Mining to the Philippines
Trends and opportunities
The Philippines is the fifth most mineralised country in the world, with
the third largest deposits of gold, fourth for copper, fifth for nickel and
sixth for chromite. The nation’s mineral resource assets are valued at
around A$1.32 trillion, but those remain largely untapped. The country’s
total land area covered by mining tenements is only 0.872 million hectares
or 2.91 per cent of the country’s 30 million total land area. In terms of
non-metallic minerals, the country has untapped coal resources estimated at
about 2.4 billion tonnes.
The country has 44 mining companies of which 37 are operating mines - six
gold mines, three copper mines and 28 nickel mines – as well as 65
non-metallic mining companies. The Department of Environment and Natural
Resources has been undertaking an audit to ensure these companies are
ISO14001 compliant. Australian and Canadian standards have been named by
Philippine President Rodrigo Duterte as the reference point.
Metallic mineral production value increased by 5.1 per cent in the first
quarter of 2017. This was due to good metallic prices. More importantly,
gold with the highest price contributed to the highest percentage to total
mineral production. The combined gold output of the Didipio Gold Project of
OceanaGold Philippines, Inc. and Masbate Gold Production of Filminera
Mining Corporation/Philippine Gold Processing and Refining Corporation in
Masbate accounted for more than 58 per cent of the country’s total gold
production. In terms of mining method, five are underground and one
In terms of nickel production, Direct Shipping Ore (DSO) and mixed
nickel-cobalt sulphide accounted for 28 per cent of total mineral
production coming. Out of the 28 nickel mines, only seven reported
production for the first quarter of 2017. Zero production was due to
unfavourable weather conditions, some mines are on care and maintenance
status, and suspended operations due to environmental related issues. Coral
Bay Nickel Corporation and Taganito Mining are at the forefront, combined
nickel production increased by 27 per cent in the first quarter of 2017.
Both companies/plants make use of hydrometallurgical nickel processing
In terms of copper production, Carmen Copper Corporation reported the
largest output equivalent to 46 per cent of total copper production,
followed by Padcal Copper-Gold Project of Philex Mining which is an
underground mine, Toledo Copper open pit mine and Didipio Copper-Gold
Project of OceanaGold Philippines also an open pit mine.
For non-metallic mine operations, Semirara Mining is the major coal
producer of the country, accounting for almost 97 per cent of total coal
production. In the first half of 2017, Semirara Mining increased coal
production by 25 per cent to 7.35 million metric tons (MMT) from 5.88MMT (Source: Semirara Mining and Power Corporation report, 1H2017).
Government and policies
The Department of Environment and Natural Resources (DENR) is the primary
agency responsible for the conservation, management, development, and
proper use of the country’s environment and natural resources. Its mandate
among others is to assure availability and sustainability of the country’s
natural resources through judicious use and systematic restoration or
replacement, whenever possible (Source:
Department of Environment and Natural Resources
The Mines and Geosciences Bureau (MGB) is mandated to take charge in the
administration and disposition of mineral lands and mineral resources;
promulgate rules and regulations, policies and programs relating to mineral
resources management and geoscience developments (Source:
Mines and Geoscience Bureau (MGB
The Department of Energy (DOE) is mandated to prepare, integrate,
coordinate, supervise and control all plans, programs, projects and
activities of the government relative to energy exploration, development,
utilisation, distribution and conservation.
Philippine Mining Act of 1995
The Philippine Mining Act of 1995 (Republic Act No. 7942) is the governing
law for mining. Under this Act, mineral resources are owned by the state
and their exploration, development, utilisation, processing and
conservation are under its full control and supervision. The state may
grant mining rights in three ways:
Exploration Permit (EP) or Mineral Processing Permit (MPP) – grants the
right to explore specified areas for two years, renewable for a maximum
of eight years for metallic mines and six years for non-metallic mines.
Mineral Production Sharing Agreement (MPSA) – grants the contractor the
right to conduct mining operations within a contract area and share the
gross output. The MPSA is for 25 years, renewable for another 25 years.
Financial or Technical Assistance Agreement (FTAA) – a contract
involving financial and technical assistance for large scale
exploration, development and utilisation of mineral resources. This
type of contract is open to Filipinos and foreign corporations with up
to 100 per cent foreign equity and has a term of 25 years and renewable
for another 25 years.
