Policy Brief
S E N A T E E CO N O M I C PL A N N I N G O F FI C E
December 2013

PB-13-02

Realizing the Philippines’
Mining Potential
Given the country’s mineral wealth, the mining industry can be a key driver of economic growth. However, the industry is hounded by various issues and challenges. These include the social and environmental costs, a revenue sharing agreement that is seen as unfair and inequitable, the overlapping and weak enforcement of mining laws, and other problems relating to the mining sector. Unless these are addressed through a clear, consistent and competitive mining policy, the sector’s huge potential to bring economic benefits will unlikely be realized.

The SEPO Policy Brief, a publication of the
Senate Economic Planning Office, provides analysis and discussion on important socioeconomic issues as inputs to the work of
Senators and Senate Officials. The SEPO
Policy Brief is also available at www.senate.gov.ph. Introduction
The mining industry has a great potential to be a key growth sector in the Philippines given the country’s vast and rich mineral resource deposits. Mining can spur economic growth and generate employment opportunities in local communities as mining companies invest in infrastructure, utilities and other facilities within the mining sites. It can likewise contribute to the country's foreign-exchange earnings through exports and bring much needed revenues to the government through taxes and fees paid on mining and other related activities.
It appears though that the Philippine mining industry has not lived up to its potential. Critics have argued that the industry has had negligible contribution to the domestic economy and absorbed only a few workers. Its destructive impact on the environment and on the welfare of the people has also been pointed out. Proponents, meanwhile, claim that the flawed provisions in the current laws pertaining to the mining sector as well as other constraints have impeded investments in the sector, thereby limiting its contribution to the economy.
In order to address these challenges, President Benigno
Aquino III issued Executive Order No. 79 on July 6, 2012. It sought to strengthen the protection of the environment, promote responsible mining, and provide a more equitable revenue-sharing scheme amid the projected boom in the sector. It is envisioned to harmonize mining policies and regulations in the country and make players in the mining industry more transparent and accountable. Pursuant to these objectives, EO 79 focused on strengthening coordination among stakeholders to ensure strict compliance by mining operators to the existing mining laws and regulations.
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This Policy Brief discusses the potential and economic contribution of mining in the
Philippines, identifies the present challenges confronting the sector, and proposes strategies that Congress may consider in its policy formulation. Mining Potential and Economic Contribution
Mineral Resource Potential. The Philippines is one of the highly mineralized countries in the world with 9 million hectares considered to have high mineral potential. According to the
Mines and Geosciences Bureau (MGB), the country is ranked top five in the world for overall mineral reserves, second in gold and third in copper resources. The Philippines has untapped mineral wealth worth at least US$840 billion (PhP47 trillion) in gold, copper, nickel, chromite, manganese, silver and iron. This is ten times the country’s annual gross domestic product (GDP). The Philippines’ gold reserves alone can amount to PhP7.36 trillion,
(US$16.873 billion) or about 76 percent of the country’s GDP of PhP9.73 trillion in 2011. This amount, according to the National Statistical
Coordination Board (NSCB), is enough to completely eradicate poverty in the country, which remains the greatest challenge facing the government. Production Value and Contribution to GDP.
Gross production value in mining has generally increased for the past ten years (2003-2012)
(Annex 1). From its production value of PhP41.1 billion in 2003, it has steadily grown to PhP163.2 billion in 2011. In 2012, it declined to PhP100.8 billion mainly on account of the EO 79 issued by the President on July 6, 2012, which imposed a moratorium on the approval of new mineral agreements until a legislation rationalizing existing revenue sharing schemes and mechanisms shall have taken effect. The moratorium effectively put the mining industry at a standstill as a thousand of applications for new mining contracts were put on hold.
Mining’s contribution to the economy is small, ranging merely from 0.6 to 1.0 percent of the
GDP during the said period. In 2012, mining accounted for merely 0.7 percent of the GDP.
Contribution to Exports. Mining has not contributed much to exports either with the sector’s contribution to total exports remaining at single digits, hovering around two to six percent. Export of minerals and mineral products only averaged 3.94 percent from 20032012 (Annex 1). Total exports of non-metallic mineral manufactures are even lower at around
0.4 percent.

