Mining
Philippines News
Quarterly Newsletter of Chamber of Mines of the Philippines
Mining Philippines 2013
a resounding success
Showing the resilience of the local
minerals development industry
despite numerous internal and
external challenges, the Mining
Philippines 2013 (MP 2013)
Conference and Exhibition proved
to be another resounding success
as it unfolded from September
10 to 12 at the Sofitel Philippine
Plaza Manila Hotel.
The premier annual event of the
Philippine mining industry drew 1,423
total participants, up 7 percent from
2012 figures, and saw over twice as many
visitors to its exhibit at the Sofitel’s Luzon
and Visayas ballrooms compared to last
year.
Volume 2013 / Issue 3
In This Issue
Mining Philippines 3
COMP places ads detailing government
share, environment impact, inclusive
growth 15
MGB opposes single tax scheme
for mining 17
SMI announces downsizing 18
Economic effects of mining is
exponential, says
top economist Villegas 18
Diwata: Women in Mining
celebrate anniversary 19
Senate President Franklin M. Drilon Mitch Hooke visits PH,
was the guest of honor and keynote guests at Mining Luncheon 23
speaker at the conference, which
carried the theme “Moving Forward: Intex spends over P140M for
Harnessing Opportunities.” The exhibit environmental protection 24
featured 63 of the country’s top mining
firms, suppliers, business groups and Draft mining bill among
associations focused on the industry. DENR updates on
EO 79 implementation 26
The 11th edition of Mining Philippines
served as a springboard for discussions Letters to the Editor 26
on the industry’s future with a powerful
lineup of speakers and topics, led Guest Column: Dr. Raul Fabella:
by Drilon, Chamber of Mines of the Parable of the Talents 30
Philippines (COMP) President Benjamin
Philip G. Romualdez and Chairman
Artemio F. Disini. (See related stories in
the following pages – Editor)
to page 2
2 2

Mining Philippines
2013 a resounding
success from page 1

Except for some hitches in the exhibitors this year were equipment on Twitter), reported the conference’s
registration process on MP 2013’s manufacturers and suppliers, proceedings in real time on Twitter,
opening day, some delegates and underscoring the multiplier effect of Facebook, and Storify.com.
participants praised the organizing the mining industry. Other exhibitors
COMP for “a very, very organized include 16 service providers, 11 mining The social media team used the
Mining Conference and the timely, well- companies, three organizations and one hashtag #FwdMiningPH in its Twitter
placed discussion topics,” according to publication. posts to denote its coverage of Mining
Manolo Labor, official spokesperson of Philippines. It became a “trending topic”
Sagittarius Mines Inc. (SMI). on Twitter in the Philippines on Sept.
12—becoming popular enough that
Delegates were also treated to Sofitel’s the anti-mining “No 2 Mining Palawan”
delectable meals and superb service, Twitter account took note of it and
as well as several forms of artistic and reminded its followers to “use the social
musical entertainment during the media more to spread our advocacy.”
opening ceremonies, the welcome
cocktails on the evening of Sept. 10, the
gala night on Sept. 11, and the farewell
cocktails on Sept. 12. Also making up the total participants
in MP 2013, apart from the 834 exhibit
By the numbers visitors, were:
As an event, Mining Philippines saw - 193 conference delegates
modest growth despite the current - 54 speakers, discussants and session
stagnation in investment of the local chairs
industry. It showed most in the total - 24 sponsors’ delegates
number of visitors to the exhibition - 259 exhibitors’ representatives
– 834, a 156% increase over the 2012 - 50 journalists and media, and
figure. - 9 members of the diplomatic corps.

Mining Philippines 2013 also attracted

The exhibition itself gathered 18 new
exhibitors, as well as 37 returning
exhibitors. Over half (32) of the
16 paying sponsors and seven media
partners, up from three the previous
year. Half of the paying sponsors were
also exhibitors.
For the first time, COMP also went “live”
with Mining Philippines on social media.
A team of 12 geology and mining
students from the University of the
Philippines, led by SMI’s Arnold Romero
(“Pinoy Minero” or @RsponsibleMiner
Before the end of the conference, COMP
also unveiled a new corporate audio
video presentation (AVP), featuring
two miners in Benguet and Palawan
who related how being employed in
the mining industry has improved their
lives and how mining operations have
improved their homes and communities.
COMP commissioned Independent
Minds to develop the AVP.

A Sustainable and Equitable Mining Industry
(Keynote Speech of Senate President Franklin M. Drilon
Mining Philippines 2013 Conference and Exhibition)
Mr. Benjamin Philip Romualdez,
officers and members of
the Chamber of Mines of the
Philippines, distinguished guests,
friends, ladies and gentlemen,
good morning.
Today, I am greatly honored for this
opportunity to meet and exchange
ideas with the movers and shakers of the
mining industry. I truly appreciate your
efforts to promote the mining industry’s
potential to become a major contributor
to the Philippine economy.
This is an auspicious venue for the
industry’s best minds to discuss and
generate ideas on how to meet the
many challenges of the mining industry,
as well as how to strike a balance
between maximizing revenues and
preventing any catastrophe that would
compromise the future of the younger
generation, and the generations yet
unborn.
I took note of your conference
theme, “Moving Forward: Harnessing
Opportunities”. Indeed, the economic
opportunities in the mining industry are
as abundant as our mineral deposits. This
mineral wealth is attributed to our being
geographically located, fortunately or
unfortunately, in the ring of fire.
Having nine million hectares with high
mineral potential, the Philippines is now
ranked top five in the world for overall
mineral reserves, second in gold, and
third in copper resources. The untapped
mineral wealth is estimated at more
than $840 billion. And yet, the industry’s
contribution to the economy is small.
In 2012, mining’s share in the GDP is
merely 0.7 percent.
Given our rich mineral resources, the
mining industry, if properly developed,
can be one of the drivers of economic
growth.
We acknowledge that the industry
is high risk and capital intensive. We
understand that investors fear that the
economic returns may not be enough
to recover the costs. Likewise, we
understand that the gestation period
for large scale investments normally
exceeds 10 to 15 years if a full exploration
program has to be undertaken.
Be assured that we are taking note of all
the issues and concerns of the industry
players.
Having said that, I am certain that all of
us, you in the mining industry and we in
government, are all concerned with the
protection of the environment and our
people’s welfare.
The Philippines is not a stranger to
mining accidents resulting in severe
environmental damage that displaced
people and deeply affected the life of
the local community. The social and
environmental costs are quite high.
It will take generations to fix polluted
rivers, devastated mangroves, coral
reefs, agricultural land and many more.
3
Damage is irreparable in most cases.
Hence, we appeal to the industry
players to observe and apply the best
practices. This 3-day mining conference
is an opportune time for the mining
industry to compare best practices,
share new techniques and showcase
new technologies and processes.
We cannot risk the future of our children
and the generations that come after
them. We have seen mining disasters
of epic proportions in many parts of
the world where environmental and
social costs outweighed the economic
benefits. We do not want that to happen
in our own backyard. We are responsible
for these resources. It is our duty to leave
these in good hands so that succeeding
generations will be able to enjoy them.
While we support the development
of the mining industry, we must take
measures to ensure that social and
environmental costs will not outweigh
the economic benefits.
Ladies and gentlemen, the road to
mining development must be paved,
not just with good intentions, but
also with serious reforms. At this
point, we must explore all possible
and feasible ways to level the playing
field. It is imperative that we practice
transparency. More so, because of our
participation in the Extractive Industry
Transparency Initiative.
to page 4
4 4
A Sustainable and
Equitable Mining
Industry from page 3
I submit some specific proposals for
your industry’s consideration.
First, the areas where mining is
allowed must be clearly identified and
marked. This is an important step to
prevent investors from being misled in
investing in areas where mining is not
allowed. This would also spare the local
community from unnecessary hassle.
Second, to ensure that only the best
practices are being observed, the grant
of mining rights should be limited to
those that have zealously complied with
the pertinent requirements. By the same
token, those that have been involved in
environmental incidents and have not
implemented the required remediation
measures shall be disqualified.
Third, to prevent both human and
environmental catastrophe, I join the
call to ban the use of mercury in small
scale mining.
Fourth, we must eliminate speculations
by cancelling non-moving applications
and non-performing mining contract
and permit holders. This would put the
industry in the hands of the real miners.
Fifth, we must earnestly go after the
illegal miners by creating a Task Force
on Illegal Mining composed of our law
enforcement agencies.
Sixth, small scale mining should be
rationalized by declaring a People’s
Small-Scale Mining Areas or Minahang
Bayan.
Seventh, the industry must do its share in
leveling the playing field by cooperating
with the government in checking
abuses in the system of incentives and
tax holidays. It is sad to note that some
mining companies have managed to
get away from their tax obligations by
devising schemes, such as locating their
mineral processing plants in Ecozones
to avail of tax holidays.
Moreover, mine life must be part of
the criteria that will be observed in
the registration process. We all know
that mining projects can be registered
to avail of an income tax holiday from
four to seven years under the Omnibus
Investment Code. Hence, a mine which
has a life of say, seven years, can operate
without paying income tax for its entire
duration.
Taxes, in whatever form, are always met
with deep resentment and cynicism
especially these days. In life, my dear
friends, there are only two things that
we cannot avoid, death and taxes.
Let me make my position clear. The
people, through taxes, royalties and
other fees, must have their fair share
from any economic activity done in
the country, especially if it involves the
extraction of our natural resources;
finite resources; limited non-renewable
resources. The Filipino people are
entitled to their rightful share in what
the industry would earn from these
finite resources. Like any industry, the
mining industry must do its share in
national development. More so, because
it is extracting our natural wealth.
While we recognize the high economic
risk involved in mining as against the
success rate, we must remember that
the minerals are owned by the Filipino
people, and not by those who have
mining licenses. Our natural resources
should be utilized properly and
sustainably, to protect the interest of
future generations. It is worth noting
that every cubic meter of ore that is
mined today, would mean depriving the
future generation of a cubic meter of
ore. The government is taking a leap of
faith in entrusting these limited assets to
entrepreneurial hands.
Ladies and gentlemen, the Filipino
people must therefore have their fair
share of the country’s wealth. Their share
comes in the form of taxes and royalties.
But how fair is fair?
Let me assure you that your Senate
will be a listening Senate. That is our
assurance.
We will exert effort to determine what is
fair for your industry and our people. We
will do our best, as your representatives,
to determine which tax regime is fair
and would work best for the industry
and our people.
Ladies and gentlemen, there are many
challenges in the mining industry. But I
am certain that if we have a continuous
dialogue among the industry players,
stakeholders and the government, we
can find a common ground to address
these tricky mining issues. We are all
after the same goal: that of having
a sustainable and equitable mining
industry.
Let me conclude by wishing all of you a
productive and meaningful conference.
I wish you all, especially the foreign
delegates and investors, a pleasant and
memorable stay in our country. May
you all bring to your respective home
countries fond memories, and consider
the Philippines again in your future
travels. Thank you very much.

