MANILA, Philippines - Mining companies will legally oppose Section 9 of the implementing rules and regulations (IRR) of the new mining policy which stipulates that the terms of mining contracts shall be renegotiated after the first 25 years, potentially shortening the lifespan of a project which is guaranteed a maximum of 50 years under the existing law.
In a speech on the second day of the Mining Conference 2012, Chamber of Mines of the Philippines president Benjamin Philip Romualdez said companies would file individual cases to oppose the provision in the IRR.
“Our members are carefully and deliberately studying the issue... They have reviewed everything carefully. Our position is they’ll sue,” said Romualdez.
Romualdez, also the president and CEO of listed mining firm Benguet Corp., described the provision in the IRR as “patently illegal.”
He described Section 9 as “patently illegal” because it stipulates that the terms of mining permit extensions would be renegotiated.
Romualdez said the IRR violated Section 32 of the Mining Act which states that permit extension would have the same terms as the first 25 years of operations.
A portion of Section 9 of the IRR reads: “ In the case of expiring 25-year mining tenements, the qualified mining tenement holder electing to exercise its right to renew the said mining tenement for another 25-year term shall file the pertinent mining applications in the MGB not later than six months prior to the expiration of the same mining tenement.”
“The mining contract/agreement that may be renewed shall be subject to new terms and conditions pursuant to the laws, and rules and regulations that are existing at the time of renewal or may be hereafter issued, such as, but not limited to, the establishment of the contract area as a mineral reservation. “
Romualdez said that since the moratorium on new mining contracts were implemented since 2011, the country has been losing out on foreign direct investments.
With the issuance of the new mining policy in July, the moratorium on the processing of exploration permits which were put in place since January 2011 was lifted but the government will not grant new mining contracts until Congress passes a law rationalizing the sharing of revenues between mining firms and the government.
The government is seeking a higher shares of revenues form mining operations.
“This comes at a time when the goverment is seeking more from our industry while it has extended the moratorium on new mining projects until a new revenue measure has been agreed upon,” said Romualdez.
“This moratorium has caused an outflow in foreign direct investments in our sector beginning in 2011 to the tune of over P10 billion...The projected $16 billion in investments that were supposed to occur during this administration will not happen. The $2 billion that we as a country were expecting in additional foreign direct investments this year from the minerals sector will not happen. The $2 billion that we expect in additional investments next year will not happen,” said Romualdez.
Romualdez said, however, that the industry is committed to work with the government on the revenue-sharing issue.