Strategic Synergies at the Mining Philippines 2018

By: Philippine Resources March 12, 2019

By Marcelle P. Villegas

Mining Philippines 2018 International Conference and Exhibition was held last 18-20 September 2018 at the Sofitel Philippine Plaza Manila. It was a three-day event organised by the Chamber of Mines of the Philippines (CoMP) with the theme “Strategic Synergies: Communicating the Gains of Responsible Mining”. The mining summit aims to give emphasis to the many innovations, technologies, and interventions undertaken by the mining industry which is often unknown to most people. The event also focuses on the environmental programs for local communities, best practices in mining, and the Chamber’s communication strategies in addressing the rampant misconception about the mining industry.

The Chamber of Mines of the Philippines is a professional association of the country’s largest mining, quarrying and mineral processing companies. The Chamber was established with an objective to promote the responsible exploration, development, and utilization of minerals.

Day 1 of the event had a lively start when the General Headquarters Band of the Armed Forces of the Philippines led the Philippine National Anthem. This was followed by their upbeat music lineup starting off with Glenn Miller’s 1939 hit “In the Mood” and then a medley of songs that pays tribute to the rock legend, Freddie Mercury of the band “Queen”.

Mr Gerard H. Brimo, the Chairman of the Chamber of Mines of the Philippines and CEO of Nickel Asia Corporation covered various important topics about the industry in his opening speech. Regarding the landslide in Benguet in September that was triggered by Typhoon Ompong and killed many small-scale miners, he said, "It did not take long for our detractors to point fingers at the mining industry in general, and that is one problem we have been experiencing over the years -- the lack of distinction between small-scale and the formal large-scale mining industry.”

He states, “As we grieve for the small-scale miners and their families over the tragedy, we must go on record that we in this room, are not connected with small-scale activities in any way, and we have done so yesterday in the media… I believe we should also go on record that we are not against small-scale mining. They do have a role to play and it is a valid occupation, but the activity has to be done legally and with proper supervision."

Mr Brimo also gave recognition to two members of the Chamber who won awards during the First Asean Mineral Awards (AMA), namely Oceanagold’s Didipio gold-copper mine for “Best Practices in Sustainable Resource Development in Mineral Processing” [1] and Nickel Asia Corporation’s Rio Tuba for “Best Practices in Sustainable Mineral Development Award” in the Mineral Mining Category.

"Imagine that, amidst all the criticisms, the best mine and the best plant in the Asean region is right here in the Philippines, voted no less by the various Asean mining ministers," said Mr Brimo. "While we continue with the struggle, your participation in the Chamber activities by your membership and through conferences such as these, is much appreciated and we thank you."

During a short break period, Mr Brimo had a quick interview by the members of the press. One of the topics discussed was regarding the House Bill 7951 or the Mining Tax Reform Bill filed by Rep. Estrelita B. Suansing of the First District of Nueva Ecija province last July 24. [2] Mr Brimo emphasized that the Philippines is at risk of losing investments in the mining sector if Congress passes the proposed law that will impose a 5% tax on all its metal and nonmetal mines, regardless if they were declared as mineral reservations or not. The HB 7951 could make mining companies suffer and overall, the country could lose quality investments which could affect around 100,000 families who are dependent on the mining industry.

Mr Melo Acuna, journalist and radio broadcaster, asked the question, “What is the impact of the President's statements about mining and how will it impact on your investment and your partners?” Mr Brimo replied, “We're concerned particularly with the Mining Tax Bill that has been filed recently in Congress… We've analyzed it and what we've done is we've compared that mining tax structure with the very large mining countries like Chile, Peru, South Africa, Canada and Australia. The way to figure out if the tax structure is expensive or not, or fair, is to do comparisons. So we know the exact tax structures of mining in very big mining countries and we have made a comparison. And that bill puts us more expensive than the five very large mining countries that we have done comparative study on.”

He describes the proposed law as, “punishing”. “We are talking to the legislator to see what can be done about it, because you can't expect investors to come here under that tax structure, but it's actually more than that. You put in an additional 5% royalty on gross revenues, and we in the nickel space, most of the nickel mines are already in mineral reservations, so a lot of us are paying that 5%. But copper and gold is a different thing. They have never been under mineral reservation. Prices are low. Everybody thinks they're making a lot of money but the reality is they're not. In fact, one of them is losing money and has lost money for the last two years. So, you introduce an additional 5% royalty to the tax structure and you run the risk of those mines closing down, and these are big mines. These are copper and gold mines, bigger than nickel. One of them in particular has a community of 20,000 people. So you can imagine the closure of one of those mines and the impact on the area if that happens.”

Mr Brimo stressed that this proposed tax structure will be a problem for new projects. “If that bill passes, we are not going to see investments in our mineral sector anymore from quality companies. We want to attract in this country quality companies. Companies that are large, that are technically knowledgeable, that have a lot of resources, and that can do things properly. And they operate all over the world, so they know what they're doing. They do things very carefully. But they will not come here with a tax structure that is too expensive.”

Therefore, with this possible forecast, how much investment do we expect to lose if this law pushes through? “There are three large copper and gold developments that are pending. I don't have the figures for one of them, but we're talking in the billions of pesos of lost investment, lost taxes, more importantly, employment and social development and that is critical.”

Referring to first-class municipalities such as Claver in Surigao del Norte, Cantilan in Surigao del Sur, Toledo City in Cebu, and others, “What a formal large-scale mining industry does is that it develops entire areas in the countryside… You will see the development that takes place there. It is huge. These municipalities are all first class. And why are they first class? It's because of the mining industry that's there. And you will lose all that down the road. And for a country that is as blessed like us with mineral resources that would be a shame. I don't know of any mineralised country that does not encourage a vibrant mining industry to develop their natural resources. And we might just very possibly be the first, and that would be a shame, because we need exports, we need employment, we need countryside development.”

Additionally, Mr Brimo also shared his insight about how taxes should be done in mining. “If you study the tax structure of these other mining countries, most of their mining taxes are on profits. They're not on revenues and that's the right way to do it because it is progressive. In other words, the more money you make, the higher your operating margin, [and] the higher the special mining tax rate [will be]. In our country, we do it in the reverse. We're very high in terms of the imposition of revenues and it's not geared towards the profits. And that is very evident in our studies and we've shared that with the DENR, MGB and DOF as well, and we continued to do dialogue with them to see where we can all end up here.”


[1] Didipio Mine Wins Asean Mineral Awards – retrieved from the website of Mines and Geosciences Bureau

[2] Gomez, Eireene Jairee. (20 Sept. 2018). The Manila Times. “PH to lose investments under mining bill – mining chamber”.

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