Welcome remarks for Mining Philippines 2013
Senate President Franklin M.
Drilon, members of the diplomatic
corps, honored guests, my fellow
miners, ladies and gentlemen,
good morning.
A popular saying – better known as the
“Chinese curse” – goes: “May you live
in interesting times.” These are indeed
interesting times, for we have so many
things going on around us that it is a
minor miracle that we are gathered
here today, and I am here to formally
welcome you, dear delegates and
friends, to our Mining Philippines 2013
Conference and Exhibition.
Before we go any further, we at the
Chamber of Mines would like to thank
the Honorable Senate President Drilon
for taking time out from this very
important week to join us today. We are
honored by his presence, and we feel he
is the right man to have with us today.
Apart from being a leading light in the
Senate, in his Party, and truly deserving
of President Aquino’s confidence.
Given your unique position, Mr. Senate
President, we pray that you can lead
your august chamber in a development
oriented discussion on mining. When it
is time to deliberate on the industry’s
future, you will be in a most influential
position to do would be truly best for our
people, our economy, and our country.
Over the next three days of our
conference and exhibition, ladies and
gentlemen, we will show you what
Benjamin Philip G. Romualdez
President, Chamber of Mines of the Philippines
mining really means to our country.
We will show you with data, credible
research, science, and the real experts,
the real picture of the industry and the
huge implications this government’s
policy decisions will have to the nation’s
economy now and many years or even
generations from now.
For my part, I want to touch on several
things that are important to the mining
industry, and yet misunderstood by
many. They are:
1) The industry’s fiscal regime
2) Our revenue sharing with the
government
3) Our present situation and the
industry’s prospects going forward.
Let me reiterate what we at the
Chamber have been saying over the
last few months: large-scale responsible
minerals development companies
contribute far more to inclusive growth
and sustainable development than
what has been said in the media by
anti-mining groups. Our companies are
responsible stewards of the environment
and perfectly in tune with the cry of the
times. We want transparency so that we
can prove that our industry has always
been and is more than willing to give
government its fair share from mining
revenues. We are after all, the original
PPPs, we are partners with government.
One of the burning issues against the
industry is the incorrect idea about the
two-percent excise tax that all mining
companies must pay the government
5
under the 1995 Mining Act. To Senate
President Drilon, all the delegates of
Mining Philippines and all our friends in
media, thank you for coming so that we
may help set the record straight.
To the innocent ear, simply increasing
the two-percent excise tax may sound
plausible. But in truth, the excise tax
is but one component out of around
12 taxes on mining; it certainly does
not show the complete picture. This
single tax – out of the 12 or so separate
taxes that each mining company has to
pay under the Mining Act -- has been
taken out of context and used by anti-
mining “NGOs” irresponsibly to vilify the
industry.
The truth is, our government receives
OVER HALF of the total value of a mining
project based on the internationally
accepted AETR or the Average Effective
Tax Rate. It is a formula that determines
the government’s share throughout
the entire life cycle of a mining project,
from the time that the contractor starts
to invest funds in the project to the very
end of the mine life.
The International Monetary Fund or IMF
used the AETR to evaluate the Philippine
mining industry in a study last year. The
study showed that, and I quote,
“For profitable projects, the Philippine
government’s average effective take
or share amounts to nearly SIXTY PER
CENT (60%) of the project’s pre-tax
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6 6
Welcome remarks for
Mining Philippines
2013 from page 5
cash flows—significantly higher than
South Africa, the US, Chile, Australia,
and Peru—all large mining countries.”
Mr. Gerry Brimo, my colleague in the
Chamber from Nickel Asia, will explain
this in deeper detail later. But in a
nutshell, the country’s current MPSA
tax regime is at par with the rest of the
mining world today, while under an
FTAA regime, the Philippines becomes
a less attractive alternative for mining
investors.
We have a feeling that government has
only looked at mining’s earnings from
year to year and only sees a rise in profits,
which makes it keen to tax the industry
more. This tack is patently unfair to us,
because it fails to consider years when
mining companies don’t make money
–the AETR formula considers all the
realities of mining including the “down”
years.
Looking at the profits alone also
conveniently ignores the reality that
mining companies are the ones that
risk the multibillion capital required to
develop the country’s mineral resources.
We take the risk of exploration, build the
roads, power plants, water supply …
build a whole town from nothing and
develop it to first class municipalities
with no expense to government. Oh,
plus don’t forget all the permits and
taxes.
In these protracted discussions and
delays in government’s formulation of
its fiscal regime for mining, there may be
a silver lining. When we – government,
the Chamber of Mines and other
stakeholders – began to review the
revenue sharing schemes two years ago,
metals prices were significantly higher,
and that government did appear to be
on the losing end of this sharing.
That is no longer the case today, ladies
and gentlemen. The “party’s over”, and
the volatility clouding the industry
worldwide is evident in these reports:
1) Global gold exploration activities
have dropped by a huge 55% since 2010,
according to research firm IntierraRMG
in its State of the Market: Exploration
Edition report.
2) The global mining outlook is
“deeply troubled” as profits decline, cost
pressures increase and planned capital
expenditures weaken, according to the
PricewaterhouseCoopers tenth annual
global report titled Mine: A Confidence
Crisis.
It is under this cloud that significant
mining projects worldwide are being
reviewed – and we have one of the
biggest in the world in the Tampakan
Gold and Copper Project in Mindanao,
under one of our members, Sagittarius
Mines Inc. or SMI. A real example on
why we appeal to the government to
look at our industry not just year-by-year
but on a long-term reality based model.
Adding to the uncertainties of our
industry is that the Mining Act is again
under being subjected to review. If you
have glimpsed at the oral arguments
at the Supreme Court, mining has
become an emotional argument by
anti-mining groups – when it should
be a sober, intellectual discussion that
seeks to strengthen and further develop
our natural assets rather than further
damaging our competitiveness with
changing rules and unstable policy
regimes. This is where we hope your
presence, Mr. Senate President, can
trigger such a discussion. We invite
you and your staff to sit in our plenary
sessions and discussions, so we can show
you our concerns. Our wish is for your
good office to lead the right discussions
on revenue sharing for mining.
To recall what I said in last year’s
conference, we noted that about 16
billion dollars in mining investments
that were supposed to happen during
this administration will not happen.
Let me tell you now that investments
in the next three years will certainly,
dramatically go down. We warned
government of that in 2012, and sadly it
is happening.
Why are investors staying away? To be
frank, it is because of proposals like the
one being floated recently – a 10 percent
gross (or 50 percent net) excise tax on
mining. This regime will simply kill the
mining industry, not only as expressed
by us but by the Joint Foreign Chambers
and other Philippine business groups.
If this proposal is allowed to prosper,
it would certainly push the Philippine
mining industry into a most
uncompetitive position. As a recent
visitor to the country -- my good friend
Mitch Hooke, CEO of the Minerals
Council of Australia – said, that kind of
tax regime is so high “it would put us on
top of Mount Everest”, and we would all
die of hypothermia.
If the argument used by some of our
critics that the Philippine mining tax
regime is truly unfair and biased in
favour of foreign investors is true, then
we should be swimming in billions of
dollar of investments – which would
lead to thousands of new jobs, new
roads and infrastructure, resulting
socio-economic benefits to millions
of Filipinos prospering in a dynamic
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Welcome remarks for
Mining Philippines
2013
from page 6
economy. That’s what will happen in a
competitive environment.
Obviously that is not the case for
us. None of the world’s top mining
companies are operating in the
Philippines right now. The decision
of one big player, Glencore Xtrata,
to reduce its footing in the country
through SMI and Tampakan due to
regulatory uncertainty is proof that
we do not have the right investment
environment. There are just too many
conflicts to deal with.
What are examples of these conflicts?
• The lack of governance in some
parts of the country lead to illegal
small-scale mining. We seem to have
no political will to stop this harmful
practice to our environment, but there
apparently is an abundance of will
to legislate more taxes on legitimate
mining companies.
• The industry is faced with the
prospect of more taxes as voiced by
the Executive branch of government
– remember the “10/50” proposal I
mentioned earlier?
• The global slowdown in mining
investments, a shrinking investment
environment, decreasing metals prices
and other external concerns.
Yet we are still here in this conference.
The Chamber and our members will
show you what responsible corporate
citizenship is and how the industry is
committed to be a long term nation
building partner.
We will show you that contrary to the
environmental critics, legitimate large-
scale mining companies are the biggest
reforesters. We plant more trees every
year than any of our critics combined can
in their lifetime.
We will show you how we contribute
billions of pesos yearly to environmental
protection and enhancement programs.
We will show you how we have enriched
and continue to enrich the lives of
thousands of families by providing free
health and education.
We will show you how we build whole
communities in the middle of nowhere.
Places that government will never go to
if not for mining.
We will show you how we build Quality
infrastructure such as roads, schools,
churches, hospitals, water supply, power
supply, every conceivable need of the
stakeholders.
We will show you how we give hundreds
of thousands of Filipinos the opportunity
to work for above-average wages, and
their families’ capital for business and
livelihood programs.
We will show you how we are partners
with indigenous peoples and our host
mining communities to give them a
better standard of living they otherwise
would not receive in if not for mining.
We do all of these and not because of
regulation but because responsible
mining is good for everyone. This way
everybody wins. We want to do this,
we want to do more and we are ready.
All we need is a clear, consistent, and
competitive policy.
Mr. Senate President, we hope that you
can help us become a game changing
industry. We have been living
7
interesting times since … well as far as I
can remember. To be fair, there is already
a good momentum. Our country has the
mineral wealth potential. We have the
science, the technology, the capital and
most important, the responsible miners
to turn rocks to riches.
Thank you and enjoy the conference.
Mining Philippines Newsletter
Official Quarterly Publication of the
Chamber of Mines of the Philippines
ARTEMIO F. DISINI
Chairman
BENJAMIN PHILIP G. ROMUALDEZ
President
NELIA C. HALCON
Executive Vice President
RONALD REX RECIDORO
Vice President for Legal and Policy
Newsletter Staff:
JIMBO OWEN B. GULE
Communications Manager
COMP Communications Committee
Roy Antonio, Manolo Labor,, Arnold
Romero (Sagittarius Mines, Inc.); John
Ridsdel, Kaycee Crisostomo (TVI
Philippines); Rochelle Hilario, Atty.
Francis Ballesteros (Philex Mining),;
Michael Garcia, Rhea Roxas (Atlas
Consolidated); Chito Gozar, Marie Joy
Josue (OceanaGold Philippines); JB
Baylon (Nickel Asia Corp.)
REVJON OBLEA
Design & Layout
For questions, comments, suggestions, and
article or photo contributions, please email
info@chamberofmines.com.ph, or contact
(02) 635-4123 to 24, (02) 635-4159, and (02)
635-4160 (fax).
in
8 8
Closing remarks for Mining Philippines 2013
Members of the diplomatic
corps, officials of government,
our speakers and discussants,
honored delegates and guests,
ladies and gentlemen, good
evening.
We have come to the conclusion of
our Mining Philippines Conference
and Exhibition, and on behalf of my
colleagues on the Board of Directors and
the officers, staff, and members of the
Chamber of Mines of the Philippines, we
thank each sponsor, delegate, exhibitor,
worker and visitor who has made this
event a success. Please join me in giving
them – all of us, really – a well-deserved
round of applause.
… and let me digress by thanking too
the men and women of our venue host,
Sofitel Philippine Plaza Hotel, for taking
great care of us.
But truthfully, we can’t pat ourselves
on the back just yet. If there’s anything
we’ve learned over the last three days,
it’s that the road ahead of us will be long,
arduous and very interesting.
To travel this road, it’s important to carry
with us the lessons of the past three
days so that all of us will be guided by
the critical messages that we all have
to echo to our stakeholders and most
specially, our government leaders. We
were blessed by the presence of the best
minds of the industry who were able to
demonstrate the enormous potential of
Prof. Artemio F. Disini
Chairman, Chamber of Mines of the Philippines
responsible mining as a game changing
economic partner for all Filipinos and
yes, a partner of the environment. So, to
enumerate the lessons:
NUMBER ONE: WE DISCUSSED THE
URGENCY FOR AN EQUITABLE,
COMPETITIVE FISCAL REGIME. To be
equitable, the new fiscal regime needs
to be fair to both government and
mining contractors. To be competitive,
it needs to offer a fair rate on the
investment when compared to regimes
of other countries like Indonesia, Chile,
and South Africa, while considering
the country’s level of investment risk,
infrastructure, security, and industry
support.
Stability and consistency in both
national and local government policy
on mining are also essential if the
Philippines wants to attract significant
investments in the industry. The best
indicators of our competitiveness are
easy to monitor: sizable domestic and
foreign investments and a flourishing
mining industry indicate a competitive
tax regime.
That said, crafting a competitive tax
regime is not that simple; there is a
whole range of ideas that need to be
discussed, and it’s a continuing effort
where studies and models need to be
done.
Whatever the government position is,
we are still working with the Mining
Industry Coordinating Council (MICC)
to determine the nature of equitable
sharing going forward. The Chamber has
always believed that a stable regulatory
regime is the foundation upon which to
build confidence in investment stability
in the Philippines and allay international
fears of economic risk.
NUMBER TWO: WE DISCUSSED
TRANSPARENCY. At the very start of the
conference, we said that transparency
is essential to establish the benefits
of responsible minerals development.
We should adopt international best
practices like the EITI and the Global
Reporting Initiative to promote good
governance and integrity.
Transparency in the industry lends to
better government policy, removes
the cloud of uncertainty, and lends to
sober, intellectual discussions that can
strengthen and further develop our
natural assets. It allows us to show what
responsible corporate citizenship is and
how the industry is committed to be a
long term nation building partner.
And to echo what our keynote speaker,
the honorable Senate President Franklin
M. Drilon, said on Tuesday, and I quote:
“The road to mining development must
be paved, not just with good intentions,
but also with serious reforms. At this
point, we must explore all possible
and feasible ways to level the playing
field. It is imperative that we practice
transparency.”
to page 9

