Mining policy uncertainties scored THE PHILIPPINES has one of the highest mineral potentials in the world , a Canada-based think tank said, but current policies make the country among the worst places to conduct mining operations. The Fraser Institute recently released its Survey of Mining Companies 2013 report, which assesses how mineral endowments and public policy factors affect exploration investments. The survey polled 4,100 individuals online between Sept. 17 and Dec. 1 last year. The Philippines, according to the report’s Best Practices Mineral Index that rates a region’s geological attractiveness, scored 0.79, an improvement from last year’s 0.74. The maximum score possible on this index is 1.0. This placed the country, along with Yukon and Greenland, in 6th to 9th places out of 112. BusinessWorld March 08, 2014 | MANILA, PHILIPPINES Alaska topped the list with a score of 0.83, closely followed by Western Australia and Nevada with 0.82, and Chile and British Columbia with 0.80. At the bottom were Uruguay (0.80), Niger (0.19), French Guiana (0.25), Honduras (0.32), and Suriname (0.33). Pulling the Philippines down was the policy climate with regard to mining. The country, according to the Policy Perception Index (PPI), scored 9.5, down from last year’s 14. The best PPI score is 100. The Philippines’ 9.5 rating placed it at 110th out of 112, or the third worst in the world. The other two were Kyrgyzstan (5.3) and Venezuela (6.5). Topping the list with the best policy environment was Sweden at 95.2, followed by Finland (94.3), Alberta (93.4), Ireland (93.4), and Wyoming (92.6). The survey showed that for the Philippines, uncertainties concerning existing regulations and disputed land claims, plus the level of security, were strong deterrents to investments. Considered as mild disincentives were uncertainties concerning environmental regulations and what areas will be protected; regulatory duplication and inconsistencies; taxation; lack of infrastructure; socioeconomic agreements and community development conditions; trade barriers; political instability; labor regulations; quality of the geological database; and the availability of labor. An unnamed exploration company official was quoted in the report as saying of the Philippines: “It’s an impossible system and provides no security for foreign investment. The locals hold companies up for endless demands, always with the implication that they’ll withdraw their consent for your project.” “They throw arbitrary conditions into licenses on a take-it-or-leave-it basis. The Mining Act of 1995 provides that the ]community’ grants its full and implied consent over mining activities, so the ‘community’ demands more and more,” the official added. Another official said: “Inordinate amount of time in lifting moratorium on exploration applications. Two years of inaction has negatively impacted on sentiment.” Sought for comment, Leo L. Jasareno, Mines and Geosciences Bureau director and a member of the Palace-created Mining Industry Coordinating Council, said: “We are sorry to disappoint some sectors of society.” “The policy of the [Aquino] administration is clear: we pursue responsible mining in the country. This is mining that is not all about cost and that is not to compromise the environment,” he added. “This is mining that heavily impacts on economic growth while being able to cure the wounds to the environment and able to build the lives of people in the host communities.” Mining has been a hot-button topic for the Aquino administration, which wants to overhaul the country’s national mining policy. Executive Order (EO) 7 , issued in 2012, extended a moratorium on the issuance of new mining permits until legislation on a new revenue-sharing scheme is passed. Ongoing discussions for a new mining fiscal regime under EO 79 have produced proposals that industry officials claim will make the country “less competitive”. Chamber of Mines of the Philippines President Benjamin Philip G. Romualdez last year said a proposal for a 10% excise tax on firms based on their gross revenues or a 50% rate based on net earnings would “simply kill” the industry. He added that “the country’s current MPSA (mineral production sharing agreement) tax regime is at par with the rest of the mining world today, while under an FTAA (financial or technical assistance agreement) regime, the Philippines becomes a less attractive alternative for mining investors.” Under the Mining Act of 1995, MPSAs are granted to firms with at least 60% local ownership, under which mining operations are subject to a 2% excise tax based on the actual market value of their gross mineral output. MPSAs for areas in mineral reservations are however also subject to an additional 5% royalty. FTAAs, meanwhile, are the only arrangements that permit 100% foreign ownership and are subject to a 50-50 revenue-sharing agreement. Mining contributed P73.4 billion or 0.6% to the economy last year, down form the P79.5 billion recorded in 2012, data from the MGB website showed. -- Daryll Edisonn D. Saclag
Posted on: Sat, 08 Mar 2014 15:16:33 +0000
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