National Resources Stuck in Regulatory Gridlock

Prof. Dindo Manhit, President at the Stratbase ADR Institute

The Chamber of Mines of the Philippines and allied industries of mining are holding this year’s Mining Philippines International Conference to again gather global experts and distinguished delegates in a three day forum to exchange  insights on current issues and concerns confronting Philippine mining. The theme “Building from the Ground Up: The Role of Mining in Global Development” shows that despite ongoing regulatory challenges, the industry continues to move forward and is already looking at their prospects in the next government.

The Philippines is undoubtedly one of the world’s richest when it comes to natural resources. The same geological processes that had shaped the archipelago to what it is today also endowed its territory with natural resources such as minerals in amounts that put the country at the top globally.

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Unfortunately, we remain to be among the poorest nations in the planet despite such abundance of resources. We are naturally geared towards becoming rich but we have not yet found a way to manage our resources in a manner that translates to economic might.

What is the reason for this? Simple.

Unstable regulatory environment.

In the mining industry, for example, the country ranks at least fifth in the world in terms of reserves of strategic minerals like gold, copper, and nickel. These minerals, however, remain under ground, with mining investments not coming in because of flip-flopping government policies.

When the present Mining Law was enacted in 1995, it was lauded for being more sophisticated in social and environmental considerations than most of its counterparts in other countries. The success of attracting responsible miners proved short-lived, however, as the constitutionality of the law was questioned before the Supreme Court soon after its passage.

It was only in 2005 when the High Tribunal ruled in favor of the Mining Act’s validity. Then, just when mining investments in the country was picking up and its contribution to the economy was finally being felt, Executive Order No. 79 was issued in 2012. Aside from the creation of a Mining Industry Coordinating Council (MICC), this policy turn also marked the imposition of a mining permit moratorium. This means the government cannot enter into new mineral agreements until the national coffers are guaranteed an increase in income from mining through a revised revenue-sharing scheme.

To this day, the ban on mining continues to be in effect, as Congress has yet to enact a law embodying the mining revenue sharing scheme the government wants. The window of opportunity to pass such law, and lift the moratorium, becomes more remote as the sine die adjournment of legislative sessions draws near in time for the 2016 general elections. Congress cannot solely take the blame for the inaction. The multi-agency MICC was tasked to formulate the new revenue-sharing scheme, supposedly in consultation with the concerned stakeholders, and it took the body several years to come up with the proposal that is now embodied in House Bill No. 5367. Despite taking precious time to draft what should’ve been a measure that increases government revenue, HB5367, if passed, could very well have the exact opposite effect. The proposed revenue sharing scheme would render the Philippine mining industry so uncompetitive, that no decent, or responsible, investor would bother coming in. The Chamber of Mines of the Philippines (COMP) rightly equated the proposal to killing the goose that lays the golden egg.

With mining put to a grinding halt for five years now, much needed contribution to the economy and to rural communities in far-flung areas likewise stagnated. Worse, data reflecting this situation has become a gold mine for anti-mining quarters in their propaganda to bring down the industry to its knees.

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With the reputation of mining besmirched more than ever, the average Filipino today opposes mining without realizing that virtually all things that enable him or her to live through his or her day-to-day life come from mining.

From an environmental perspective, the mining moratorium did not do any good either. Instead of meeting the government’s objective of protecting the environment by putting a stop to more large-scale mining operations, illegal, small-scale ones proliferated. Reports of illegal mining from all over the country abound, with very few held accountable. These unlawful activities not only wantonly destroy the environment, they endanger human lives as well through unsound mining practices, like the use of mercury and the profuse boring of unstable holes in the mountains. As these illegal miners extract our resources and destroy the environment at the same time, they do so without paying any taxes.

In undertaking a mining project, people should know that investors take a big risk by investing billions of dollars just for the exploration and the determination whether an area is economically feasible to mine. It takes at least 25 years for a full cycle of mining operations to take place. Changing the rules or policies in the middle of the game does not help the country. With legitimate miners scared away, the country will lose its resources without its people benefitting from them. What we will have left are illegal miners the government cannot control, and an utterly degraded environment.

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(Image Source: Manila Bulletin)

The government must listen to the industry experts and understand the complications and long term benefits of a resource that can potentially be one of the major economic drivers of the country. Like the EDSA traffic the huge benefits of our natural resources is stuck in gridlock and will become a political issue in 2016.

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