Closing remarks for
Mining Philippines
2013 from page 8
NUMBER THREE: WE DISCUSSED
CONSISTENCY AND SOCIAL
RESPONSIBILITY. The inconsistencies
of our government’s mining policy has
sadly resulted in the dramatic decrease
in investments. One of our speakers,
former Environment Secretary Horacio
Ramos, hit the nail on the head when he
said that since the issuance of Executive
Order No. 79, the industry has been in a
virtual standstill.
Therefore, in the following weeks
and months, we will work with the
government to establish a fiscal regime
for mining that is clear, internationally
competitive, equitable and progressive.
We will do this to remove the
uncertainties and delays in mining
project developments that could really
help our nation move forward.
And we need to do this quickly, because
as Horace Ramos said, “we do not want
to see the time when we have the best
mining policies, yet have no industry
to speak of” because investors have
decided to stay away for good.
Still, the investors who have decided
to stay have shown us that indeed,
responsible mining is good for
everyone, not just ourselves. We only
have to look at the examples of Oceana
Gold in Didipio, Atlas Consolidated
in Cebu, and even Sagittarius Mines
in Tampakan – who continue to
generously spend tons of dollars in
their communities, patiently waiting
for the day when they can finally
start producing their first ounce of
ore. Everybody wins with responsible
mining, and the large-scale mining
industry is ready and committed to be
a long term partner in nation building.
NUMBER FOUR: WE DISCUSSED HOW
CRITICAL IT WOULD BE TO CRAFT
THE RIGHT POLICY AND THE NEED TO
COMMUNICATE EFFECTIVELY. As we
personally discussed with the media
two days ago, it’s not about agreeing to
a magic number as an excise tax figure
for mining that will solve all of our
problems. The plenary sessions we held
today show the many facets and the
whole gamut of issues that need to be
resolved first to create the right mining
policy.
We need to look at the present mining
taxation and see how that will put us
in a competitive position in the global
market.
We need to effectively communicate
the great value of a strong mining
industry, its multiplier effect, and that
mining operations actually provide not
only for our host mining communities
but to the whole country.
Mr. Peter Wallace gave his usual
forthright opinion in his column and I
quote: “About P370 billion -- that’s how
much the Philippines will lose this year
and over the next four years because
of government’s aversion to mining.
That amount would pay for health and
education three times over.”
And even as we craft these policies,
we should not forget our greater
responsibility as stewards of the
environment, to keep in mind what
Senate President Drilon said of the
purpose of our Mining Philippines
Conference: to compare best practices,
share new techniques, and showcase
9
new technologies and processes that
help protect and nurture nature.
While we try to cover all these bases,
we have agreed as an industry
to communicate in greater detail
and frequency the true benefits of
responsible minerals development to
the Filipino public and the government
leadership.
Our annual conference is one such
platform, but in the days, weeks and
months ahead we will also need to put
forward our messages through both
traditional and online or social media. To
help win public opinion for our industry,
we need all of your support, and I thank
once again Mr. Mick Wilkes of Oceana
Gold for making the call to support the
Chamber and make mining strong.
Let me close by saying that not all
is bleak with the Philippine mining
industry. Our country is still blessed with
nearly a trillion dollars’ worth of mineral
deposits. We are still in a position to
take advantage of constant, if not rising,
demand for our nickel, gold, copper, and
even rare elements like scandium.
We have the science, the technology,
the capital and most important, the
responsible miners to turn our rocks into
currency that will be invested in much
needed infrastructure, schools, hospitals,
water, electricity, and prosperous
communities that will benefit millions of
Filipinos for many generations.
We hold out hope not just for ourselves
but for the people we ultimately serve
– the Filipino people who truly own the
mineral resources we develop.
Thank you, ladies and gentlemen, and
we hope to see you all again next year!
10
Philippine membership to EITI
will ensure reforms
The global Extractive Industry
Transparency Initiative
(EITI) is a forward step in
combatting corruption and the
misappropriation of funds, so
that the wealth generated by
mining firms can serve as an
engine of economic growth
and contribute to sustainable
development and the reduction
of poverty, a World Bank official
said at the Mining Philippines
2013 Conference in Manila.
“Adopt international and best
practices. The good policy and
competitiveness will help gain the
Philippines in International markets.
This will also ensure the protection of
environment by adopting technology
and scientific methods as well as
indigenous best practices,” said Dr.
Michael Stanley, The World Bank’s Lead
Mining Expert in Asia for Oil, Gas, &
Mining Development.
The EITI is a global transparency
standard that ensures disclosure of
government revenues from natural
resources. The Philippines was recently
admitted as an EITI candidate in May
2013.
A country that implements the
EITI standard will ensure greater
transparency of the payments to the
government from oil, gas and mining
companies, Stanley said.
Atty. Alessandra Ordenes,
National Coordinator of the
Philippines EITI Secretariat
“The new EITI standards are streamlined,
structured around the EI value chain
to permit multi-stakeholder groups
to be better informed. With EITI, it can
and will deliver efficient and effective
management of the mining sector,” he
added.
With the ongoing reforms being
implemented in revenue sharing
between government and mining
companies, an EITI process should ease
perceptions of the lack of economic
contributions of the sector.
The private sector has long initiated
the Philippines’ membership into the
EITI, led by the Chamber of Mines of the
Philippines (COMP) as early as 2005.
According to the Chamber, transparency
should remove the cloud of doubt
against mining, which has been paying
an average of P10 billion in taxes yearly
from 2007 to 2011.
The EITI aims to reconcile tax and royalty
payments reported.
On other hand, Atty. Alessandra Ordenes,
National Coordinator of the Philippines
EITI Secretariat, revealed that the new
EITI rules require revalidation only every
after three years instead of five.
However, Ordenes (picture above)
admits one of the challenges facing
EITI implementation is not just the
collection of data but making sure
10
the data obtained will satisfy the EITI
requirement.
“They have a requirement of
disaggregation; what they want is that
it should be for a per benefit stream, per
project, per company reporting. There is
a standard,” she said.
Ordenes said the Philippine group will
come up with a draft and publication
of their EITI validation report by July of
2016.
“We are not sure yet when this will
finalized, because we are still in the
process of looking at the data from the
BIR (Bureau of the Internal Revenue)
and the MGB (Mines and Geosciences
Bureau),” she said.
Ordenes also clarified the misconception
of the confidentiality provisions of the
National Internal Revenue Code. “There
is a provision on the NIRC on the revenue
disclosure of the taxpayers; right now,
the MSG (Multi Stakeholder Group) is
looking into the matter in principle. The
industries have agreed to come up with
a waiver of the confidentiality but that is
still being drafted, so nothing is final yet,
it is still being discussed by the member.”
The EITI will not violate Philippine
Constitution and the professional law on
accounting, as it will allow foreigners to
conduct audit of tax in the Philippines,
Ordenes explained.
“That is actually a misconception,
to page 11

Uncertain mining policy can cause
demise of the industry
The government started mining
industry reforms with the
issuance of Executive Order No.
79 in September 2012, aimed at
increasing the government share
in mining revenues.
Since then, however, uncertainties have
hounded the industry and have already
caused investors’ departure from the
country, according to Engr. Horacio C.
Ramos, president of Clariden Holdings,
a San Miguel Corp. subsidiary that is
buying into metallic mining properties.
“The government must move fast. Since
the issuance of Executive Order No. 79,
the Philippine mining industry has been
in virtual standstill. Unless the situation
is stabilized, there will be uncertainties,”
said Ramos, a former Department of
Environment and Natural Resources
(DENR) secretary, who spoke at the
Mining Philippines 2013 Conference
and Exhibition.
Philippine
membership to EITI
will ensure reforms
from page 10
because it is the independent reconciler
who will conduct the audit and will be
done through a local auditing firm,” she
said.
There are presently 37 countries
implementing EITI rules of which 21
Engr. Horacio C. Ramos
President, Clariden Holdings
“There will be uncertainties and delays
in mining project developments. Hope
we don’t see the time when we have
the best mining policies, yet have no
industry to speak of,” he said.
“Many are opining that the FTAA fiscal
regime is a sell-out, unfair to the country.
Yet no company granted with an FTAA
is operating, which can tell us if this
sharing scheme is faulty. Shouldn’t we
allow it first to be implemented before
thinking of changing the framework?”
he said.
The lone operating FTAA contractor in
the country, Oceana Gold Philippines,
opened its Didipio gold-copper mine in
Nueva Vizcaya just last April.
There have been strong
recommendations for government
to come up with a revenue sharing
scheme that considers the low times of
mining when metal prices are low and
countries are compliant.
EITI emerged as a global agreement
announced at the 2002 World Summit
for Sustainable Development in
Johannesburg.
“This will increase the integrity of
information and provide a level playing
field for industry players,” she said.
In the Philippines, the EITI is governed
11
companies could hardly make a profit,
Ramos said.
It is unfortunate, he added, that many
perceive that the government only
gets two percent of the gross value of
minerals in the form of excise tax, plus
corporate taxes under the currently
implemented MPSA regime.
“In reality, this (particularly MPSA)
includes all other direct and indirect
taxes that (all) end up in government
coffers—the total tax take,” said Ramos.
Ramos, also a former Mines and
Geosciences Bureau director, supported
the Chamber of Mines of the Philippines’
proposal for a simplified fiscal regime
that is equitable and competitive.
by a multi-stakeholder group composed
of representatives of the government,
which are the Department of Energy,
Department of Environment and Natural
Resources, Department of Interior
and Local Government, Department
of Finance and the Union of Local
Authorities of the Philippines.
COMP, the Petroleum Association of
the Philippines and Bantay Kita are also
members.
12
Mining investors seek stable
business environment
Mining investors expect a stable
environment that could make
operations more predictable
and enable the influx of more
investments that can make
mining contribute more to
GDP (gross domestic product)
growth.
Government contractors including
New Zealand-based Oceana Gold, MRL
Gold, and Atlas Consolidated Mining
Corp. expressed interest to see a stable
fiscal regime in the country.
Oceana Gold, the country’s only
operating Financial and Technical
Assistance Agreement (FTAA)
contractor, hopes rules will not
suddenly change midstream,
according to Mick Wilkes, Oceana
Gold Philippines Inc. (OGPI) managing
director and CEO (picture above).
“The FTAA is a contract between
Oceana Gold as contractor and the
government. We invested on the basis
of that tax regime which is on the high
side. We’re hoping to get a comfortable
return from Didipio even though the
tax is high. That’s the contract that
we entered into,” said Wilkes on the
sidelines of the Mining Philippines
2013 Conference and Exhibition.
OGPI, which launched commercial
operation on April 1 this year, has
poured in close to $500 million into
the copper-gold project in Didipio,
Managing Director and CEO
Oceana Gold Philippines Inc. (OGPI)
Kasibu, Nueva Vizcaya. It projects an
$8.5-billion benefit to the Philippine
economy in terms of its multiplier effect
behind its estimated $3.3-billion export
revenue.
“Mining by itself is capital intensive. You
have to put in a lot of money to find it
(resources). If you’re lucky enough to
find it, you’ve got to have hundreds
of millions if not billions of dollars to
develop it,” Wilkes said. “To make that
decision to invest that money, you need
certainty that the tax regime will not
change. It’s very important.”
Meanwhile, MRL Gold Inc., a subsidiary
of the Singaporean Red Mountain
company, has two mineral production
sharing agreement (MPSA) contracts
to develop a gold project in Lobo,
Batangas.
While MRL Gold believes it may not be
affected by the ongoing government
review on revenue sharing, it may not
pursue mine development if rules are
changed to its disadvantage.
“If we are allowed to pursue
development and get it into production
under the current fiscal regime, then
we’ll start to work on the financial
models. Then we go to the banks and
say, ‘This is the fiscal regime, you lend
us the money.’ If government changes it,
we may not get the funding,” said MRL
Gold Inc. Philippines Manager Geoff
Boswell.
12
Mick Wilkes
“You may get a greater percentage of
nothing because they’re changing the
rules. It’s a very sensitive thing. The
model that we used for funding may no
longer be viable,” Boswell added.
Even Filipino mining firms are concerned
by the ongoing fiscal review.
Clariden Holdings, a unit under San
Miguel Corp. that is buying into metallic
mining properties, cannot immediately
pursue acquisition plans due to the
moratorium on new mining permit
issuances.
“We’re having problems with rights
because new issuances for MPSA
had been stopped. The other thing
is not only MPSA. The NCIP (National
Commission on Indigenous People)
followed suit. They’re not giving free
and prior informed consent to new
applications,” said Clariden president
Engr. Horacio Ramos.
Foreign investors are “imperative” to
mining development, added Ramos,
a former environment secretary and
director of the Mines and Geosciences
Bureau.
“Mining is highly capital intensive.
The money you can utilize to explore
development is normally not in the
Philippines. You access it abroad, so you
need foreign banks,” he said.
to page 13

