Manila, Philippines -- The country risks missing out anew on the benefits of the multi-billion dollar mining industry if the government goes ahead and implements new policies seen to favor the antimining lobby, foreign business groups said.

The Joint Foreign Chambers (JFC), along with the Philippine Mining and Exploration Association Inc. (PMEA), has expressed "great" concern over the proposed mining reforms, appealing to the Aquino administration to consider industry inputs and to address the root causes of project delays, among other issues.

Based on copies obtained by the Inquirer, a draft presidential executive order proposes, among other things:

Replacement of the “first-come, first-served” system in mining applications with competitive public bidding.

Addition of declared prime agricultural lands and ecotourism zones to areas closed to mining.

Conduct of the total economic valuation scheme in mining areas before mining applications are approved and mining activities are allowed.

Review of all existing incentives and mining contracts to see if these are in line with the new mining policies.

• Promotion of downstream processing.

The JFC’s appeal to the government was signed by representatives of the Philippine offices of the American Chamber of Commerce, Australia-New Zealand Chamber of Commerce, Canadian Chamber of Commerce, European Chamber of Commerce, Japanese Chamber of Commerce and Industry, Korean Chamber of Commerce, and the Philippine Association of Multinational Companies regional headquarters.

Both the JFC and PMEA expressed support for the government’s aim to raise the bar in mining and to increase its tax take. They noted, however, that the discrepancy between benefits and liabilities was more pronounced in small-scale and unregulated mining, and not in the highly regulated large-scale mining industry.

The PMEA, in a letter to Executive Secretary Paquito Ochoa Jr., said it had provided further inputs through a detailed response through the Chamber of Mines.

Letter to Mr. Aquino

The JFC, in its letter to President Aquino, requested a meeting between its mining representatives and Ochoa’s policy team to discuss their differing views.

The PMEA said it was concerned the proposed reforms would not address project delays due to a permit process that “is prone to land grabbers and claim jumpers.” It also expressed surprise at proposals to include additional taxes and the removal of investment incentives for large-scale operations.

“This has sent a strong message to the investment community that the Philippine mining industry is closed for business until further notice,” said PMEA president Johan Raadsma. “Future investments would become uncertain of possible drastic changes if rules of engagement, such as the revocation of the income tax holiday, were to be initiated.”

The JFC said the draft order as presented “proposes to review all existing contracts and renegotiate or impose an increased government tax or royalty share, and potentially close out granted contracts completely.”

The foreign businessmen also pointed out that the draft executive order carried “retrospective legislative implications” and “inferred sovereign risk.”

The groups cautioned that retrospective policies generated investment uncertainty not only in mining, but also in all foreign direct investments.

“It also unnecessarily damages sovereign credibility on the global stage, and in some cases violates the foreign investment protection agreements signed by the Philippines with many countries. Such uncertainty would have a major and lasting impact on the Philippines’ ability to attract responsible investors—particularly as it would come at a time when global and regional competition to attract foreign investment is so competitive,” the JFC said.

‘No cause for alarm’

Environment Secretary Ramon Paje, however, assured mining investors there was no cause for alarm.

Paje headed the group that proposed the reforms in the as yet unsigned executive order, titled “Institutionalizing and Implementing Reforms in the Philippine Mining Sector, Providing Policies and Guidelines Therefor, and for Other Purposes.”

In a phone interview on Saturday, Paje said: “There is nothing in there that is not already in existing contracts. We are using existing guidelines.”

“We are just optimizing the provisions to upgrade the environmental standards in the industry, resolve the issue of small-scale mining, harmonize national and local regulations on mining and optimize government revenue from mining,” he said.

SOURCE: Philippine Daily Inquirer;Front Page;13 Feb 2012