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Philippines readies rules on mining tax use

MANILA -- The Philippines is preparing guidelines on the use of taxes paid by mining companies to ensure local communities benefit, as it remains firm in upholding the supremacy of the Mining Act over local rules, a senior government official said on Wednesday.

The guidelines on mining revenues aim to end graft practices by local officials and the move, along with the government's strong view that local mining bans were inconsistent with national policy, should boost investor interest in the sector with estimated untapped mineral reserves worth US$1 trillion.

Local Governments Secretary Jesse Robredo said Manila was ready to intervene, if needed, to overrule local regulations banning open pit mining. There are two provinces that have passed such a ban.

“There is a proposal to come up with guidelines on how the money will be spent. We now have a draft ... (covering) the general parameters,” Robredo told Reuters in a phone interview.

The guidelines aim to uphold the autonomy of local government units, but would seek to make officials accountable for any wrongdoings, he said.

Robredo said he was aware of concerns and issues against mining and supports an industry recommendation that taxes on minerals be directly remitted to local governments.

The industry group Chamber of Mines of the Philippines has said remittance to local governments of mining taxes from the national treasury takes two to three years, delaying the benefits to rural areas and fuelling resistance to mining by local officials and lobby groups.

Manila is crafting a new mining policy that addresses thorny issues hampering the industry, including when the national government can overrule provincial bans, Mines and Geosciences Bureau director Leo Jasareno said last month.

President Benigno Aquino himself issued the directive to review the mining policy, Robredo said.

“National policy must also be shaped by the valid concerns raised by these (anti-mining) groups,” he said.

A strong anti-mining lobby, led by environmentalists and the Catholic Church, is seen hampering an industry that could help create jobs and boost economic growth in the poor Southeast Asian country.

Two southern provinces, Zamboanga del Norte and South Cotabato, have banned open-pit mining, a move that negatively affected existing and planned projects and worrying investors.

The local unit of Canada's TVI Pacific Inc, TVI Resource Development (Phils) Inc, has sought a court order stopping the ban in Zamboanga del Norte which would force the firm to close its polymetallic mine within one year.

A similar ban last year in South Cotabato has put at risk the US$5.9 billion Tampakan copper-gold project of global miner Xstrata Plc and Indophil Resources NL.

Amid fears the bans could spread to other provinces, Robredo said the national government stands firmly by its position that local ordinances banning open-pit mining were contrary to the national mining law.

He said the national government could not force local officials to repeal such ordinances, but it could help mediate, if asked, to settle disputes between local governments and miners.

“As much as possible, we would like to uphold and protect the autonomy of local governments. But if there are excesses on their part, then we need to correct them,” he said.

There was a process in overruling those ordinances which could take time, Robredo said. “We need to convince them (local governments) that it's beyond what has been authorized (for them to do).”

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