Figure 1. Gross Production Value in
Mining (Billion PhP) and Share to GDP
(%), 2003-2012
180

1.2

7

1

163.2

160

6

6

1
0.9

140
120

Figure 2. Mining Contribution to
Total Exports (%), 2003-2012

0.8
0.7

0.7
0.6

100

0.7

1
145.3

106.1

100.8

102.2 87.1

80
72.5

60
41.1

4.5

0.6
0.4

43.4

4.9
3.9

4

50.2

40

5.2

0.8
0.7

0.6

5.3

5

0.2

20

3
2
1

1.8

0.4

2

0.4

3.8

2

0.4

0.4

0.4

0.4

0.4

0.3

0.4

0.3

0

0

0
Minerals and Mineral Products
Non-Metallic Mineral Manufactures

Source: MGB; Note: *preliminary

Value
Share to GDP

Source: MGB; Note: *preliminary

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Contribution to Employment. The mining (and quarrying) sector’s contribution to national total employment has consistently been below one percent. In 2003, mining directly employed
104,000 people. This has modestly grown to
252,000, or 0.7 percent of total employment in
2012. Extractive mining is known as a lowemployment generating activity due to the high capital investment in machines and other labor efficient technologies by the mining companies.
However, it is estimated that for every job created in the mining sector, at least five indirect jobs are generated in the upstream and downstream sectors (Mining Journal Special
Publication, London, 2006). Moreover, the assistance provided in developing or strengthening community development programs and supply chain linkages generates as much as 28 indirect jobs (IFC Jobs Study, 2013).
Figure 3. Mining Contribution to
Total Employment (%), 2003-2012
1.2
1
0.8

0.7

0.6
0.4

0.3

0.3

0.4 0.4 0.4

0.5 0.5 0.5

0.6

0.2
0

Source: MGB; Note: *preliminary

Foreign Investments. Investments in the mining industry generally escalated from 2006 to 2010
(Annex 1). The upsurge in foreign mining investment can be attributed to the decision of the Supreme Court to uphold the constitutionality of the Financial or Technical
Assistance Agreement (FTAA) and Republic Act
No. 7942 or the Philippine Mining Act of 1995.
The law allows foreign ownership in Philippine mining companies (Disini, 2009).
However, foreign and domestic mining investment dropped to US$618.5 million in 2011

Figure 4. Total Mining Investments
(US$ Million), 2006-2012
1200
968.3

1000
800

719.5

708.4
604.2

618.5

600
400
200

190.3

160

0
2006 2007 2008 2009 2010 2011 2012*
Source: MGB

from US$956 million in 2010 after the government stopped issuing new permits and began a comprehensive review of the sector to ensure that the government receives more revenues. Mining investments further slipped to
US$160 million in 2012 following the issuance of
EO 79, which barred the granting of new mining contracts pending the passage of a legislative measure on the revenue sharing between the government and mining companies. EO 79 also cut mining contracts' term to 25 years from 50.
Revenues/Taxes Received by the Government.
Government revenues through taxes, fees and royalties from the mining industry has been on the upsurge since 2003 (PhP1.5 billion) to 2011
(PhP22 billion) except in 2008 due to low commodity prices. The recovery in revenues in
2009 was largely due to the increase in gold and copper prices and increased production in response to high prices (International Monetary
Fund, 2012).
On the average, from 2003 to 2012, nearly three quarters of total revenues from mining were accounted for mostly by taxes collected by national government agencies (these include corporate income taxes, value-added tax or VAT on imported equipment, etc.). Excise tax collected by the Bureau of Internal Revenue
(BIR) accounted for 13 percent while fees, charges and royalties accounted for a relatively small amount of the total revenues from the sector. 3|Page

Table 1. Taxes, Fees and Royalties from Mining (PhP Million), 2003-2016
Taxes, Fees and
2003
2004
2005
2006
2007
2008
2009
Royalties from Mining
Fees, Chargers and
Royalties Collected by
79.8 120.1 210.2 192.1 774.0 557.4 396.2
DENR-MGB
Excise Tax Collected
155.8 232.5 251.4 489.6 942.1 660.3 718.8 by BIR
Taxes Collected by the
1,039.2 2,769.1 4,733.6 5,313.2 8,371.7 5,949.5 10,272.5
NGAs
Taxes and Fees
226.9 358.5 453.5 395.0 359.8 522.2 992.8
Collected by LGUs
TOTAL
1,501.7 3,480.2 5,648.7 6,389.9 10,447.6 7,689.4 12,380.0