Philippine mining fiscal regime
not globally competitive
The government must craft
a simplified fiscal regime
for mining that would be
internationally competitive,
equitable and progressive,
according to the Chamber of
Mines of the Philippines (COMP).
Justin Hillier, Executive Vice President
of Sagittarius Mines Inc., representing
the position of COMP in a presentation
at the Mining Philippines 2013
Conference and Exhibition in Manila,
said the country’s current fiscal regime
is not at all competitive.
Though it may be an attractive
destination for mining investors
Mining investors
seek stable business
environment
from page 12
Assuming Philippine companies have
capital, they still could not carry out
many big projects, Ramos added.
“Filipino companies with capital like San
Miguel can get foreign loans. But that’s
not all. What about technology? Who
among us, despite being big like Philex
or Atlas, can operate a big mine like
Tampakan? None. It has to be foreign
firms with technical experience.”
Ramos said the best approach to a
foreign partnership policy on mining
Executive Vice President
Sagittarius Mines Inc.
because of its rich mineral deposits,
the current mining fiscal regime is not
globally competitive compared to other
countries, said Hillier (picture above).
“The Philippines should be competitive.
If we can end up somewhere, in terms
of government share, like Chile has
in its mining projects, that would be a
reasonable outcome for the Philippines
as it will attract more investments in
mining,” he said.
Other criteria that need to be taken into
consideration in developing a single
fiscal regime for mining, Hillier said, is
one
• that ensures an equitable share of
is the adoption of a “big brother, small
brother” tie-up.
“Foreign groups should joint venture
with Filipino companies as big brother
on 50-50 sharing or whatever system
there can be, defining the role of each.
One can take care of the operations, the
other takes care of the social, political
tasks,” he said.
Meanwhile, Atlas Consolidated Mining
has also been eyeing new projects to
make its operations sustainable even
after the exhaustion of its Carmen
copper mine in Cebu.
But it could not pour in investments in
exploration since new permit approval
13
Justin Hillier
proceeds between government and
investors;
• delivers a higher and steady revenue
stream to government;
• is progressive; and
• is streamlined, enabling government
to collect revenues in an efficient and
transparent manner.
The Philippines currently imposes
two different sets of taxes for mining
companies depending on their contract
with the government. The contracts
are either for a Financial or Technical
Assistance Agreement (FTAA) or a
Mineral Production Sharing Agreement
(MPSA).
to page 14
is on hold while the fiscal regime
review is ongoing, said Atlas Executive
Vice President Adrian Ramos. Costs
of projects that can be easily put to
production are also more prohibitive.
“We’re evaluating most copper and
gold (prospects). But most MPSAs are
quite expensive,” Ramos said.
Jose P. Leviste, OGPI chairman, quoted
a Department of Finance statement
that given more investment in mining,
the Philippines can hit an additional
two percent growth in gross domestic
product even on top of the 7.8 percent
growth registered by the country in
the first quarter of 2013.
14
Philippine mining
fiscal regime not
globally competitive
from page 13
Taxes for the FTAA and MPSA are both
high, as cited by the International
Monetary Fund report which puts the
government’s take in the total cost of
the mining project at above 50 percent,
Hillier noted.
In order for the Philippines’ mining fiscal
regime to move forward, Hillier said
that apart from being internationally
competitive, it should also “encourage
investments in the Philippines mineral
resources industry and enable the
country to realize its resources potential.” different taxes and royalties that the the IRR is even lower at 11.5 percent,
“It should also achieve an equitable share
of proceeds between government and
investors, which delivers a higher and
steady revenue stream to government,” that will be beneficial,” said Hillier.
he added.
“It should also be streamlined, enabling
government to collect revenues in an
efficient and transparent manner,” Hillier
said.
“In terms of having one versus two
regimes, there are variations in each
regime; the reason of bringing it back to
one regime is simplicity. So when foreign
investors come in the country, whether
there is 39 percent of the project or 41
percent of the project, it is all about one
regime,” he explained.
14
In his presentation, Hillier compared compared to developed countries
the country’s mining fiscal regime with like Canada. Risks are higher in less
that of Chile, Peru, Canada, South Africa, developed countries and investments
Australia, Indonesia and Papua New in infrastructure like power and roads
Guinea using the Average Effective Tax are higher.
Rate (AETR) and Internal Rate of Return
(IRR). Using a model of a copper mine that
He said despite the tax holidays, mining has a $3.1-billion value of resources on
companies operating in the Philippines the ground, this mine would generate
pay taxes more than the other countries an internal rate of return (IRR) of 11.9
noted above in comparison. This tends percent under the tax regime of Canada,
to discourage investors, he said, citing a developed country, Hillier explained.
reasons why other countries have But in Papua New Guinea, which is a
attracted more mining investments than developing country where risks for
the Philippines. investors are higher, the IRR—a figure
used to measure and compare the
“Compared to other international profitability of investments—is higher
regimes, the regime in the Philippines at 14.9 percent. Using the same model
is very complex in terms of number of copper mine under the Philippine FTAA,
mine needs to administer and also for Hillier added.
the government to administer. If we can
bring that back to a small number, I think Meanwhile, Dr. Allan Trench, managing
consultant of the CRU Group, said the
Philippines should follow the example
“There is an ongoing discussion between of Chile in its attractive mining policy for
the Chamber and the representatives investors, as it is rated No. 1 by investors
of the Mining Industry Coordinating based on a recent Fraser Institute survey
Council (MICC) in charge of putting that considers three criteria, including
together the new fiscal regime under mineral potential and mining fiscal
the EO (Executive Order) 79. And as part policy.
of that, the COMP has put forward its
recommendation and argument which “Chile’s investment policy is five to six
is sort out today and what it believes times more attractive than any place
what the share should be,” he said. in the world, including the Philippines,
even if the Philippines also has huge
Hillier noted that mining investors really mineral potential,” said Trench.
expect a higher rate of return in less
developed countries like the Philippines
 15

WB’s Stanley: Economic linkages,

multiplier effect of mineral Michael Stanley
development sector can sustain Lead Expert, Sustainable Energy,
Oil, Gas, & Mining Department
bigger growth World Bank Group

The government should
maximize “economic linkages”
from mining so it will contribute
to national development even
when the Philippines finally
comes out with a stable and
competitive tax regime.
A framework called Average Effective
Tax Rate (AETR), which compares
taxation between mining countries,
has indicated that the Philippines has
among the world’s highest tax rates
for mining based on an International
Monetary Fund (IMF) report.
Michael Stanley, the World Bank
Group’s Mining Expert, affirmed
during the Mining Philippines 2013
Conference that the use of the
AETR as a tax comparison system
between countries is “internationally
acceptable.”
AETR is a way of measuring if a country
has a high or low tax imposition in
comparison to other countries. However,
having affirmed that the AETR system is
of international standard, Stanley said
the Philippines should concentrate on
using mining operations to create a
domino effect in rural economic activity.
“What government should focus on is
on a more robust curve ... It actually
becomes a better curve than the mine
(tax) curve itself. Revenue comes not
only from the mine itself but from other
services it creates,” Stanley said.
Stanley (picture aboved) assured that
the Philippines can avoid the feared
“resource curse” concept by ensuring
that revenues from mining are
managed and used properly for rural
development.
“Resource curse countries are those that
fail to use (resource revenues) from the
mines that leads to the curse, as these
countries have the fewest economic
linkages,” he said.
The resource curse or “Paradox of
Plenty” concept refers to conclusions
that countries rich in natural resources,
like minerals or oil and gas, are inclined
to be less economically developed, as
these depend on highly-volatile foreign
revenue sources. The concept is largely
associated with oil-producing countries
in the Middle East, including Iraq, Iran,
Saudi Arabia, and Kuwait.
The Philippines, under the AETR “apples
to apples” comparison system, has
been tagged as having among the
highest mining tax charges, particularly
standing at around 60 percent of the
total value of a mine project for the
MPSA or mineral production sharing
agreement contract.
Local mining tax impositions could go as
high as 80 percent for the FTAA contract
or financial and technical assistance
agreement that was designed to attract
foreign investors to Philippine mining.

COMP sends letter to MICC detailing WB, IFC,

AIM findings on mining tax
In an effort to better frame
the current discussions on
the mining fiscal regime, the
Chamber of Mines of the
Philippines (COMP) has written
President Benigno Aquino III
through the Mining Industry
Coordinating Council (MICC), addressed to President Aquino through
detailing recent findings by MICC co-chairman and Finance
experts who appeared at Secretary Cesar V. Purisima.
the Mining Philippines 2013
Conference and Exhibition. COMP President Benjamin Philip G.
Romualdez and board director Gerard H.
The letter, sent September 25, was to page 16
16
COMP sends letter to
MICC detailing WB,
IFC, AIM findings on
mining tax
from page 15
Brimo detailed the research findings of
experts from the International Monetary
Fund (IMF) and the Asian Institute
of Management (AIM) Policy Center
and statements from officials of the
World Bank and International Finance
Corporation (IFC) during the Mining
Philippines 2013 Conference.
“It is our hope that by updating you of
these findings by experts… regarding
the country’s fiscal regime for mining,
we would be able to frame the fiscal
regime discussion in a different light
and give a global perspective on how
mining is viewed by economists as a key
factor in growing a nation’s economy,”
the letter to the President said.
Romualdez and Brimo said that taken
COMP places ads to support positions
on Mining Act, revenue sharing
To support its positions on the
constitutionality of the Mining
Act in the Supreme Court and the
discussions on mining revenue
sharing with the government,
the Chamber of Mines of the
Philippines (COMP) drafted and
placed advertisements in several
newspapers and magazines
starting in August.
Through the COMP Communications
Committee, full-page ads were crafted
and placed with the Philippine Daily
16
collectively, the experts’ findings “are structure, which will allow government
significant and we feel should be taken a larger take when mineral prices are
into consideration by government.” high, will go a long way to achieving the
industry’s growth, they added.
“We fully understand the desire for
government to optimize benefits from The COMP officials stressed that the
the extraction of the country’s mineral Chamber is “happy to continue its
resources, but we strongly feel that the dialogue with the MICC on a new tax
mining fiscal policy reform should be structure” despite several tax proposals
studied well and deliberated carefully,” already being prepared by the Council.
the COMP officials said.
“We have noted government’s
“Our apprehension is that government perspectives on our industry and are
seems to be engrossed at arriving at a keenly aware of the need to balance
tax take on gross revenues that could environmental and social concerns with
be regressive and make the industry mineral resource development,” the
uncompetitive,” they added. letter began.
Romualdez and Brimo pointed out that “We also appreciate the fact that
government’s tax take can substantially government, as mentioned by Senate
increase “not from those operating President (Franklin) Drilon (who was the
and paying substantial taxes, but from keynote speaker of Mining Philippines
having the right policies that encourages 2013), considers responsible minerals
the growth of a responsible, large-scale development as a growth driver of the
mining industry.” economy, and we are committed to live
up to that expectation.”
A competitive and progressive fiscal
Inquirer, Philippine Star, Manila Bulletin, The first newspaper ad, titled “Green
Manila Standard Today, Business World Mining: How the 1995 Mining
and Business Mirror. The ads carried the Act protects our environment,”
tag line “We think, we care, we invest details what mining companies do
and we act.” before constructing a mine site,
during operations and after mine
In addition, COMP sealed a 10-issue decommissioning, along with before-
advertising contract with the Philippine and-after pictures of mine sites such as
Rotary Magazine, the official monthly Sibutad in Zamboanga del Norte and
magazine of the Rotary Club in the Rio Tuba in Palawan.
Philippines, starting with its September
2013 issue and carrying the same ad This ad drew interest even from anti-
material run in the newspapers. mining groups. COMP learned that
to page 16