As of September 2016, the Philippines has 29 existing EPs; 303 MPSAs; and
five FTAAs. (Source:
Mines and Geoscience Bureau (MGB)
Executive Order 79
Reforms in the Philippine mining industry was institutionalised in July
2012 through the Executive Order 79. Two important issues have been raised
under the EO 79, which will greatly affect the mining industry:
- The proposed mining revenue sharing scheme
- The proposed no-go zone maps
House Bill (HB) 5367 proposes a government share equivalent to 10 per cent
of the gross revenue, or 55 per cent of the ‘adjusted mining revenue’,
whichever is higher. The no-go zone maps developed by the Mining Industry
Coordinating Council (MICC) identified areas reserved for agriculture,
eco-tourism, protected landscapes and seascapes.
The no-go zone maps developed by the Mineral Industry Coordinating Council
(MICC) closes approximately 84 per cent of the country’s 30 million hectare
total land area as off limits to mining activities. These areas are
reserved for agriculture, eco-tourism, protected landscapes and seascapes.
Effectively, about 4.5 million hectares of the 9 million hectares
generally considered to be of high mineral potential are now closed off to
mining. The ‘no-go’ zone maps remain pending approval with the Office of
the President, but it is now being used by the MGB in its review of
exploration permit applications.
Legislation on Open Pit Mining
The EO 79 does not have specific laws on mining techniques. The Department
Secretary (Minister) for Environment and Natural Resources will recommend a
legislation providing clear-cut rules and regulations on open-pit mining.
Discussions are ongoing with the Mining Industry Coordinating Council
The MICC is tasked to formulate the implementation rules and regulations
for EO 79. It is composed of the Economic Development Cabinet Cluster and
the Climate Change Adaptation and Mitigation Cluster. The Philippine mining
stakeholders which include the MICC, the Chamber of Mines of the
Philippines, and the mining non-governmental organisations are currently
having a series of discussions to ensure that it is equitably beneficial to
the state and to the private sector with emphasis on environment
sustainability and safety standards.
Extractive industries transparency initiative
The Philippine Government has joined the Extractive Industries Transparency
Initiative. This is a commitment to fiscal transparency and accountability
for effective governance. The Philippines-EITI Multi-Stakeholder Group
(MSG) appointed an independent administrator that reconciled the accounts
submitted by the relevant government agencies and the 33 participating
mining and oil and gas companies.
Through the EITI process, local governments and mining communities now have
access to data regarding their shares from national wealth and payments
collected from companies in their area. The data is collected from an
electronic reporting system where EITI data and the Local Government Units
and Department of Finance are integrated.
The Philippine-Extractive Industries Transparency Initiative (PH-EITI)
report for 2014 covered a total of 36 companies - 31 large-scale metallic
mining companies and 5 oil and gas companies for collections in year
2014. The report revealed that there was a variance of over Php 76 million
from what was paid by mining and oil and gas companies in the form of
taxes to what was received by the Philippine government. The causes of
variances were a result of difference in accounting frameworks, no centralized
database, disaggregated data, delayed submissions of required schedules and
documents to support disclosures.
The recommendations of the report include: uniform accounting framework
preferably through the accrual method, formalise alternative procedures, close
coordination by agencies’ central offices and provincial branches, and
regular conduct of audit.
Mining Projects (Source: Mines and Geosciences Bureau)
Some of the current Major Mining Projects in the Philippines are:
Didipio Copper Gold (OceanaGold Philippines): copper, gold, silver
Carmen and Lutopan (Carmen Copper Corporation): copper, gold, silver
Coral Bay HPAL (Coral Bay Nickel): mixed nickel-cobalt sulphide (MPP)
Padcal Copper-Gold (Philex Mining): copper, gold, silver (MPSA)
Masbate Gold (Filminera Mining): gold, silver MPP
Taganito HPAL (Taganito HPAL Nickel Corporation): mixed nickel-cobalt
- Mindanao Mineral Processing and Refining (Philsaga Mining
Corporation/Mindanao Mineral Processing): gold, silver (MPP)
- Cagdianao Nickel (Platinum Group Metals): nickel (MPSA)
- Rio Tuba Nickel (Rio Tuba Nickel): nickel (MPSA)
New mining projects
Two mining projects are close to getting a final investment decision (FID).
These are the KingKing Mining Project and the Silangan Mining Project.
Kingking Mining Project is a A$ 2 billion project in Pantukan, Compostela
Valley. The project is under the Mineral Production Sharing Agreement
between the National Development Corporation (NADECOR) and St. Augustine
Gold and Copper Ltd (Sagcl), a company listed in Toronto Stock Exchange. It
is expected to produce up to 3.2 billion pounds of copper, 5.4 million
ounces of gold and 11.7 million ounces of silver. The company targets to
produce cathode copper by 2018 to 2019.
