Bernardo M. Villegas
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Rebalancing Strategy
published: Mar 31, 2017



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Strategies for the Mining Sector (Part I)

            Executive Order No. 79 has mapped out clear strategic guidelines for the future rational development of the mining sector in the Philippines to maximize its contribution to economic growth, full employment, a more equitable distribution of income and wealth and a balanced ecology.  For complete transparency, the opening of new areas for mining will be done through competitive public bidding.  The grant of mining rights and mining tenements over areas with known and verified mineral resources and reserves, including those owned by the Government and all expired tenements, shall be undertaken through competitive public bidding.  The Mines and Geosciences Bureau (MGB) shall prepare the necessary competitive bid packages and formulate the proper guidelines and procedures to conduct the same, which shall include ensuring that the social acceptability of the proposed project has been secured.  Social acceptability shall be assured if there are well-defined programs for the protection of the environment, the preservation of the rights and culture of indigenous tribes, the provision of such basic services as education, health and water, and a long-term plan for the sustainable development of the community once the mineral reserves are depleted. This last ingredient of the long-term plan may include the training for entrepreneurship in small and medium-scale agro-industries; the rehabilitation of mined-out areas for other economically productive uses such as retirement villages, tourism facilities, and industrial estates. 

          The Executive Order also clearly outlines what to do with abandoned ores and valuable metals in mine wastes and mill tailings.  All valuable metals in abandoned ores and mine wastes and/or mill tailings generated by previous and now defunct mining operations belong to the State and shall be developed and utilized through competitive public bidding in accordance with the pertinent provisions of law.  In the case of existing mining operations, all valuable metals in mine wastes and/or mill tailings shall automatically belong to the State upon the expiration of the pertinent mining contracts and shall be similarly developed and utilized through public bidding; provided, that where two or more mine sites, covered by their respective mining contracts, share a single tailings pond, both or all mining contracts must expire before the State can claim ownership over the said tailing pond.

          Within the framework of a long-term industrialization program, investors are encouraged to explore possibilities for value-adding activities and the development of downstream industries for the mineral sector.  Contrary to views expressed by some sectors that the Philippines can no longer put up viable manufacturing industries and must be contented with a services-oriented economy, there is much room for the right kind of industrialization in the future of Philippine economic development. That is why the Executive Order mandates that the DENR, in coordination with the Department of Trade and Industry  (DTI), Department of Science and Technology (DOST),  National Economic and Development Authority (NEDA), other government agencies concerned, the mining industry, and other stakeholders, should submit within a period of six months a national program and road-map, based on the Philippine Development Plan and a National Industrialization Plan, for the development of value-adding activities and downstream industries for strategic metallic ores.  This plan may include the further processing of the major metals of copper, gold, and nickel into manufactured products.  For example, in a recent trip to Sri Lanka, some Philippine investors had talks with the gem producers of that country about possible joint venture in which Philippine gold can be processed in tandem with the precious and semi-precious stones of Sri Lanka for the jewelry industry.  As the car market in the entire ASEAN region becomes fully integrated after 2015, when all tariffs will be reduced to 0 to 3 percent, the Philippines could be a major player in the processing of nickel products for the ASEAN car industry.

          It should be pointed out that the Executive Order explicitly recognizes the non-retroactive nature of its provisions by stating that mining contracts, agreements, and concessions approved before the effectivity of the Order shall continue to be valid, binding and enforceable so long as they strictly comply with existing laws, rules and regulations and the terms and conditions of the grant thereof.  The Order provides that the review and monitoring of such compliance be undertaken periodically.  For comments, my email address is bernardo.villegas@uap.asia