MGB opposes “10-50” single
tax scheme for mining
The Mining Industry
Coordinating Council (MICC)
may scrap the proposed unified
tax collection scheme for the
mining industry in a bill it drafted
following a concern raised by
the Mines and Geosciences
Bureau (MGB).
Under the draft bill titled “Philippine
Mining Revenue Sharing Arrangement
Act of 2013,” MICC seeks a government
share of 10% of gross production value
of mining projects or 50% of gross
income, whichever is higher.
Environment Secretary Ramon
Paje said the MGB raised a concern
regarding the proposal and submitted
its own recommendation to the
council.
COMP places ads to
support positions on
Mining Act, revenue
sharing
from page 15
lawyer Christian Monsod asked the
Mines and Geosciences Bureau (MGB)
if the facts detailed in the Green Mining
ad were accurate, and reportedly asked
the bureau for more data on the Mining
Act’s environmental provisions.
MGB Director Leo Jasareno wrote
Nestor Arcansalin, director of the
Resource Base Industries Department of
the Board of Investments, saying the tax
scheme being eyed will result in lower
government share in mining revenues.
“For instance, in the case of the gross
production value of mining for the year
2011, which is P163.2 billion, the total
taxes paid by mining contractors during
the same year amounted to P22.2
billion. This is equivalent to 13.6% of
gross production value,” he explained.
“If this is the case, we are instead
proposing to just implement the
present fiscal tax regime but less the
incentives plus 5% of the gross sales
as royalty payment, applicable to both
mineral and non-mineral reservation
The second ad bore the headline “What
a vibrant and responsible minerals
development industry can do for the
Philippines.” Using check boxes, the ad
indicated that the mining industry can
provide the country a higher GDP (gross
domestic product), more jobs, more
government revenues, helps poverty
alleviation, and environment protection
leading to inclusive growth.
These benefits, the second ad stressed,
“will lead to a continuous and sustained
17
areas,” Jasareno said.
Paje said MGB’s proposal will still go
through deliberations by MICC.
MICC is an inter-agency body created
by virtue of Executive Order No. 79 – the
Aquino administration’s mining policy.
The council is tasked to formulate a fair
revenue-sharing arrangement between
government and mining firms.
“Whatever we submit to the President
and to Congress should be better than
the existing revenue-sharing scheme,”
Paje stressed.
“And natural resources are finite
resources. We should be able to get an
equitable share from it,” he added.
development for future generations,
through a stable platform for responsible
minerals development in the country.”
COMP’s ads in Philippine Rotary
Magazine, meanwhile, are found in the
inside-front cover until its June 2014
edition. Digital copies of the ads will be
posted on www.chamberofmines.com.
ph.
18 18

SMI revising approach on Tampakan Project

(Note: This is the full, unedited version of Sagittarius Mines Inc.’s press release on
12 August 2013. This can also be found online at www.smi.com.ph)

SMI will be taking a new
approach to the Tampakan
Copper-Gold Project as part
of an effort to place particular
focus on a number of the key
challenges facing the Project.
SMI Executive Vice-President, Justin
Hillier, said that after consideration
of a range of options presented by
SMI management, shareholders have
endorsed a revised approach for the
Project, with a renewed focus on
enhancing collaboration with National
Government partners and other
stakeholders, to resolve the challenges
facing the Project.
“Over the past few months SMI has
carried out a review of the Project
including an assessment of progress
to date, ongoing and emerging
challenges, and the current approach
to advancing the Project.
“The outstanding issues and challenges
facing the Tampakan Project include the
resolution of the South Cotabato open-
pit mining ban, the definition of the
pathways to project approvals from all
levels of government, and the gaining
of consent and the resettlement of
impacted communities,” Hillier said.
“With these challenges as
unresolved, it has not proved possible
to make adequate progress toward
our Project goals and, without a
fundamental change in approach,
progress is unlikely to improve in the
foreseeable future. Therefore, it is timely
for a change of approach to give the
Project every opportunity to progress in
a reasonable timeframe,” he said.
“Today we have commenced a revised
work plan that tightens our focus
on resolving these issues. We look
forward to working with the National
Government through the Mining
Industry Coordinating Council
address these challenges.
“This plan will reduce current activity
levels and expenditure on the Project,
and regrettably this reduced activity
and expenditure will result in staff
downsizing and a reduction in the
utilization of contractors.
yet
“This decision has not been taken lightly;
however, we expect it will take some
time to resolve these complex matters
effectively before the Project can again
resume a path toward development.
“We will continue to support our host
communities through our committed
development programs.
“The Tampakan deposit is a world-class
resource, and SMI remains committed
to working with our key stakeholders
to resolving the current challenges
facing the Project, and realizing its full
to potential.”

Economic effects of mining

is exponential, says top Dr. Bernardo M. Villegas
economist Villegas Co-founder of the Center for Research and
Communication (CRC) and Vice President of the
University of Asia and the Pacific (UA&P)

There is no doubt that the
Philippine mining industry
makes a significant contribution
to the economy -- reaching
P299.5 billion or 3.3 percent of
gross domestic product or GDP top economic think tanks said.
in 2011 – through its multiplier
effects and not just through tax In a briefing organized by the
revenues or export earnings, the Chamber of Mines of the Philippines
co-founder of one of the country’s to page 20
 19

COMP’s BOD commends SMI’s Mark Williams

Mark Williams
former General Manager
Sagittarius Mines Inc.

The Board of Directors (BOD)
of the Chamber of Mines of the
Philippines (COMP) has given
Mark Williams, former general
manager of Sagittarius Mines
Inc. (SMI), a commendation in
recognition and appreciation of
his distinguished service to the
association.
In a resolution on August 27, the COMP
BOD “acknowledged and expressed its
strong appreciation” to Williams “for his
outstanding service to the Chamber
of Mines and notable contribution to
the Chamber’s mission of promoting
responsible minerals development in
the Philippines.”
Williams left SMI after the revised September 30 after serving as its GM
approach of its parent company, for six years, led the committee “with
Glencore Xstrata, toward its operation great professionalism, dedication, and
of the Tampakan Copper-Gold Project distinction.”
in South Cotabato. The downsizing saw
SMI’s workforce cut by 90 percent and “Mark Williams graciously volunteered
its operating budget by 75 percent. his time and expertise to the Committee,
providing invaluable insights,
Williams represented Sagittarius perspective, and guidance throughout
on the COMP Board, and since the organization and implementation
March 2013 co-chaired the special process,” the Board commendation
Communications Committee read. “The Committee’s plans and
comprised of member-companies’ recommendations will assist the
communications professionals tasked Chamber greatly in fulfilling its mission.”
to organize, develop, and implement
a communications program for the Williams and his family headed back
Chamber. to their native Australia after his SMI
assignment.
The BOD said Williams, who left SMI on

Diwata’s first anniversary highlights women

in mining profession

Women have reached great
heights in the Philippine mining
industry, as emphasized by
the four speakers featured in a
special edition of the “Bulong
Pulungan sa Sofitel”media forum
to celebrate the first anniversary
of the DIWATA – Women in
Resource Development Inc. last
July.
Redempta Pena Baluda, Eliza
Laudencia, Maria Ines Rosana Dacanay
Balangue-Tarriela and Rodalee E. Ofiaza
noted the benefits of mining and the
challenges of a career in mining in
the forum also attended by DIWATA’s
president Atty. Patricia Bunye and
chairperson-founder Ambassador Delia
Albert.
R. A native of Baguio City and a former
foreign affairs secretary, Albert stressed
that to check poverty in the Philippines,
“we should create wealth by using our
natural resources,” echoing what South
African President Nelson Mandela told
her in a conference.
Albert said that as an organization,
to page 22
20
Economic effects
of mining is
exponential, says top
economist Villegas
from page 18
(COMP), Dr. Bernardo M. Villegas, co-
founder of the Center for Research
and Communication (CRC) and vice
president of the University of Asia and
the Pacific (UA&P), said their studies
indicate that through inter-industry
linkages, “the mining industry has major
impacts on employment, income and
consumption that go much beyond the
taxes paid by the mining enterprises.”
“I would like to reiterate that we
cannot judge the mining industry
just on the basis of the taxes that they
pay. That’s a very small percentage
of the contribution of the mining
industry to the common good,” said
Villegas, who received his Ph.D. from
Harvard University and specializes in
development economics, business
economics and social economics.
Villegas cited the study of UA&P’s Dr.
Cid Terosa, who is “the most focused on
the mining industry” and who used the
tools of Input-Output or Inter-Industry
Analysis. These measure the favorable
impacts of the industry on the total
GDP, on total investment, on household
income, and consumer spending,
Villegas said.
Through this analysis, Villegas said
the total output multiplier of the PH
mining industry is 2.6. “This means that
2.6 pesos additional input is created in
the economy every time final demand,
such as export demand, by the mining
industry increases by 1 peso. So with
a 1-peso increase in the demand for
mining industry, there is an additional
increase of 2.6 pesos through all these
multiplier effects of the industry,” he
said.
Using 2011 data, “which was incidentally
a good year for mining” and when metals
prices in the world market reached a
peak, mining exports reached P115.2
billion, said Villegas, who stressed he
“has been really following the mining
industry at least since the 1970s.”
“The total output multiplier effect
was P299.52 billion,” he said. “So you
multiply P115 billion by 2.6 and you get
P299.52 billion, which is 3.3 percent of
GDP in 2011. And 3.3 percent of GDP is
not an insignificant amount. This was in
2011 when metal prices were definitely
higher than they are now.”
Villegas also explained mining’s impact
using the same “commonsensical
approach” that he said President
Benigno Aquino III used to highlight the
effect on the country of the business
process outsourcing (BPO) industry
during his State of the Nation Address in
July 2012.
Quoting the President’s SONA last year,
Villegas said that “in addition to directly
employing 1.3 million workers by 2016,
the BPO sector will actually generate an
additional estimated 3.2 million jobs.”
“So the BPOs have inter-industry linkages
with some of these industries mentioned
by the President – taxi drivers, baristas,
restaurants, name it,” said Villegas, who
has been special economics adviser to
five Philippine presidents and numerous
legislators and local officials. “In the
same way, the mining industry has inter-
industry linkages with all types of public
utilities, all types of consumer goods
industries that sell consumer goods to
the households, and so on.”
20
Speaking of the “common good,”
Villegas said that is “not just tax revenues
or export earnings but employment
generation, the nurturing of small and
medium scale industries through the
multiplier effects, the stimulation of
consumption in the communities where
various establishments, whatever they
are, are located.”
Mining can help stimulate all of that,
Villegas said, through its multiplier
effect on the following:
• Household income and consumption
(multiplier of 0.32 according to the CRC/
UA&P study; the additional household
income induced in the economy by
mining exports in 2011 reached P36.9
billion);
• Employment (mining added 6.3
percent to the total national labor
force, or 179,158 additional direct and
indirect jobs in ’11);
• Compensation received by mining
workers (P6.8 billion in 2011, leading to
P10.8 billion in induced spending); and
• Fiscal spending (P10.4 billion total
taxes paid by the mining industry in
2011, leading to an additional output of
P37.4 billion).
“Only by considering all of these
multiplier effects can we arrive at the
significance of the mining industry,”
said Villegas, the author of several
economics textbooks widely used
throughout Philippine schools and
universities.
“That’s why we cannot capture the
significance of any industry, whether
mining or not, until we take a look at
its fiscal multiplier, its employment
multiplier, its household consumption
multiplier, and so on. That’s the only
way to be able to say whether or not
an industry is making a significant
to page 21

