PH-EITI report reveals problems in mining industry regulation

Bantay Kita, a coalition of civil society organizations (CSOs) pushing for transparency and accountability in the extractive industries, supports the passage of an alternative mining law to replace the Philippine Mining Act of 1995. The current mining law has failed to boost economic gains from the extractive industries and to protect communities and the environment by extractive operations in the country.

Last December 31, 2014, the first Philippine Extractive Industries Transparency Initiative (PH-EITI) Report was submitted to the EITI international secretariat. This was considered one of the milestones in the extractive industry in the country as it accounted for Php 6.2 billion contribution from mining companies and Php 52.7 billion from oil and gas in 2012.

However, a simple calculation using the financial statement of companies submitted to the Securities and Exchange Commission shows that we lost about P2.01 billion or almost 25% of the proceeds from mining because of income tax holidays granted to the following companies:

• Carmen Copper Corp.
• Carrascal Nickel Corp.
• Marcventures Mining & Devt. Corp.
• SR Metals Inc.
• TVI Resource Development Inc.
• Adnama Mining Resources
• Berong Nickel Group
• APEX Mining Company Inc.

Semirara Mining Company, which refused to participate in the Philippine EITI, reported an income of Php5.2 billion in 2012 to SEC. They only paid Php 1.2 million in income tax and around Php 1.6 billion to the Department of Energy as the government’s share in the extraction of coal according to the PH-EITI report. This is about 30% share in the company’s profit in 2012.  It begs to ask whether it is fair for the Filipino people, as the owners of this resource, to only get 30% share in profit.

Bantay Kita believes that all incentives awarded to extractive companies should be cancelled. Extractive companies invest in a country because of the value and quality of the minerals and not the incentives given to them by the government.

The PH-EITI report also highlights the failure of the government to protect the rights of indigenous peoples. According to the report, the National Commission of Indigenous Peoples (NCIP) could not validate if the indigenous communities indeed received Php 52 million in royalties the companies are claiming they’ve remitted to the IP communities hosting mining operations.

The PH-EITI report also highlighted the problems in the monitoring of the different environmental funds. These are the funds for Environmental Management and Protection Program (EPEP), Mine Waste, Mine Monitoring Trust Fund and Tailings Reserve and the Mine Rehabilitation Fund. Supporters of the Mining Act of 1995 claim these environmental funds to be among the key features of the law that ensure protection of the environment.  The government and the companies could not agree if these funds actually exist or not and if they exist, they could not explain how the monies were spent.

“Mining requires effective government regulation. We cannot allow mining if the government cannot guarantee a fair share in natural resource extraction or protection and rehabilitation of the environment,” Dr. Cielo Magno, National Coordinator of Bantay Kita. Bantay Kita supports the passage of the Alterative Mineral Management Bill and advocates for the review of the fiscal policy governing the extractive industry.

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Bantay Kita (BK) is a coalition of organizations pushing for transparency and accountability in the extractive industry. It is affiliated with Publish What You Pay (PWYP) Coalition. It takes the lead in engaging mining companies, national government agencies as well as local government units towards achieving greater transparency and accountability in the mining industry through capacity-building, conducting dialogues with communities, and engaging in fiscal policy reforms.

The Extractive Industries Transparency Initiative (EITI) is a global coalition of governments, companies and civil society working together to improve openness and accountable management of revenues from natural resources. Countries implement the EITI Standard to ensure full disclosure of taxes and other payments made by oil, gas and mining companies to governments. These payments are disclosed in an annual EITI Report. which allows citizens to see for themselves how much their government is receiving from their country’s natural resources.

The establishment of Philippine EITI (PH-EITI) was pursuant to EO No. 79, “Institutionalizing and Implementing Reforms in the mining sector providing policies and guidelines to ensure environmental protection and responsible mining in the utilization of mineral resources” by Philippine President Benigno S. Aquino III.