2010

2011

2012*

800.6 1,180.8 1,644.1
1,305.9 6,985.8

-

10,187.9 12,886.0 5,817.8
1,070.8 1,179.1

496.6

22,231.7 22,079.8 7,958.5

Source: MGB; Note: *preliminary
Issues and Challenges
The Philippine mining industry is beset with various issues and challenges, which affect the sector’s social acceptability. The following issues have arguably been the most controversial and pressing, namely: environmental and social cost; low economic contribution; revenue sharing between the government and mining companies; and overlapping and weak enforcement of mining laws.
Environmental and Social Costs. The mining industry continues to find low acceptance and strong opposition from communities due to observations that it inflicts environmental damage and displace people. Mining is deemed to overexploit and adversely affect environmentally critical areas, leading to risks and hazards to the public’s health, safety and general welfare.
In 2007, a Fact-Finding Team composed of human rights and environmental experts from the United Kingdom observed the mining operations in the country. Among its findings are the following: 1) mining operations invariably evicted indigenous peoples from mining sites; 2) mining poses an imminent danger to indigenous culture; 3) mining polluted the rivers at their sites; 4) mining destroyed

mangroves; 5) mining damaged coral reefs; 6) mining ruined agriculture; and 7) mining damaged the nation's biodiversity. The team observed that "the record of mining companies with regard to environmental protection, disasters and post-mining clean-up in the
Philippines is widely acknowledged to be very poor” (Doyle, et al., 2007).
In 2012 alone, at least two major disasters related to mining happened, which damaged various ecosystems. In June 2012, a fish kill occurred in Lake Bito, a rich fishing ground in
Leyte. The tragedy was traced to mine wastes from Nicua Mining Corporation, which was then operating in another village in MacArthur, Leyte.
The MGB suspended Nicua operations following the fish kill. In August 2012, a waste spill happened in the province of Benguet. About 20 million metric tons of tailings gushed out from the tailings-pond of Philex's Padcal mines, surpassing what was spilled out of the
Marcopper mine in 1996 in Marinduque (3-4 million tons). The huge discharge drained out to the Balog and Agno River systems, which provide the water requirements of San Roque
Dam for agricultural irrigation and power generation while serving a number of municipalities in the province of Pangasinan, like
San Manuel.
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The existing abandoned mines, on the other hand, pose environmental and human health problems in the immediate vicinity of the mines.
The damages include acid mine drainage, heavy metal contamination of the surface water, sedimentation, pit void, and visual aesthetic problems. According to the MGB, these have arisen due to the failure of the project proponents to undertake mine rehabilitation or maintenance procedures. At present, there are
22 abandoned mines in the Philippines with six priority mines under rehabilitation namely:
Bagacay Pyrite Mine in Western Samar;
Antamok Mine; Black Mountain Mine in
Benguet; Basay Copper Mine in Negros Oriental;
Black Mountain Copper Mine in Benguet; and
Dizon Mine. Rehabilitation of these six priority mines are expected to be completed at the end of the Aquino Administration.
According to Clive Montgomery Wicks, Vice
Chair of the Commission on Environmental,
Economic and Social Policy of the Switzerlandbased International Union for Conservation of
Nature (IUCN), most of the mining companies in the Philippines do not identify the possible dangers that might occur, as well as their proposed remedies in such events in the required Environmental Impact Assessment/
Environmental Impact Statement (EIA/EIS). This is contrary with international standards, where mining companies are obliged to identify the environmental impact posed by their operations and to identify contingency or remedial measures that will be undertaken. It is proposed that the government put in place a structure or a body that would specifically look into mining and strictly enforce responsible mining policies to avoid the negative impact of mining on the environment and people.
Mining Contribution. Despite the sector’s economic potential, mining contribution to the economy remains low. Based on the MGB figures, the mining industry has merely accounted for no more than 0.91 percent of the
GDP from 2003 to 2012, on the average.

Production has been fraught for the past years by the effects of natural disasters and low international prices. Investments in the mining sector are also hindered by long-standing complaints about the lengthy, tedious approval process for exploration permits (EPs). Industry players argue that the practice of having the
MGB central office review and validate approvals done at regional offices are redundant and is one of the main factors causing delay.
Foreign investments were also obstructed by the requirement of 60 percent domestic equity control and high excise taxes (mineral royalties) on production.
The measly contribution to the economy was also attributed to the limited processing of minerals in the country. Most of the industry’s products are currently exported in primary form
(e.g. as raw material ore). For 50 years, the mining industry has remained to be an extractand-export-ore activity and there is no significant industrialization footprint. Mining has never played a major role in national development even during the mining boom of the seventies and early eighties (Habito, 2010).
Revenue Sharing. The amount of revenues that the government derives from the mining sector is one of the main drivers behind the government’s mining policy thrust. At present, the government receives its revenue share from two mining contract schemes, namely: the
Mineral Production Sharing Agreement (MPSA); and the Financial or Technical Assistance
Agreement (FTAA). Under the MPSA, the share of the State is limited to the excise tax, which is two percent of the value of the mineral extracted. Under the FTAA, the State receives no share of the value of the minerals extracted by foreign firms, other than the usual taxes (e.g corporate income tax and business tax) (Habito,
2010).
According to the Department of Finance (DOF), with the existing rate, the government only generates around PhP2 billion a year in revenues, or less than one percent of the country’s GDP. Other governments such as
5|Page