Economic effect
of mining is
exponential, says top
economist Villegas
from page 20
contribution to the economy,” he
added.
Primed to develop the
countryside and uplift the
poor
In the same briefing, Dr. Villegas said
large-scale responsible mining is
primed to develop the countryside
and should be promoted alongside
agriculture to help uplift the three-
fourths of the country’s poor – or an
estimated 21 million Filipinos -- who
reside in remote and rural areas.
“It is obvious that mineral resources are
usually in the boondocks, in the most
remote areas. And it’s also obvious
that 75 percent of the poor, those who
belong to the so-called base of the
pyramid, are in the countryside and
rural areas. So if we are going to benefit
the poor, we must have economic
activities in the countryside,” Villegas
said.
Villegas said it would be “prejudicing
the poorest of the poor if we prevented
investment activities” like mining and
agriculture in the countryside. He put
both industries “in the same category
of having a direct contribution to
addressing our poverty problem.”
In fact, having urban poor—a clear
and present concern for Metro Manila
and other cities across the country—
is “really a result of not having done
enough in the countryside,” added
the Harvard-educated professor, who
specializes in development economics,
business economics and social
economics.
“Why are they (urban poor) here?
Because they have nothing to do in
the countryside,” Villegas said. “And “If
we prevent our mineral resources from
being developed, we will see a lot more
people in Manila who are squatters,
informal settlers, and so that will
definitely be a disservice to the country.”
Mining and agriculture is also not an
“either-or” situation because most mine
sites are in remote areas that are not
arable or fit for farming, the economist
added.
“I’m not saying mining should be
everywhere. But I’m sure it can be
proven by experts that a lot of the areas
where there are mineral ores are not
agricultural areas. So we should really
promote both agriculture and mining
operations,” he said.
Masbate Gold Project as an
example
One example of how responsible
mining can develop the countryside is
the Masbate Gold Project (MGP), which
a team from CRC and UA&P studied
since April of 2007. By 2011, the MGP’s
total economic impact amounted to
P15.8 billion on the national level and
P9.96 billion in the Bicol Region to
which Masbate province belongs, said
Villegas.
“That’s another thing about a mining
company: it does make a contribution
to the nation, it has a national impact.
And in addition, it has a regional impact,”
he said. “Again, you cannot measure the
significance of a mining activity only by
looking at its national impact or only
21
its regional impact; you have to take the
two together.”
By the time the MGP engaged in drilling
and ore-refining activities in 2009, the
project generated an average of 1,245
direct and indirect jobs per month, said
Villegas, with around 70 percent of those
employed residents of Masbate. “
A total of 14,227 jobs were created
nationally during the MGP’s construction
and development stage, and another
15,664 during the mining and processing
stages, “of which 54 percent were
employed from the Bicol region – again,
more than 50 percent from the region
itself,” the economist added.
The economic activities induced by
the MGP “are indirectly responsible for
creation of economic value through its
supply chain -- so this is again a reference
to the forward and backward linkages
(created by mining),” Villegas said.
Higher household incomes “directly
and indirectly resulting from mining
activities” also stimulated further
spending in Masbate and Bicol and
thus economic production,” added
the economist, who has advised five
Philippine presidents and numerous
local officials.
Responsible mining’s multiplier
effect, both regionally and nationally,
is supported by the fact that “when
a mining company locates in the
boondocks, it’s the one that has to build
the farm-to-market roads, it has to build
water facilities, sometimes it’s the one
who provides electricity – and those
people (in remote areas), they would
never have those amenities without the
mining investment,” Villegas said.
22
Diwata’s first anniversary highlights
women in mining profession
DIWATA wants to promote dialogues
to make people aware of the benefits
of responsible mining.
Meanwhile, the four Filipina geologists
called themselves “rare gems” and
stressed that in the Philippines women
are top, well-paid executives in mining
corporations. What used to be a
male-dominated profession now sees
“about equal in number among men
and women,” according to Laudencia.
For instance, Baluda is the vice
president for exploration of Philex
Mining Corp. She has been with the
company for 28 years, straight after
graduating from the University of
the Philippines and placing eighth
in the 1976 national licensure board
examination.
Baluda said she was “luckier than most
women working in the cities” for being
able to work with Philex in Benguet
and has never regretted the decision
to stay with the company through
three decades.
from page 19
At Philex, Baluda said, she met her
husband -- then a nurse for Philex -- and
at present all four of their sons hold
various jobs in the mining firm.
Laudencia, meanwhile, leans on her 32
years as a geologist as the executive
director of Geoscience Foundation
Inc., which manages projects in
mining, environmental hydrogeology,
engineering geology and research.
“Geology rocks!” noted the mother of
six.
“Mining impacts everyone,” added
Balangue-Tarriela, an associate
professor and the deputy director for
academic affairs of the National Institute
of Geological Sciences (NIGS). “The key
word is responsible mining. We can
develop centers for mining awareness
and industries in the different regions,
so people will stop coming to Manila to
look for jobs.”
Apart from her geology degree at
UP, Balangue-Tarriela obtained her
doctorate in Physical Sciences from the
School of Earth Sciences at La Trobe
University in Victoria, Australia, and
her Masters in Energy Technology from
the Asian Institute of Technology in
Bangkok.
She also noted that a new geology
graduate, even before passing the
board, “is guaranteed a starting salary of
P50,000, and often, as is the case with
some of the women geologists, job
offers come in even before they finish
22
the course. And when you pass the
board exams, you can even get a raise
of at least P10,000.”
Ofiaza, the youngest resource person
on the Bulong Pulungan panel, finished
mining engineering at UP in 1996.
She is currently a technical adviser
to the president of Sulu Sea Minerals
Management Corp.
“CSR in mining is not new,” said Ofiaza,
noting how Baguio its and environs
“flourished” from a tiny hill station for
American colonists seeking to escape
the warm lowland, to the city it is now
largely because of revenues from the
mining companies.
She said mining companies put in
provisions for “roads, power, water” long
before they even hope to begin making
profits, and all of these infrastructures
“have an impact on the surrounding
communities,” empowering them and
encouraging the people “to protect the
environment.”

MCA’s Mitch Hooke visits PH, speaks at
Mining Luncheon
Mitchell “Mitch” H. Hooke,
president of the Minerals
Council of Australia (MCA),
visited the Philippines from
August 11 to 17 to speak at the
Philippine Mining Luncheon
and meet with top government
and industry officials.
During his visit, Hooke paid courtesy
calls on Executive Secretary Paquito
Ochoa, Finance Secretary Cesar
Purisima, Trade Secretary Greg
Domingo, Environment Secretary
Ramon Paje and Australian
Ambassador to the Philippines Bill
Tweddell.
Hooke also met with the Board
of Directors of the Chamber of
Mines of the Philippines (COMP),
gave a workshop to the COMP
Communications Committee and
other representatives from COMP
member companies, and visited the
Tampakan Copper-Gold Project site in
South Cotabato through the efforts of
Indophil Resources NL and its officials,
Gavan Collery and Neil Grimes.
He also graced the Wallace Business
Forum Breakfast in Makati City, a
meeting of the Joint Foreign Chambers
(JFC) Mining Committee, and a press
conference with the DIWATA – Women
in Resource Development at the Manila
Polo Club after the Mining Luncheon.
It was Hooke’s second time in the
Philippines since June 2007, when
Mitchell “Mitch” H. Hooke
Minerals Council of Australia
he was invited to speak at the 7th
Asia Pacific Mining Conference and
Exhibition in Makati City as then-
chairman of the APEC Members of the
Mining Industry Leaders Forum.
Hooke is set to step down as president
of the MCA at the end of 2013 after not
renewing his contract with the Council,
which he has led since 2002, according
to MiningAustralia.com.au. For a time
he was also Chair of the Full Council of
the International Council of Mining and
Metals based in London.
Message at Luncheon
At the Mining Luncheon organized by the
Philippine Mining Club, Hooke stressed
that the sustainable development of a
nation’s natural resources endowment
must be pursued for the social and
economic development of their people,
“and more particularly in lifting their
people out of poverty.”
He said he “could not fathom how
anybody can wittingly or unwittingly
condemn people to a life of wretched
poverty for want of enlightenment, for
want of the courage to step outside
one’s comfort zone, and for want of
the conviction to learn from others
who have successfully developed their
minerals endowment on a platform of
mutual respect and trust.”
Hooke stressed that responsible mining
“has made a remarkable contribution
to the transformation of emerging
23
President
economies” as well as in Australia, where
the industry’s boom “translated into the
highest terms of trade in 150 years.”
Mining helped boost Australia’s
economic output “by a marginal
increase of 15% per year, compared
with what would have been without the
boom” which in turn, created jobs not
just in mining but across the economy,
Hooke said.
It also lifted real household incomes
in Australia “by an extraordinary 40%
by 2011-2012 compared to the start
of the decade, which is massive when
compared to an increase of only 9% in
the preceding decade,” he added.
“This means Australians’ household
income is $400 a week better off because
of the mining boom,” Hooke said. He
also noted that their mining industry
also became the biggest employer of
indigenous Australians, providing them
with “paths to education, training and
jobs.”
Turning to the Philippine setting, Hooke
warned those who “simply would like
responsible mining to go away” to “be
careful what you wish for” because once
the opportunity to develop the industry
passes, in light of constantly growing
demand for minerals worldwide, “it will
likely be gone at least for the duration of
this generation.”
to page 24
24
MCA’s Mitch Hooke
visits PH, speaks at
Mining Luncheon
from page 23
He revealed that in a dinner hosted
by the Australian Embassy, a economics, environmental and social
“senior member of the Philippine
administration” pointed out to him that
the country’s mineral resources “weren’t
going anywhere, that the country had
time to contemplate their development,
and that there was a natural inevitability
that mining companies would be there
to develop them.”
“I can’t really dress it up in any other
way – but in my view, in mining
jargon, that is ‘fool’s gold,’” Hooke told
the Mining Luncheon, stressing that
“there is real danger in that sort of
complacency” which was “not unique
to the Philippines.”
Not mining yet, Intex spends over
P140M for environmental protection
Still in the exploration stage,
Intex Resources Philippines
Inc. has spent, from 2008 up to
June 2013, over P140 million for
environmental protection and
management initiatives for its
Mindoro Nickel Project (MNP).
A huge portion of these expenses
were disbursed in 2008 and 2009 at
the height of Intex’s exploration and
The danger of missing the boat, he
clarified, was losing the Philippines’
potential position as a supplier of
minerals to the world, and especially
of rapidly growing Asia, given its vast
natural reserves that remain largely
undeveloped.
“We have witnessed the shift from a
growth super-cycle to a growth mega-
cycle and we are now in a ‘new normal’
– a sustained plateau of development
and growth -- with its inherent volatility,
what I like to refer to as ‘cyclical noise,’”
Hooke said.
In closing, he noted that business
confidence in the Philippine mining
industry depended “on the composite
of production costs and productivity, a
nation’s public policies and sovereign
risk, and the relationship between
a company and its community –
fundamental to a social licence to
operate.”
Sven Monrad Jensen
Executive Vice President
Intex Resources Philippines Inc.
drilling activities in portions of its
property, which straddles the provinces
of Oriental Mindoro and Occidental
Mindoro.
Through its innovative design and
unique process solutions, the Mindoro
Nickel Project is expected to set new
standards for the nickel industry
with its unprecedented low-carbon
emissions, independence of fossil fuels,
24
These factors, if aligned, would help the
country “to invest and to grow, and to
sustainably convert natural endowment
into societal capital. At the end of the
day, this is the very foundation to this
industry’s commitment to sustainable
development, with all 3 pillars –
-- in balance.”
“Remember, you can’t be in the social
‘pink’ or the environmental ‘green’ if you
are not in the economic ‘black’ – and
vice versa,” Hooke ended.
A copy of Hooke’s speech at the
Mining Luncheon may be found
on the Chamber’s website, www.
chamberofmines.com.ph.
and exceptionally low environmental
impact.
Leo Cleto Gamolo, Intex president, says:
“With the end in view of systematically
and effectively mitigating the potential
impacts of minerals exploration
and, subsequently, development,
on both the environment and host
communities, Intex commissioned a
to page 25
 25

