by Prime Sarmiento
MANILA, Sept. 19 (Xinhua) -- The Philippines may lose about 4 billion U.S. dollars worth of mining investments if the government continues to impose a moratorium on new mining projects, mining executives said.
In Wednesday's opening of the Mining Philippines Conference 2012, Chamber of Mines of the Philippines President Benjamin Philip G. Romualdez said a provision in executive order no. 79 (EO 79) which calls for renegotiating the terms and conditions of a second 25-year mining contract will discourage investment in the mining sector.
"The 2 billion dollars in mining investments we are expecting this year will not happen. The 2 billion U.S. in mining investments we are expecting next year will not happen. The 16 billion U.S. dollars in mining investments we are expecting in ( the present) administration will not happen," Romualdez said.
EO 79, which is often alluded to as the mining policy of the administration of President Benigno Aquino III, only allows mining projects that would provide higher revenues for the government and adhere to more stringent environmental standards.
The implementing rules and regulations (IRR) of EO 79 was signed last September 10 by Environment Secretary Ramon Paje. Mining executives are calling for the review of section 9 of the IRR as it mandates that the terms and conditions of the second 25- year term of mining contracts would be renegotiated by the government.
"Section nine indicates that mining companies are no longer guaranteed an automatic renewal of its contract for another 25 years. This bodes ill to businessmen who invested a lot of money in a mining site," Michael Toledo, senior vice president of Philex Mining Corp., said in an interview with Xinhua.
Policy kinks are also preventing the Philippines to take advantage of the rising global gold prices, according to PHILSAGA Mining Corp. Director Joel Muyco.
"The price of gold is more than 1,700 U.S. dollars per ounce compared to 250 U.S. dollars per ounce 20 years ago. We can't take advantage of this good price because we don't have good (policies) in place," he said.
Gold prices rose to a seven-month high early this week on the back of news that the U.S. Federal Reserve will keep interest rates low.
Romualdez said CMP members are appealing to the government to reconsider the IRR which contradicts government's assurance that mining contracts will be respected.
"This (section nine) effectively shortens mining contracts to a mere 25 years in violation of section 32 of the Mining Act, which guarantees the mining companies of a second 25-year term under the same terms and conditions," he said.
But Environment Secretary Paje maintained the government will approve new mineral agreements until the existing government sharing scheme of a "measly" 2 percent of the gross sale is changed "in favor of the government, the environment and the Filipino people."
Paje, reacting to Romualdez's earlier speech in the mining conference, said that he can't go against the provisions of. EO 79, insisting that the 2 percent sharing scheme is disadvantageous to the government.
"It is not even enough to pay for the environmental impacts of mining," he said.