Chile, Peru, Ghana, Zambia and Papua New
Guinea have revenues from mining that exceed ten percent of their respective GDPs. In other mining-intensive economies such as Australia and Chile, the excise tax ranges as high as 15 percent (Annex 2).

Thus, industry players believe that the government should take into account that mining is a high risk and capital intensive business, and that investors need some incentive to equalize the risk that they are taking. EO 79 calls on Congress to pass a new mining law that will raise the government’s revenue share. According to the MGB, the Mining
Industry Coordinating Council (MICC) is in the final stages of crafting a draft bill for a new revenue-sharing scheme between the government and mining companies.

Overlapping and Weak Enforcement of Mining
Laws. Based on the draft midterm review of the
Philippine Development Plan (PDP) 2011-2016, some provisions in the country’s current mining policy (RA 7942) either overlap or run counter with other national and local laws such as the
Indigenous Peoples Rights Act (IPRA) of 1997,
National Integrated Protected Areas System
(NIPAS) Act of 1992, Local Government Code
(LGC) of 1991, Agriculture and Fisheries
Modernization Act (AFMA) of 1997, Climate
Change Act of 2009, and the EIA/EIS, among others. For instance, there is a policy inconsistency between the Mining Act and the authority given to local government units (LGUs) by virtue of the LGC. While the Mining Act promotes the national policy of mining in LGUs with mineral deposits subject to limitations, some LGUs have refused mining activities altogether in their provinces.

Subject to deliberation in the final drafting of the said bill are the proposed two new revenue sharing schemes: the imposition of a 10-percent tax on gross revenues; and the imposition of a
50-percent tax on adjusted mining revenues plus 10 percent of gross sales if metal prices increase by 25 percent annually. The revenuesharing scheme that would produce the most earnings for the government shall be used. Both schemes would be inclusive of income tax and royalties. Adjusted mining revenues pertain to the difference between gross sales and direct cost, which comprises the costs incurred in the actual production of ore (direct mining cost) and administrative expenses.
Industry players led by the Chamber of Mines have argued though that both proposals would make the Philippine mining industry more uncompetitive. They pointed out that the two percent excise tax is just one component out of the 12 taxes imposed on mining. They referred to a 2012 International Monetary Fund (IMF) study on the Philippine mining tax regime which shows that nearly 60 percent of the total value of a mining project is turned over to the government based on the internationally accepted Average Effective Tax Rate (AETR).1
This AETR is significantly higher than all large mining countries.
1

The AETR is the government’s share of pre-tax net present value (NPV), usually measured at the government’s assumed discount rate.

The lack of governance and weak enforcement of the mining laws have also led to the proliferation of illegal small-scale mining. At present, illegal small-scale mining activities are found in more than 30 provinces in the country, with thousands of persons directly engaged in the activity. Because they are not properly regulated, the government loses a considerable amount of revenues. According to the MGB, small-scale mining also poses problems such as the unabated use of mercury in extracting gold; unsafe mining practices; lack of environmental impact mitigation; illegal use of heavy equipment and explosives; and rapid decrease of mineral deposits, among others.
Other Problems Relating to the Mining Sector.
EO 79 and the proposed new policies on mining should aim to address the other problems of the sector which include the: a) absence of integrated map of areas closed to mining/“no-go
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zones”; b) lack of guidelines on small-scale mining; c) absence of national program and roadmap for the development of value-adding activities and downstream industries for strategic metallic ores; d) lack of transparency in mining revenues and taxes paid by mining firms; and f) absence of centralized database for the mining industry. These problems, when addressed, are expected to boost the performance of the mining sector, ensuring that the country extracts equitable gains from the industry while minimizing environmental and social costs.
Proposed Legislative Measures
In the Senate of the 16th Congress, a number of legislative measures instituting reforms in the mining industry have been filed. Senate Bill No.
432 seeks to address the challenges facing the mining industry by providing a framework for the utilization and management of the country's mineral resources that focuses on the needs of the domestic economy and upholds the rights of all stakeholders involved, including the workers, farmers, indigenous peoples and the local or host communities. Under this legislative proposal, the State shall have at least a share equivalent to ten percent of the gross revenues from the development and utilization of mineral resources that are owned by it to be set aside for the general fund of the government.
On the other hand, SBN 3343 seeks to institute an independent health and environmental assessment for all mining projects. This bill intends to temper economic strategy by putting in place possible safeguards to protect the environment, ecology and health of the potential mining communities. These safeguards were drawn from the tragic experience of the people of Marinduque due to the Marcopper mining disaster, with the hope that the said tragedy will never be repeated and should never