Silangan Mining Project is a copper-gold mine in Surigao del Norte. It
involves the development of Boyongan and Bayugo mineral deposits with an
estimated reserve of five billion pounds of copper and nine million ounces
of gold in its 25-year mine life. The estimated project cost is A$ 1.2
billion. This project is expected to replace Philex Padcal project, whose
mine life is expected to end by 2020. Silangan Mining and Philex Mining are
subsidiaries of Hong Kong’s First Pacific Co. Ltd.
Tampakan Mining Project of the Sagittarius Mines, Inc. located 50
kilometers north of General Santos City with a potential investment of
A$ 5.9 billion. Tampakan project contains 15 million tons of copper and
nearly 18 million ounces of gold. This will be an open pit mine. The
current investors are the Alcantara family and SM Investments Corporation.
Australian firms remain well placed to capitalise on future developments in
the Philippines’ mining and resources sector. Key opportunities for
Australian companies include specialist consultancy and engineering
services and mining equipment supply.
Other areas of opportunity include:
- mineral exploration – geophysics, mapping, diamond drilling and
- mining software – resource estimation, modelling, mine design and
planning, maintenance and optimisation
- contract mining and engineering services
industry education and training
- environmental related products and services – water and sewage treatment
plans, effluents analysers and software
mine safety training and equipment
land rehabilitation and mine closure
The market is aware of Australia’s mining capabilities in heavy mining
equipment, mining technology and consultancy. However, there is strong
competition in consumable items such as core trays, personal protective
equipment (PPEs) which usually come from China, and heavy mining machinery
from Europe and US.
Tariffs, regulations and customs
- Executive Order 57 (EO 57), which aims to provide fiscal incentives to
businesses for start-up and expansion, provides zero tariff on importation of
capital equipment. Here is the link to a complete list of capital equipment covered by EO 57.
- If the importer (the Philippine company) is registered with the Board of
Investment (BOI) and the capital equipment is listed in EO 57 then the
tariff rate is zero.
- If the importer is NOT registered with the BOI, then the tariff rate will be
3% - the tariff schedule for Most Favoured Nation and not EO57.
- Australian consultants in the Philippines and independent personal services
not rendered more than 183 days, or equivalent to a non-resident with
income sourced from the Philippines are exempt from Philippines income
tax. The Philippines and Australia has a tax treaty agreement. The Australian
consultant must apply for a Tax Treaty Relief Application (TTRA) and submit and have it received by the International Tax Affairs Division (ITAD) (Source:
Taxation of Non-Residents, Bureau of Internal Revenue).
Value Added Tax
The Bureau of Customs confirmed that VAT is 12% based on the value of the equipment.
ASEAN Australia New Zealand Free Trade Agreement (AANZFTA):
The signing of the
ASEAN Australia New Zealand Free Trade Agreement (AANZFTA)
has had a positive impact on the ability of Australian companies to supply the Philippines with mining operations and products. Many products including grinding balls, iron steel wire, conveyor belts and centrifugal
pumps now have zero tariffs
The exporter (the Australian company) may avail of the zero tariff rate
under the ASEAN-Australian New Zealand Free Trade Agreement (AANZFTA). The
HS Code for mining equipment, specifically mining slurry suction and
discharge hoses, is 4009.12.10.
- The Certificate of Origin (COO), original and two copies, must be
presented for every shipment. The Australian Chamber of Commerce and
Industry (ACCI) and the Australian Industry Group (AIG) are agencies that
Visit the Australian Government’s
Free Trade Portal
to find out more.
Marketing your products and services
Australian companies should develop relationships with mining contractors
and consultancy companies that provide services in the Philippines.
Several Australian mining equipment and technology services (METS)
companies have also established a presence in the Philippines and supply
directly to mining companies. Other METS companies have appointed a
reputable agent or distributor to market their products and services. These
companies provide after sales support as a part of their service to
- annual event organised by the Philippines Chamber of Mines and held in
Philippine Mine Safety and Environment Association Exhibition and
- annual assembly for the Philippine Mining Engineers and Geologists held
Links and industry contacts
Chamber of Mines of the Philippines
Geological Society of the Philippines
Mines and Geosciences Bureau
Philippine Society of Mining Engineers
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