Not mining yet, total rehabilitation. These measures
include land, water, air, and noise
Intex spends pollution control, soil loss and erosion
over P140M for management, rehabilitation and
reforestation, and environmental
environmental monitoring.
protection
from page 24 “Intex has also taken an interest in
helping solve Mindoro’s perennial
thorough assessment or baseline study flooding problems – a major concern
of Mindoro.” that has antedated our exploration
activities on the island,” Gamolo adds.
“The study was conducted by a host of “Our company commissioned Phillips
Filipino and foreign experts, including Technical Consultants Corp., the
environmental engineers, botanists, consulting arm of the FF Cruz Corp.; as
mining engineers, environmental project well as DHI Water and Environment Sdn
managers, biologists, social scientists, Bhd, a leading international expert on
hydrologists, and agro-foresters, among water management, to conduct flood a
others.” study for the Bucayao, Panggalaan and
Mag-asawang Tubig Rivers in Oriental
The baseline study was led by the Mindoro.”
University of the Philippines Los Baños
Foundation, Inc. for an inventory of In 2009, Intex constructed Gabion
the island’s flora and fauna. Lichtel protection dike structures worth P10
Technologies, Inc. undertook the million for the people of Barangay Alcate,
comprehensive social and environmental Victoria, Oriental Mindoro to avoid
studies, which became the cornerstone further deterioration of the road leading
of MNP’s Environmental Impact Study to communities in the municipality,
(EIS). which have been seriously damaged by
previous floods.
The EIS provides the framework for,
among others, Intex’s Environmental The company spent an additional
Management Plan, which identifies P29 million for an in-depth study by
the predicted impacts, the mitigating independent experts and scientists from
and enhancement measures, the Golder Associates PTY Ltd to determine
responsible parties that will implement the real cause of flooding in Mindoro
the mitigating measures, the schedule of Island. The completed study has since
implementation, and the guarantees or been turned over to local government
programs that will address the impacts. officials.
the harmful effects of climate change,
maximizing land use, and protecting
damaged ecosystems while providing
livelihood opportunities to residents
of the company’s host communities,”
Gamolo stresses. “For the first six months
of June alone, the company has spent over
P2 million for its Livelihood Enhancement
through Agro-Forestry (LEAF) project.”
Initially intended as Intex’s response
to government’s call for private sector
participation in the National Greening
Program, LEAF has, since 2012, been
encouraging local farmers to better
utilize their land and establish sustainable
income, growing over time as more crops
reach harvesting stage.
“Overall, our LEAF partners in the Sablayan
Penal Colony in Occidental Mindoro
and the Mangyans of Victoria, Oriental
Mindoro have propagated some 200,000
plants,” Gamolo points out. “We have
likewise planted more than 45,000 trees
over currently a 60-hectare area.”
For the National Greening Program itself,
Intex has either planted or donated
approximately 144,000 trees in nearly 300
hectares over more than 192,000 hills in
Mindoro Island.

The environmental protection and “While the government has temporarily

management measures encompass revoked Intex’s Environmental
all stages of the mine life, from Compliance Certificate in 2009 in
exploration to development, response to unfounded accusations by
construction, commissioning anti-mining groups, Intex has resolved
operation, and decommissioning and to continue its efforts to mitigate
26 26

Draft mining bill among DENR

updates on EO 79 implementation

The drafting of a new mining bill
for submission to Congress and
the creation of a mining “no-go
zone map” are some of the recent
actions taken by the government
to implement Executive Order No.
79, according to a recent update
on the Aquino administration’s
mining policy released by the
Department of Environment and
Natural Resources (DENR).
To be presented to the Mining Industry
Coordinating Council (MICC) for
final review and submission to the
legislature, the draft bill is one of eight
actions taken by the DENR to implement
EO 79 as of August 2013.
Other actions are the no-go zone map,
prepared as a “major input” to the
Integrated Land Use Map that aims to
clearly show areas closed to mining;
the creation of regional one-stop-shops
(OSS) for mining applications; and the
country’s participation in the Extractive
Industries Transparency Initiative (EITI).
Four other actions the DENR noted are:
• Nationwide consultations held
to draft a new small-scale mining
guidelines, also to be presented to the
MICC for approval;
• The targeting of 15 mineral
reservations to be identified and
assessed within 2013;
• The creation of regional multi-
sectoral teams to review the
performance of existing mining
operations, along with the start of
the “cleansing process” for approved
mining tenements by sending “show-
cause” letters to those concerned; and
• The creation of a Task Force on Illegal
Mining headed by the Department of
Interior and Local Government (DILG)
and the subsequent launching of
operations against illegal mining.
“The government is now ensuring that
clear and predictable policies for more
secured mining investments will be set
in place under good governance and
the principle of responsible mining,”
the DENR presentation said.
“Mindanao, with its high mineral
potential, stands to greatly benefit from
the pursuit of responsible mining,” the
report added.
The report also took note of four
upcoming major mining projects,
three of them run by members of the
Chamber of Mines of the Philippines:
• The $1.6-billion Sumitomo HPAL
(High Pressure Acid Leach) processing
plant of Taganito Mining Corp. in
Claver, Surigao del Norte, launched in
September;
• The Boyongan-Bayugo Copper-Gold
Project of Philex Mining Corp. in Mainit
and Placer, Surigao del Norte;
• The Kingking Copper-Gold Project of
Nationwide Development Corp., Russel
Mining-St. Augustine Gold Mining Corp.
in Pantukan, Compostela Valley; and
• The Tampakan Copper-Gold Project
of Sagittarius Mines Inc. in South
Cotabato, Sultan Kudarat and Davao
del Sur.

Mareng Winnie’s distorted analogy,

nondisclosure
(Note: Below is COMP’s Letter to the Editor replying to the column of Prof. Winnie Monsod in
the Philippine Daily Inquirer’s August 9, 2013 issue, edited by PDI for brevity. To read Monsod’s
column online, go to http://opinion.inquirer.net/58521/worse-than-the-pork-barrel-scam)

We would like to express our by Solita Monsod. to the current controversy surrounding
deep concern over a column Congress’ use of their pork barrel funds.
titled “Worse than the pork barrel Monsod compared the revenue-sharing And she claimed that the law cheats the
scam” (Opinion, 8/9/13) written provision of the Philippine Mining Act to page 27

Mareng Winnie’s
distorted analogy,
nondisclosure
from page 26
people of at least P7 trillion, an amount
which would take 158 years of pork
barrel scamming to match.
The fact is, the Department of Finance
has engaged the assistance of the
International Monetary Fund (IMF) to
review the Philippines’ mining fiscal
regime, and the latter has found that
the current fiscal regime is “tough” on
mining companies and less competitive
compared to the fiscal regimes of other
major mining countries.
While we take exception to Monsod’s
Replying to Winnie Monsod - Again
(Note: Below is COMP’s Letter to the Editor replying to a column by Prof. Winnie Monsod, which
appeared in the Opinion section, Page 4 Section 1, of Business World’s September 23, 2013
issue. To read Monsod’s column online, go to http://www.m.bworldonline.com/m_content.
php?section=Opinion&id=76322)
Dear Messrs. Santos, Belleza,
We would like to express our grave
concern over certain statements made
by Prof. Solita Collas-Monsod in an
article entitled “Old tricks” in her column
“Calling a Spade” in your newspaper last
11 September 2013.
Once again, Prof. Monsod has made
misleading generalizations to vilify
the industry, comparing local mining
operations to counterparts abroad out
of context, and citing studies made
by foreign experts when each and
every mine must be considered in
both its local and national context. The
challenge of responsibly developing
distorted analogy, we respect her
right to free speech. However, to call
the Mining Act a “scam” (that purports
to steal trillions of pesos from the
Filipino people) is irresponsible; it is
statement that belittles the hundreds
of thousands of people who work in the
mining industry; and it implies that the
members of the Ninth Congress, former
President Fidel V Ramos, and the justices
of the Supreme Court in 2005 were all
accomplices in or, at least complicit
with, the “scam.”
More importantly, Monsod deliberately
failed to disclose the fact that her
husband, Christian Monsod, is lawyering
for the petitioners in Hontiveros, et
al. vs. DENR, et al., a case challenging
the constitutionality of the Philippine
the Philippines full mineral potential for
the benefit of the nation is very complex
and can easily be misunderstood.
In fact, the study that was cited
was actually refuted in the recently
concluded Mining Philippines
Conference 2013 by the World Bank. The
same source she has quoted.
We certainly take no satisfaction on the
issue of dwindling investments in the
mining sector, and in our predictions
turning out to be correct owing to a lack
of regulatory clarity and consistency. We
are the industry most affected by this
situation. It is not something to crow
about when hundreds of thousands of
27
Mining Act in the Supreme Court. In
fact, Christian Monsod argued for the
petitioners during oral arguments.
Solita Monsod’s failure to disclose
this fact taints her objectivity on this
matter and she should not be allowed
to use the Inquirer as the mouthpiece
of her husband or his clients.
Further, to say that the Philippine
Mining Act of 1995 is a scam larger
than the pork barrel issue is a brazen
attempt to influence an intended
audience.
(Sgd.) ARTEMIO F. DISINI
Chairman
Chamber of Mines of the Philippines
Filipinos depend on mining for their
employment and millions more for
their livelihood.
It’s why we at the Chamber of Mines
of the Philippines have stressed that
government must put in place a
mining regime that is equitable and
competitive so the benefits of the
industry can be felt by every Filipino,
not just the miners.
There has been a de facto moratorium
on mining projects since 2010,
which partly explains why mining’s
contribution to GDP is only 0.7% in
2012 from 1.0 percent in the two years
before that. But even one percent of
to page 28
28
Replying to Winnie
Monsod - Again
from page 28
GDP is not insignificant, since it means
other sectors apart from mining would
have to pick up the slack of producing
billions for the economy.
Also, just because a country like the
Philippines is rich in natural resources
doesn’t mean it has to fall into the so-
called “resource trap” as implied by the
studies cited by Prof. Monsod. A leading
expert in the economics of mining, Dr.
Bernardo Villegas, has stated in recent
reports that through its multiplier
effect, mining contributes 3.3 percent
to GDP and has major impacts on
employment, income and consumption
Incredibly erroneous statements
(Note: Below is COMP’s Letter to the Editor replying to an opinion piece by Cielo Magno of
Bantay Kita, which appeared in the Opinion section, Page 5, Section 1 of Business World’s
September 24, 2013 issue. To read Magno’s article online, go to http://www.bworldonline.com/
content.php?section=Opinion&title=Rebuilding-trust-in-the-mining-industry&id=76482)
We write to correct some incredibly
erroneous statements in an Opinion
article recently published in your
newspaper, by Ms. Cielo Magno,
which appeared in your pages last 16
September 2013.
The title is good: “Rebuilding trust in the
mining industry,”and for the record, we’d
like to begin by pointing out that we
are working hard with Ms. Magno and
her Civil Society Organization, Bantay
Kita, to do just that, in participating
in the multi-sectoral group (MSG) of
the Philippine Extractive Industries
Transparency Initiative or PH EITI, which
will result in greater transparency
“that go much beyond the taxes paid by
the mining enterprises.”
The fact is, mining done responsibly can
become a long-term nation-building
partner of government. Legitimate
large-scale mining companies are the
biggest reforesters in the country.
We contribute billions of pesos yearly
to environmental protection and
enhancement programs.
Our members continue to enrich
the lives of thousands of families by
providing free health and education. We
build whole communities in the middle
of nowhere--places that government
will never go to if not for mining. We
build quality infrastructure such as
roads, schools, churches, hospitals,
water supply, and power supply--every
around the industry – from all sides
including industry, government, LGUs
and Civil Society Organizations.
We would also like to point out
that the PH EITI was initiated by the
President of the Chamber of Mines,
who first proposed the mechanism to
government as a good governance
policy measure back in 2005.
The first erroneous contention of
Ms. Magno’s to deal with – and, to
be fair, she is a victim of widespread
misinformation on this point that has
even reached government circles and
has widely been repeated in the media
28
conceivable need of our stakeholders.
As we stressed in our recent annual
conference, we do all of these not
because of government regulation,
but because responsible mining
is good for everyone. This way
everybody wins. All we need is a clear,
consistent, and competitive policy—a
policy that generations present and
future can benefit from.
Very truly yours,
(Sgd.) ATTY. RONALD S. RECIDORO
Vice President for Legal and Policy
Chamber of Mines of the Philippines
– is the “just 2%” nonsense.
As stated in a 2012 report from the
International Monetary Fund, and
confirmed last week by the World
Bank and the International Finance
Corporation, the correct way to look
at Government Share is the Average
Effective Tax Rate or AETR.
The government share of a resource
project – any resource project in any
country – is the total “take” of taxes and
royalties that flow to the public sector
from a project over its entire life. This
share is taken through many taxes,
to page 29