2

SBN 43 was filed by Senator Sergio R. Osmeña III on July
1, 2013.
3
SBN 334 was filed by Senator Pia S. Cayetano on July 2,
2013.

be experienced communities.

by

potential

mining

SBN 457,4 meanwhile, seeks to increase the tax on minerals and quarry resources from two to seven percent. With the passage of this bill, the national government can look forward to higher revenues than it has collected in recent years.
The potential revenue from the proposed increase in excise tax on mineral products shall be equally divided between the national government and the LGUs where the mineral and quarry resources are extracted. In particular, revenues from the 3.5 percent tax on minerals shall accrue to the National Treasury, while revenues from the other 3.5 percent tax on minerals shall be remitted directly to the
LGUs as support for their Special Education Fund
(SEF). With the infusion of additional funds, it is hoped that the perennial shortages of classrooms, tables and chairs, books, teaching aids, and other educational materials will be addressed. In the House of Representatives, House Bill No.
1715 seeks to re-orient the country’s mining industry by ensuring the highest industry development standards. Meanwhile, HBN 9846 seeks to regulate the rational exploration, development and utilization of mineral resources, and ensure the equitable sharing of benefits for the State, indigenous peoples and local communities. HBN 1173,7 on the other hand, proposes to create the Department of
Mines and seeks to institute a revised regulatory framework for the country’s mining industry, which will thereby amend or repeal the existing mining laws particularly the Philippine Mining
Act of 1995.

4

SBN 457 was filed by Senator Ralph G. Recto on July 4,
2013.
5
HBN 171 is principally authored by Representative Neri
Colmenares on July 1, 2013.
6
HBN 984 is principally authored by Representative
Teodoro Brawner Baguilat Jr. on July 3, 2013.
7
HBN 1173 is principally authored by Representative Philip
Pichay on July 8, 2013.

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Conclusion and Recommendations
Considering the wealth of the country in terms of mineral deposits, mining can be a potential sector for spurring growth in the economy. If mining is done right and with an equitable revenue sharing agreement, mining can generate more employment and further increase government income.
Communities have a tendency to view mining operations with suspicion because of the industry’s potential to cause environmental damage to the area. If all mining companies comply with existing laws, employ environmental protection measures and are fully aware of their social responsibilities, environmental damages and adverse social impact can be avoided or reduced. If the mining industry is to be a successful driver of the economy and will outweigh its environmental and social costs, sector development efforts should be anchored and aligned on the right policy frameworks particularly on the nation’s blueprints for sustainable development and inclusive growth, the Philippine Agenda 21 (PA
21),8 its follow-up document the Enhanced PA
21 (EPA 21),9 and the PDP 2011-2016. These development documents provide strategies that integrate the sustainable development parameters in the development of the mining industry. 8

The PA 21, which is the nation's blueprint for sustainable development, advocates a fundamental shift in development thinking and approach. Its action agenda elaborates a mix of strategies that integrates the SD parameters in the development of the country’s minerals and mines resources.
9
The EPA 21 is an improved document that seeks to clarify and laymanize the concept, vision and principles of sustainable development and provide a more focused and catalytic action agenda for promoting, mainstreaming, and sustaining sustainable development initiatives in the country. It builds on the core principles of the PA 21 with distinction on the shift from ecosystem-based management to thematic approach. The EPA 21 has five goal elements, namely: Poverty Reduction; Social Equity;
Empowerment and Good Governance; Peace and
Solidarity; and Ecological Integrity.

