a "patently illegal" provision on contract reviews under Section 9 of the IRR of EO 79.

COMP president Benjamin Philip Romualdez told reporters on the sidelines of the Mining Philippines 2012 Conference that mining companies were "preparing legal action against the government" as the provision allows the government to renegotiate the terms of mining contracts after the first 25 years. This, Romualdez said, effectively shortens the potential project period from the existing maximum of 50 years.

He also cited challenges in the mining industry that are hampering investments at a time when the government is seeking more revenues from the industry. These include the long-standing moratorium on new contracts pending changes in mining tax laws, local government ordinances that ban mining in certain areas and methods such as open-pit mining, as well as the high investment requirement amid high political risks.

Outflow of investments

"The moratorium has caused an outflow in foreign direct investments in our sector beginning in 2011 to the tune of over 10 billion pesos (US$239.87 million)," Romualdez said.

"The projected $16 billion of investments that were supposed to [come] during this administration will not happen," he added.

Ignacio told the Inquirer that during the meeting in Philippine Palace, the members of the MICC agreed to amend the controversial provision on a government review of existing mining contracts to make it clearer, and to suspend the implementation of the IRR until the amendment is published.

"We are not going to do anything else," the undersecretary said, referring to changes in other portions of the IRR.

EO 79 has been touted as the centrepiece of the government's mining reforms programme, while the IRR was described as leaning more toward environmental preservation than raising government revenues from mining.

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