Incredibly erroneous
statements
from page 28
not just one, and through other fiscal
measures. This is Government Take 101.
Evaluating the AETR for the Philippine
mining industry, the IMF concluded
that the government take in Philippine
mining projects is actually higher than
in our comparator countries, and is
therefore not competitive. Read: too
high, and even higher than the 50%
target that has been stated by the
President.
On average, Philippine mining
companies under MPSA contracts
register a 60% AETR--comparable with
Indonesia, although slightly lower
than Peru, Chile, South Africa and
Canada. The Philippine FTAA regime,
meanwhile, indicates more than 80%
AETR, leading the IMF to conclude in its
2012 study that the regime is “tough”
and is not internationally competitive.
The other critical point put forward in
a key speech last week at the Mining
Philippines Conference by Dr. Michael
Stanley, the mining expert of the World
Bank Group, is: “Look at the linkages,
and not just the taxes!”
Setting aside the 5% royalty from the
gross value of minerals by companies
operating in mineral reservations
and the 1.5% of the gross value given
to indigenous people as royalty, the
economic linkages of a mine imbedded
in a community or a remote area
bring enormous development in the
province or the region, with more
goods and services produced from
small enterprises that thrive to sustain
the needs of the communities.
This therefore means more taxes taken
by government overall, and this is
evidenced by the transformation of
communities from fourth-class to first-
class municipalities.
Dr. Stanley stressed, and we quote, that
instead of focusing on the “royalties
curve” or the rise of taxes paid through
royalties, “governments need to focus
on a more robust curve, which is the
economic linkages curve.”
“The more that you embed that mine
in the local community, and have
more regional economic development
around the mine, the more goods and
services come from small to medium
enterprises around the mine, so you get
a more robust tax take overall. So the
big revenue economic impact from a
mine is that second curve,” Dr. Stanley
said.
Meanwhile, we cannot discount the
veracity of Dr. Otto’s findings in his
study that Ms. Magno quoted. However,
the fiscal regime, the average metals
price, the average cost of production—
all of these have changed significantly
since Dr. Otto published his study, not
just for the Philippines, but for the other
countries involved in his study as well.
Reading the material portion of Dr.
Otto’s study (where Table 5.2. is shown)
provides the relevant context for why
the table was included in the first place:
it was to illustrate how changes in Papua
New Guinea’s mining fiscal regime
affected their global competitiveness
for mining investments.
Table 5.2, in which the Philippines
appears in the second-lowest quartile as
Ms. Magno mentions, was therefore not
29
a definitive attempt by Dr. Otto to rank
all mining countries in the world in terms
of their tax take and foreign investor IRR,
and for Ms. Magno to assert it as such
is to mislead the public into reaching a
different conclusion not intended by the
author.
On the contrary, Dr. Otto’s point in
introducing Table 5.2 was to show that
Papua New Guinea was able to improve
its global competitiveness ranking
by eliminating certain onerous taxes,
reducing the corporate income tax and
withholding tax, and fixing the royalty
rate. Dr. Otto’s final sentence on Papua
New Guinea is most telling: “Had the
government not made changes in the
level of royalties, and in the tax regime
more generally in recent years, the
adverse effects on mining would soon
have reduced the benefits that the
country derives from this important
economic sector.”
I personally know Dr. Otto, as he was my
professor at the East-West Center and in
my studies in the United Kingdom, and
I doubt he would purposely undermine
the objectivity of his studies with an
irresponsible statement.
In this case we are sad to see Ms. Magno
misinform the public by spinning a well-
known authority’s studies to distort the
author’s findings. While we do share Ms.
Magno’s sentiment that governance of the
mining industry – as in every industry, as
well as government – must be improved,
we think it’s important to ensure that the
data are correct, and misinformation is
not rebroadcast to suit political ends. In
the end, truth will always prevail.
(Sgd.) NELIA C. HALCON
Executive Vice President
Chamber of Mines of the Philippines
30
Buried Talents: The Mining Controversy
By Dr. Raul V. Fabella, UP School of Economics
(NOTE: This article first appeared in Business World on February 20, 2012. It can also be viewed
online at http://www.econ.upd.edu.ph/perse/?p=755)
Few can put it better than William
Shakespeare in Julius Caesar: “There is
a tide in the affairs of men that taken at
a flood leads on to fortune; omitted, all
their journeys are mired in the shallows
and in miseries.” I can’t help but
think of the Philippine development
experience in Shakespearean terms. For
truly, the annals of underdevelopment
are painted on the tapestry of wasted
opportunity, not on the canvas of
resource scarcity. Japan, South
Korea, and now China have overcome
resource scarcity to become world
leaders in development. They seized
the opportunity offered by galloping
demand in the West for products that
intensively used their then-cheap labor
to jumpstart their march. The oil crisis
in the ‘70s opened the window for gas
savers in the West, and Japan seized
the opportunity to export small cars
that made sense in a high gas price
environment.
Opportunities occur randomly in the
life of a nation but they are seized
only by societies with enough internal
coherence and nimbleness to harness
the fleeting current. Those rent by
indecision and ideological paralysis
will suffocate in the dust of those who
are not. When the Plaza-Louvre Accord
in mid-‘80s forced the Japanese yen to
appreciate from 240 to 140 yen to a dollar,
a Japanese foreign investment tsunami
hit Southeast Asia, which instantly
transformed Malaysia and Thailand into
major electronics export platforms for
the Japanese. Meanwhile, a Japanese
foreign investment delegation coming
to explore the Philippine potential
stayed in Mandarin Hotel. The hotel was
caught in the eye of yet another coup
attempt launched by rightist crazies to
foil the designs of leftist crazies. These
were going to be their partners? We
were too much at each other’s throat
for the stability-obsessed Japanese. The
foreign investment tsunami never even
touched our shores.
The growth rampage of China and
India has created problems for our
manufacturing sector but has also
opened the window for mineral exports.
Australia, Brazil and Russia have seized
the day and continue to do so. But the
Philippines is a mineral-rich country too,
a grace we received from Providence in
exchange for travails of being in the
Ring of Fire. We could easily join the
mining-boom club if only we did not let
our inner demons get in the way. As it
is, we are literally burning our chances.
In early October last year (2011), mining
operations of Nickel Asia’s Taganito
Mining Corp. and the Platinum Group
Metals Corp. in Surigao del Norte were
attacked and saw their assets burned
by the NPA. The inevitable reason given
by the NPA is that they wish to “protect
the people”—all the while robbing
them of jobs and livelihood. Still the
signal to other mining operations is
this: fail to come across and you will
risk an NPA attack. But why would they
kill the goose that lays the golden egg?
30
The simple reason is that in the exalted
game of extortion, the binding dictum is
the Mafia’s: grave threats become stale
unless carried out once in a while.
Today the nation is rent asunder with
what to do about mining. Some sketchy
details of a proposed EO have emerged
(PDI, 20 February 2010): sweeping aside
the “first-come first-served” modality
in favor of public auction, requiring
total economic valuation, reviewing
all existing contracts and promoting
downstream processing. At the risk
of tripping on inaccurate reportage,
it is still best to speak now before it is
finalized.
Let us start with the last one: promotion
of downstream processing. This looks
innocent enough and why not indeed?
For who would oppose higher value-
added? But if licensing of mineral
extraction projects is conditioned
on more advanced downstream
processing, it becomes an invitation
to killing the mining industry. For
example, advanced processing of
copper concentrate (smelting) requires
massive electricity use and involves
very different economics than copper
extraction. With power costs so high
and unreliable in the Philippines, the
viability of smelting absent subsidies is
a real issue. In Australia, the share of ore
in iron exports is 100%, since Australians
have realized that their competitive
advantage is not in steel making. Such
to page 31

Buried Talents: The
Mining Controversy
from page 25
decisions should be left to firms doing
the market calculus. As an imposition
by the state, it is import substitution all
over again.
Second, the review of all existing
mining contracts and incentives if
with the view to unilateral alteration
is chilling and dangerous. The latter
spells massive regulatory uncertainty
and paints the Philippines as an
unreliable counterparty that cannot
abide by contracts. Modifications to
existing contracts should be effected
only after proper negotiation with
and with adequate compensation to
adversely affected contract holders.
New conditions without compensation
should apply only to new entrants.
Third, nobody can quarrel with
“Total Economic Valuation” if this
can be done with dispatch and is
based on international best practice.
Controversies and uncertainties
associated with valuing opportunity
costs and use-option can make decision
making catatonic. If there can be no full
certainty even in science, full certainty
is certainly a fool’s errand in this
inherently risky business of mining. But
we can certainly require contingency
funds dedicated to responding to
unintended consequences (assuming
they are not raided for other uses). It
is however the height of stupidity to
suggest (as one school of governance
effectively did!) that mining should be
suspended until total economic value
can be ascertained. That is like saying
air travel should be stopped because
some airplanes do crash and extinguish
lives. All progress is predicated on
taking calculated risk.
Finally, again who can quarrel with award
by public auction? But isn’t this insistence
the very reason that the PPP program has
failed to take off? There is a dearth of bid-
ready contracts, and somebody has to
draw up the specifications of the contract
for it to be bid-ready. Who will do and pay
for the exploration to determine the size,
quality and depth of the deposit? How
do you establish the reservation value
of a prospective area without a proper
exploration and evaluation? Requiring
award by public auction must answer
these tough questions.
The main message of the proposed
EO as reported is tougher rules. This is
understandable. Our past experience with
mining has been mostly negative and
cautionary. This has everything to do with
our past incapacity to properly regulate
and enforce rules. But tougher formal rules
alone do not make for good governance.
After all, the rulebook “Compliance and
Beyond: A Guidebook on Corporate Social
Responsibility for the Philippine Mining
Industry” of the Philippine Chamber
of Mines cannot be described as soft.
Adequate enforcement must complement.
On the latter, however, the impending
EO as reported is eloquently mute. Good
governance of mining has resulted in
good outcomes in other countries. The
suggestion that we stop mining because
we do not have adequate regulatory and
enforcement capacity today amounts to
saying that we should let our sordid past
hold our future hostage. A better guide
is the experience of water privatization in
Metro Manila. Water regulation was dismal
or non-existent before water privatization.
But we managed to create an adequate
regulatory environment and regulator for
the Metro Manila service area through the
contract itself. This experience is now a
global template.
31
We should replicate this in mining. We
could for example create a dedicated
mining regulator for say Tampakan Gold
and Copper Mine, which has passed
all national requirements. This will see
to the proper enforcement of contract
obligations, the wise deployment of
the sinking fund and the disposal of
mining proceeds for worthy projects
through Tampakan’s lifetime. The board
of this agency should include adequate
local representation and hardboiled
technocrats. In other words create a new
Tuwid na Pamamalakad in mining via a
learning-by-doing mode. Getting your
feet wet is the only way to learn to swim.
Even the Gospel’s Parable of the Talent
has only unequivocal contempt for the
timid. A man going on a journey left
his servants with talents. The first put
his talent to work and made five more;
as did the second who made two more.
The Gospel states: “But the one who had
received one talent went out and dug a
hole in the ground and hid his master’s
money in it.” For he was afraid. To the
returning master he presented one talent
saying “See, you have what is yours.”
But answered the master: “Evil and lazy
slave! You should have deposited my
money with the bankers, and on my
return I would have received my money
back with interest! Therefore take the
talent from him and give it to the one
who has ten… and throw that worthless
slave into the outer darkness, where
there will be weeping and gnashing of
teeth’” (Matthew 25:13-30). Weeping and
gnashing of teeth await the pall-bearers.
May we be these no longer!
(*The author is grateful for comments by
Prof. Emmanuel de Dios. Errors are the
author’s sole responsibility.)