To address the low share received by the government from mining, there is a need to fasttrack the legislation of new revenue sharing mechanism. The challenge is determining the optimal mining tax mix, one that will ensure the greatest possible benefit for the public without damaging the firms’ incentives to invest. It has also been proposed that the government put in place a structure or agency that would specifically look into mining and strictly enforce responsible mining policies to avoid the negative impact of mining on the environment and people. Complementary to this, there must be clear and measurable indicators to monitor compliance from mining companies and track progress in reforms to ensure responsible mining and inclusiveness of economic benefits, as well as social, cultural and environmental safeguards (Ateneo School of Government,
2011).
Taking off from other successful countries’ and other domestic mining companies’ experiences, a comprehensive compilation of best practices should be prepared to provide the government, mining companies and affected communities with information and models for decisionmaking processes. There should also be a continuous capacity building for mining companies and LGUs on the following areas: a) natural resources valuation; b) measuring local economic impact; c) measuring impact on community values and culture; d) establishing systematic monitoring and evaluation of environmental, social and economic impacts at all levels (project, local and national); and e) genuine and inclusive process of obtaining free and prior informed consent.
It is also high time for the mining industry to move toward more domestic processing to make growth in the sector more inclusive.
Legislation could be introduced that will mandate large mining enterprises especially foreign ones to set up processing facilities in the country. The establishment of processing plants would generate more tax revenues and more employment opportunities.
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Congress may also legislate the institutionalization of the Extractive Industries
Transparency Initiative (EITI) in the Philippines.
The EITI is a global standard for transparency in the extractive industry sector that involves the reconciliation of company payments with government receipts by an independent administrator, and disclosure of this information to the public. Its objective is to ensure that accurate figures about revenues are publicly available, to identify any potential discrepancies between payments and receipts and to investigate and address the underlying causes of such. Government, mining companies and civil society groups will work together on this process. It is a voluntary initiative in which participating mineral and oil-rich governments agree to publish their receipts from oil, gas and mining activities, and extractive sector companies. The Philippines was admitted as a “candidate” country by the EITI International Board on May
22, 2013 during the International EITI
Conference in Sydney, Australia. The Philippines is among the 37 countries that have committed to implement or are implementing the EITI.

Member countries have shown significant revenue increase in mining and oil sectors such as Peru and Nigeria. The latest Peruvian EITI showed that the government received over
US$5 billion in 2010, about six times as much as in 2004, when Peru started disclosing the figures. The government received more than 60 percent of the revenue from the mining sector and over US$1 billion from gas and oil exploitation. Across Latin America, revenue from extractive sectors has increased 20 times over the past decade. Similarly, the Nigerian government uncovered vast discrepancies between what the government has received and what they should have received. For the threeyear period 2009-2011, Nigeria EITI Reports revealed that a company owed tax payments adding up to US $8.3 billion.
Lastly, a long-term plan for the sustainable development of the country’s mineral resources should be developed, which will define the roles and responsibilities of all stakeholders. The plan shall reflect the official government policies and directions on mining and shall serve as the clear basis for development reforms.

