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MANILA - (UPDATED 8:17 p.m.) The Philippines said Monday it would not approve new mining permits until Congress passed a bill increasing royalties on the industry as part of new rules governing the sector.
The policy is contained in a new executive order signed by President Benigno Aquino III aimed at overhauling policies governing the industry to boost state revenues while putting in place measures to protect the environment, tourism and agriculture.
Environment Secretary Ramon Paje, who announced the new rules, said the key provision would impose a five percent royalty on the gross earnings of mining companies compared to the existing two percent tax.
However he said this would require passage of a bill in Congress, expressing hope it would be passed soon.
"Basically, the executive order intends to increase the revenues of government from mining," he told reporters.
"There will be no new mining agreements before the new legislation on revenue is passed," he added.
He stressed the order would respect the existing mining agreements with the 33 mining operations already in the country but would be imposed on new entrants.
He said that if the law was passed by 2016, the country could earn an additional P16 billion ($372 million) from the higher royalties.
In addition, the order raises certain fees for mining companies, which could raise an additional P760 million, he said.
It also designates all mine waste and tailings as state property, allowing the government to extract any remaining minerals, potentially raising another P50 billion, Paje added.
The order also bans mining in 78 areas designated as "eco-tourism" sites and in "prime agricultural and fishing areas."
It also bans mining in certain "island eco-systems," to be defined later.
Investment target attainable
Despite the moratorium on permits, Paje said this year's investment target will be met.
“If ever, there will only be a slight change, it will not be that much,” he said, referring to this year's $2.27 billion target.
“Investments would come purely on exploration permits, tailings engineering, and existing contracts with mining companies, which is allowed under EO 79,” he added.
In 2011, the Philippines missed its mining investment target of $1.44 billion due to delays in major projects. Actual investments reached only $618.5 million last year.
From 2012 to 2016, several major mining investments are being completed, which will allow the government to achieve its target, according to the DENR.
These projects include the $1.8-billion Kingking copper-gold project of St. Augustine Mining Ltd. and partner CGA Mining Ltd. of Australia; the $1.4-billion hydrometallurgical nickel processing plant of Nickel Asia Corp. and Japan’s Sumitomo Metal Mining; the $3-million Batangas gold project of South Africa's Gold Fields Group of Companies and Mindoro Resources Ltd.; and the Far Southeast gold project of Lepanto Consolidated Mining Co.
Also included were the $800 million Runruno gold-molybdenum project of FCF Minerals Corp. and Metals Exploration Plc of Australia, as well as the Didipio gold project in Nueva Vizcaya of OceanaGold Corp.
Profit projection unchanged
Lawyer Michael Toledo, Philex Mining Corp. spokesperson, said the new EO would not change the company's profit projection since any increase in the government's share would have to go through Congress.
In the meantime, the additional fees are not substantial to make a dent on the company's income in the short-term, he said.
In the first quarter this year, Philex's net income slipped by three percent to P1.268 billion from P1.310 billion in the same three-month period last year due to the drop on lower grade and metal recoveries at the Padcal mine in Benguet province.
The Philippines is believed to have some of the biggest mineral reserves in the world - the government estimates the country has at least $840 billion in gold, copper, nickel, chromite, manganese, silver and iron ore deposits.
However, the minerals have been largely untapped, partly because of a strong anti-mining movement led by the influential Catholic Church, while poor infrastructure and security concerns have also kept investors away.
With reports from Orti Despuez and Likha Cuevas-Miel, InterAksyon.com
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