Duterte ends Aquino-era mining ban in departure from anti-mining past

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Duterte ends Aquino-era mining ban in departure from anti-mining past
President Rodrigo Duterte holds a meeting with some members of the Inter-Agency Task Force on the Emerging Infectious Diseases (IATF-EID) at the Malago Clubhouse in Malacañang on April 13, 2020.
Presidential Photo / Karl Norman Alonzo

MANILA, Philippines — In a departure from his anti-mining stance, President Rodrigo Duterte lifted a 9-year-old ban on new mining agreements on Thursday, ending a controversial policy considered the last big hurdle to miners looking to capitalize on mineral-rich Philippines.

As expected, Executive Order 130 was met by contrasting comments from mining companies which in numerous cases had been at the receiving end of Duterte’s harsh rhetoric, and environmentalists whose opposition to the administration is only tempered by the president’s adverse attitude toward mining.

“The Government may enter into new mineral agreements, subject to compliance with the Philippine Mining Act of 1995 and other applicable laws, rules, and regulations,” the EO stated. 

The Chamber of Mines of the Philippines, an industry group, immediately welcomed the news. “A major roadblock to the huge potential of the Philippine mining industry has been removed,” the group said in a statement. The mining and oil sub-index closed up 5.38% at the local bourse on Thursday after the news.

Alyansa Tigil Mina, an environmental group, meanwhile opposed Duterte's decision. “Pres. Duterte has completed his turn around, from claiming to protect the environment and stop the destruction of forests by destructive mining to a pro-mining president,” the group said in a separate statement.

Indeed, the EO marks a dramatic shift in Duterte’s stance against mining since lambasting the sector on his State of the Nation Address in 2017. At the time, the chief executive slammed the nascent industry, blaming them for costly environmental destruction, while supposedly giving far less in government revenues.

A lot has changed since then. After the late Gina Lopez was not confirmed as environment secretary in 2017, Duterte’s economic managers reversed majority of her 26 mining suspensions that drew the ire of mining firms. Meanwhile, in July 2020, the government restored an environmental clearance to the $5.9-billion Tampakan open-pit mining project in South Cotabato, which has long been stuck after getting opposed by the local state. 

Broad change

The EO is arguably the biggest and broadest policy change on this front, especially since it would again open the gates to future mineral investors looking at the Philippines’ untapped resources. But that does not mean it would be a field day for them as well, as Duterte also instructed the state’s top environmental agency to ensure government gets its due, even from already existing pacts.

“The DENR shall formulate the terms and conditions in the new mineral agreements that will maximize government revenues and share from production…,” the EO said.

“The DENR shall likewise undertake a review of existing mining contracts and agreements for possible renegotiation of the terms and conditions of the same, which shall in all cases be mutually acceptable to the government and mining contractor,” it added.

More broadly, this marked another push to open the economy to foreign investors, some of which have tested constitutional boundaries that limit 40% equity in select industries. This includes Duterte pressing on his allies in Congress to pass three bills that will permit more foreign players in retail, public services like transport, plus a broader liberalization measure that reduces sectors where foreign capital is prohibited. 

In October last year, Duterte also lifted a prevailing moratorium on oil and gas exploration in the West Philippine Sea, a decision officials said was meant to find and develop new energy sources, but one that also inevitably opens partnerships with foreign investors, including those from China, on these exploration deals.

Finally, late last month, Duterte likewise enacted the Corporate Recovery and Tax Incentives for Enterprises Act that reduced corporate tax rates and tax perks in a bid to level the playing field for companies in and out of economic zones. All these in a bid to get the private sector to facilitate the economy’s pandemic recovery, while the government repeatedly hesitates to spend more over fears of ballooning its deficit and debt.

For Ronald Recidoro, vice-president at Chamber of Mines, it would take some time to bring back the appetite of foreign miners for the Philippines, but added that the EO was a move in the right direction.

“I think at the most, you will see an uptick in investment inquiries, but how soon will those translate to MPSA (mineral production sharing agreements), it will be long. It takes 10 to 15 years to graduate from application to actual MPSA,” Recidoro said by phone.

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