9|Page

References:
Alonzo, E.M. (2012). Issues affecting the mining industry. STRSO Taxbits, 3 (15). Retrieved from http://www.senate.gov.ph/publications/taxbits%2015%20vol3%20September%20%20October%20%2 02012.pdf.
Alyansa Tigil Mina (2011). ATM Position Paper on the Continued Adoption of the Aquino Government of the
Revitalization of the Philippine Mineral Industry Policy. Retrieved from http://www.slideshare.net/ farahsevilla/atm-policy-paper-on-mining-in-the-philippines. Ateneo School of Government Policy Brief (2011). Is There a Future for Mining in the Philippines? Retrieved from http://bantaykita.ph/pdfs/ASOG_Mining%20Policy%20Brief.pdf.
Disini, Artemio F. (2009). Economy stays buoyant despite downturn. Mining Journal special publication–
Philippines.
Retrieved from http://www.mining-journal.com/_data/assets/supplement_file_ attachment/0003/173217/Philippines_scr.pdf. Doyle, C., Wicks, C., and Nally, F. (2007). Mining in the Philippines: Concerns and Conflicts. Report of a FactFinding Mission to the Philippines. Society of St. Columban, West Midlands, UK, 63pp.
Habito, Cielito F. (2010). An Agenda for High and Inclusive Growth in the Philippines. Available from http://www.slideshare.net/no2mininginpalawan/agenda-for-high-and-inclusive-growth-in-the-philippines. International Finance Corporation (IFC) Jobs Study (2013). Assessing Private Sector Contributions to Job
Creation and Poverty Reduction. Retrieved from http://www.ifc.org/wps/wcm/connect/ d3b612004e3468c783d5ab7a9dd66321/IFC_FULL+JOB+STUDY+REPORT_JAN152013_FINAL.pdf?MOD =AJPERES.
Mining Industry Statistics (2013). Retrieved from http://www.mgb.gov.ph/Files/Statistics/MineralIndustry
Statistics. pdf.
Mining Journal Special Publication, London (2006). Philippines: Revitalizing the Minerals Industry. Retrieved from http://denver.miningopp.govtools.us /DOCUMENTS/ Philippines_MiningJournal.pdf.
Mining Journal Special Publication, London (2006). Philippine Mining: A Wealth of History and Experience.
Retrieved from http://denver.miningopp.govtools.us /DOCUMENTS/ Philippines_MiningJournal.pdf.
Michelitsch, R., Armenta, G., Casadevall-Massuet, F., Datta, M., Denisova, A., Grover,R., LLeyva,L., Oikawa, J. and Shi, A. (2013). Assessing Private Sector Contributions to Job Creation and Poverty Reduction.
International Finance Corporation (IFC) Jobs Study. Retrieved from http://www.ifc.org/wps/wcm/ connect/d3b612004e3468c783d5ab7a9dd66321/IFC_FULL+JOB+STUDY+REPORT_JAN152013_FINAL.p df?MOD=AJPERES.
Nakayama, K., Caner, S., and Peter Mullins (2011). Philippines: Technical Assistance Report on Road Map for a
Pro-Growth and Equitable Tax System. International Monetary Fund (IMF) Report, 12/60. Retrieved from http://www.imf.org/external/pubs/ft/scr/2012/cr1260.pdf.
National Economic and Development Authority (2013). Philippine Development Plan (PDP) 2011-2016
Midterm Review. Pasig City.
Pasimio Jr., H. (2005) Extracting Growth from Mining. SEPO Policy Insight. Retrieved from http://www.senate.gov.ph/publications/PI%202005-11%20%20Extracting%20Growth%20from% 20Mining.pdf.
What is EITI? Retrieved from http://eiti.org/eiti.
This Policy Brief was principally prepared by Mr. Sherwynne B. Agub with inputs from Microeconomics
Sector Head Peter Anthony S. Turingan, under the supervision of the SEPO Directors and the overall guidance of its Director General.
The views and opinions expressed herein are those of the SEPO and do not necessarily reflect those of the Senate, of its leadership, or of its individual members. For comments and suggestions, please e-mail us at sepo@senate.gov.ph. 10 | P a g e

Annex 1. Philippine Mining Industry Profile, 2003-2012
Item
Gross Production Value in
Mining (MGB; in current prices, Billion PhP)
Gross Value Added in
Mining (NSCB; current prices, Billion PhP)
Mining Contribution to GDP
(%)
Total Exports of Minerals and Mineral Products (BSP;
Million US$)
Mining Contribution to Total
Exports (%)
Total Exports of NonMetallic Mineral
Manufactures (BSP; Million
US$)
Mining Contribution to Total
Exports (%)
Total Mining Investment
(Data from the
Revitalization Program under EO 270) (MGB;
Million US$)
Employment in Mining and
Quarrying (DOLE; number of persons)
Mining Contribution to Total
Employment (%)
Taxes, Fees and Royalties from Mining (Million PhP)
Fees, Chargers and Royalties
Collected by DENR-MGB

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012+

41.1

43.4

50.2

72.5

102.2

87.1

106.1

145.3

163.2

100.8

30.3

32.6

37.1

43.9

60.0

53.6

65.8

88.2

96.9

72.8

0.7

0.6

0.6

0.7

0.9

0.7

0.8

1.0

1.0

0.7

637

797

820

2,103

2,605

2,498

1,470

1,929

2,840

2,265

1.8

2.0

2.0

4.5

5.3

5.2

3.9

3.8

6.0

4.9

128

165

171

182

223

211

156

162

177

145

0.4

0.4

0.4

0.4

0.4

0.4

0.4

0.3

0.4

0.3

-

-

-

190.3

708.4

604.2

719.5

968.3

618.5

160

104,000

118,000

123,000

141,000

149,000

158,000

169,000

197,000

211,000

252,000

0.3

0.3

0.4

0.4

0.4

0.5

0.5

0.5

0.6

0.7

79.8

120.1

210.2

192.1

774.0

557.4

396.2

800.6

1,180.8

1,644.1

Excise Tax Collected by BIR

155.8

232.5

251.4

489.6

942.1

660.3

718.8

1,305.9

6,985.8

n/a

Taxes Collected by the NGAs

1,039.2

2,769.1

4,733.6

5,313.2

8,371.7

5,949.5

10,272.5

10,187.9

12,886.0

5,817.8

226.9

358.5

453.5

395.0

359.8

522.2

992.8

1,070.8

1,179.1

496.6

1,501.7

3,480.2

5,648.7

6,389.9

10,447.6

7,689.4

12,380

22,231.7

22,079.8

7,958.5

Taxes and Fees Collected by
LGUs
TOTAL

Source: DENR-MGB, 2013

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Annex 2. Summary of Mining Tax Rates of Selected Countries
Type of
Taxes
Income Tax
Rate

