Interview: Ramon Paje

Is the mining industry’s current regulatory environment sufficient to attract investment in the sector?

RAMON PAJE: Mining regulations in the Philippines are among the most favourable in the world. To begin with, the government demands only a 2% excise tax from mining companies, which is among the world’s lowest rates. If you consider tax holidays and other incentives, especially those offered to organisations operating in areas designated by the Philippine Economic Zone Authority, the regulatory regime is extremely competitive.

The Philippines is receiving renewed attention from the international mining industry due to its relatively large mineral deposits and unprecedented commodity prices. Still, companies will generally not invest in long-term and capital-intensive projects unless they see the potential for a significant return. With industry players from around the world continuing to invest in new and existing projects in the Philippines, the government sees this as a testament to the competitive and welcoming investment environment offered in the sector.

The DENR has also recently moved to open the industry to further investment by encouraging development over market speculation. The department has adopted a “use-it-or-lose-it” policy towards tracts of land claimed by speculators who have no actual interest in development, following a South African initiative that led to a large increase in mining activity. Generally speaking, companies that are awarded concessions will be expected to develop the land in a timely manner. Undeveloped plots will be subject to a renewed bidding process and awarded to alternative organisations. The policy is designed to discourage speculative buying and to reward companies that are committed to active participation in industry development.

How is the DENR working to address the issue of small-scale mining in the Philippines?

PAJE: Small-scale mining presents a significant challenge to the industry. Not only does it place many individuals in risky and unhealthy situations, it also results in irreparable and extensive damage to the environment. The government has recently sought to address both of these issues by clarifying mining regulations and affirming the authority of national policy.

Confusion had arisen surrounding the implementation of two separate government laws: Presidential Decree 1899 and Republic Act 7076. The former allowed local government units (LGUs) to issue small-scale mining permits for any mineralised area, while the latter stipulated that permits only be granted within designated areas deemed appropriate for small-scale mining by the national government.

In August 2011, the Department of Justice ruled in favour of Republic Act 7076, and Presidential Decree 1899 was determined to be void, creating a stricter permit regime. Moving forward, this clarification will allow for better and more comprehensive regulation of the small-scale mining industry, including mitigation of the environmental impact of their mining activities. This ruling will also work to align the policies of LGUs with the national vision for the development of the mining industry, and should serve to streamline and simplify the permit-approval process for new projects.

How can the country pursue development while ensuring that it is done in a sustainable manner?

PAJE: In the future, it will be important to ensure sustainability as we focus on continued development of the mining sector. While the Philippines is very interested in seeing a flourishing mining sector, this cannot be done without regard for the society and the environment in which the industry operates.

Most mining companies are willing to comply with the ecological regulations present in the Philippines, as they too see the value and importance of preserving the integrity of the environment in the country. Moving forward, continued cooperation between the private sector and the government on this issue, as well as on other initiatives such as education and development projects, will serve to benefit all involved parties.