Philippine President Rodrigo Duterte has just issued Executive Order (EO) 130, which lifts the nine-year moratorium on mineral agreements in the hope of “ushering significant economic benefits to the country,” supporting government infrastructure projects, contributing to more employment opportunities to stimulate development of the countryside where mining projects are situated.
As a result, the Philippine Government through the Department of Environment and Natural Resources (DENR) may now enter into mineral agreements, in the form of Mineral Production Sharing Agreements (MPSA’s), Financial or Technical Assistance Agreements (FTAA’s), Co-Production Agreement and Joint Venture Agreements, subject to compliance with the Philippine Mining Act of 1995 (Republic Act [RA] No. 7942) and other applicable laws, rules, and regulations. Exploration Permits, which is the initial mode of entry for mineral agreements, may continue to be granted by the DENR preparatory to the mineral agreements.
The moratorium on new mineral agreements arose out of EO No. 79, series of 2012, Section 4, issued by the previous administration and it was to be lifted only when a new legislation rationalizing existing revenue sharing schemes and mechanisms shall have taken effect.
That legislation has recently been enacted by the Philippine legislature through Republic Act No. 10963 otherwise known as the Tax Reform for Acceleration and Inclusion (TRAIN) Act which, among others, raised the excise tax rate on minerals, mineral products and quarry products from 2% to 4%.
Moreover, during the moratorium, the DENR has thoroughly reviewed the regulatory framework of the mining industry and has adopted additional rules, regulations and policies that provide for and enhance environmental safeguards ensuring compliance by mining companies with laws on environmental protection.
The Philippine Government also realized that less than 5% of the country’s mineral resources has been tapped even as the country is among the most endowed in minerals like gold, copper and nickel. The Government notes that the factors for the moratorium no longer exist paving the way for this new EO 130 amending Sec. 4 of EO 79.
EO 130 also mandates the DENR to strictly implement mines safety and environmental laws, rules, and policies and recommended measures of the Mining Industry Coordinating Council relating to all mining operations, as well as the terms and conditions of EP’s, MPSA’s and FTAA’s.
The mining industry has welcomed this encouraging development in this time of the pandemic that has severely affected the Philippine economy. But the mining industry is still hopeful that the open pit ban imposed by a former DENR Secretary would like be lifted so that the benefits of EO 130 may be fully realized. Legislators have also hailed the lifting of the mining moratorium and look to mining as an “economic vaccine”.
Fortun Narvasa & Salazar (FNS), in particular, its Senior Partner Dicky Salazar, whose field of practice, among others, is mining law, likewise lauds the Philippine Government for this bold move as he believes that the mining industry, if given the full opportunity to develop its potential, would be a great contributor to the Philippine economy.
FNS welcomes this significant development in the mining industry given its wide practice in mining law. It stands ready to assist new entrants and existing clients mine the opportunities presented by the lifting of the moratorium.
The Firm is ranked by Chambers Asia-Pacific 2020 and previous years as a leading Philippine firm in the area of Project, Infrastructure and Energy; and Dispute Resolution as well as by Asia Legal 500 2020 Edition and prior years.
Dicky Salazar, with over 33 years’ experience as a lawyer, was recently included in the 2020 Asia Business Law Journal list of top 100 lawyers in the Philippines. He was also listed in the 2020 edition and in past editions of the International Who’s Who of Mining Lawyers for the Philippines. He was ranked as a leading lawyer in natural resources and mining by Chambers Global 2019 and prior years and is highly recommended as a leading lawyer in projects, energy and natural resources by Chambers Asia-Pacific 2019 and ranked a leading individual in projects and energy by the Asia Legal 500 2019 Edition and prior years. Dicky was likewise recently inducted into the inaugural 2020 The Legal 500’s Asia Pacific Hall of Fame in projects and energy. He is in the elite list of recommended lawyers for Corporate and M&A and Real Estate & Construction in the 2020 edition of Legal 500 Top Firms and Lawyers for Asia Pacific (Philippines).
FNS is an active member of the Chamber of Mines of the Philippines wherein Dicky is a member of the ad hoc Executive Committee. He is also a Trustee of the Philippine Mining and Exploration Association of the Philippines.