Mineral
Taxes

Australia

Chile

China

30.0%

18.5%

25.0%

State
Royalties
(State)

Specific
Mining
Tax
(Federal)
–
14.0%

Resource
Tax
(Federal)

Copper –
2.7-3.5%
Gold –
1.0-2.5%

Copper –
5-7 RMB per tonne
Gold –
1.5-7 RMB per tonne

Iron Ore –
6.5-7.5%

Iron Ore –
10-20
RMB per tonne Coal –
7.0-10.0%
Minerals
Resource
Rent Tax or MRRT
(Federal)

Coal –
2-8 RMB per tonne

Gold –
N/A

Compensation for
Mineral
Resource
(Federal)

Iron Ore –
22.5%

Indian
Company –
32.45%
Foreign
Company –
42.024%
Royalty
(State)
Copper –
4.2%
Gold –
2.0%
Iron Ore –
10.0%
Coal –
55 + 5.0% (P)
-INR 130 +
5.0% (P)

Indonesia

Peru

Philippines

South Africa

25.0%

30.0%

30.0%

28.0%

Government
Royalty
(Federal)

Mining
Royalty
(Regional)

Copper –
4.0%

Copper –
1.0-12.0%

Gold –
3.75%

Gold –
1.0-12.0%

Iron Ore –
3.0%

Iron Ore –
1.0-12.0%

Coal –
3.0-7.0%

Coal –
1.0-12.0%
Special
Mining Tax
(National)

The 5% representing a surcharge and P being the sales price per tonne of coal at mine mouth. Copper –
2.0-8.4%

Copper –
0.5-4.0%

Coal –
22.5%

India

Gold –
0.5-4.0%

Copper –
N/A

Gold –
2.0-8.4%
Iron Ore –
2.0-8.4%
Coal –
N/A
Special
Mining
Contribution
(National)
Copper –
4.0-13.12%

Iron Ore –
0.5-4.0%
Coal –
0.5-4.0%

Gold –
4.0-13.12%

Excise Tax
(Federal)
Copper –
2.0%
Gold –
2.0%
Iron Ore –
2.0%
Coal –
1.0-PhP10.00/
metric tonne
Royalties to
Mineral
Reservations
(Federal)

Mining and
Petroleum
Resources
Royalty or
MPRR
(Federal)
Copper –
0.5-7.0%
Gold –
0.5-5.0%
Iron Ore –
0.5-7.0%
Coal –
0.5-7.0%

Copper –
5.0%
Gold –
5.0%
Iron Ore5.0%
Coal –
5.0%
Royalties to
Indigenous
Cultural
Communities
(Federal)
–
As agreed

Iron Ore –
4.0-13.12%

Tax on
Exports

N/A

N/A

N/A

Ore
Extracted –
10.0-20.0%

N/A

Coal –
N/A
N/A

N/A

N/A

Processed
Ore –
10.0-40.0%
Refined
Metal –
10.0%

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Withholding
Tax

Dividends
– 30.0%

Dividends
– 35.0%

Dividends
– 10.0%

Dividends
– N/A

Dividends
– 20.0%

Dividends
– 4.1%

Dividends
– 15.0-30.0%

Dividends
– 10.0%

Interest –
10.0%

Interest –
4.0-35.0%

Interest –
10.0%

Interest –
21.01%

Interest –
20.0%

Interest –
4.9%

Interest –
20.0%

Interest –
N/A

Royalties
– 30.0%

Royalties
– 30.0%

Royalties
– 10.0%

Royalties
– 10.51%

Royalties
– 20.0%

Royalties
– 30.0%

Royalties
– 30.0%

Royalties
– 12.0%

Services
Fee –
5.0%

Services
Fee –
15.020.0%

Services
Fee – varies Services
Fee –
42.02%

Services
Fee –
20.0%

Services
Fee –
15.0%

Services
Fee –
30.0%

Services
Fee –
N/A

Source: Global Mining Industry Updates, June 2012, PricewaterhouseCoopers

10

10

PricewaterhouseCoopers (trading as PwC) is a multinational professional services firm which is headquartered in
London, United Kingdom. Accordingly, it is the world's largest professional services firm and the largest of the “Big Four” accountancy firms (along with Deloitte, Ernst & Young, and KPMG) as measured based on 2012 revenues.

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