Mineral Reservations and the Schizophrenia of DENR

Republic Act No. 7942 or the Philippine Mining Act of 1995 states:

“When the national interest so requires, such as when there is a need to preserve strategic raw materials for industries critical to national development, or certain minerals for scientific, cultural or ecological value, the President may establish mineral reservations upon the recommendation of the Director [Mines and Geosciences Bureau] through the Secretary [DENR]. Mining operations in existing mineral reservations and such other reservations as may thereafter be established, shall be undertaken by the Department or through a contractor: Provided, that a small-scale mining cooperative covered by Republic Act No. 7076 shall be given preferential right to apply for a small-scale mining agreement for a maximum aggregate area of twenty-five percent (25%) of such mineral reservation, subject to valid existing mining/quarrying rights as provided under Section 112 Chapter XX hereof. All submerged lands within the contiguous zone and in the exclusive economic zone of the Philippines are hereby declared to be mineral reservations.” (RA 7942, Sec. 5)

In the interest of discussion on this topic, let me enumerate some key points:

  • What specific “national interest” is required to declare a mineral reservation? Are we talking about an economic interest or an environmental interest?
  • What is the primary objective of declaring areas as a mineral reservation? Is it for preservation or for utilization of strategic raw materials?
  • How much shall the government actually earn from mining within mineral reservations?
  • What are the existing mineral reservations in the country?

The Department of Environment and Natural Resources Secretary has directed the Mines and Geosciences Bureau (MGB) to identify more mineralized areas throughout the country for “possible declaration into mineral reservations.”[2] Secretary Paje said that the additional mineral reservations is a move to “provide equitable access to mineral resources and to generate additional non-tax revenue for the government.”[3]

In a nutshell, the identification of mineral reservation areas has become one of the reforms proposed by the MGB  to enhance revenues.

It is clear from the statements of Sec. Paje that the “national interest” that made DENR  declare more mineral reservations is economic while the environmental interest to “preserve” because of the “ecological value” of the area is side-lined.

One of the confusions which arises in declaring an area a mineral reservation is whether that area will be preserved (as in the case of forest reserves and national parks where forests are left unimpaired for future generations[4]) or will minerals be extracted, utilized and exploited.

One such example of the term Mineral Reservation referring to “preservation” of the environment is Proclamation No. 297[5] by former President Gloria Macapagal-Arroyo. The area under the mineral reservation is the Municipality of Monkayo, Compostela Valley Province where gold, copper and other minerals are mined. Unregulated small to medium-scale mining operations have, since 1983, been undertaken in that area and in the process, has caused grave environmental, health and peace and order problems in the area. In this Proclamation the national interest stated is to “prevent the further degradation of the environment and to resolve the health and peace and order problems spawned by the unregulated mining operations in the said area.”[6]With that declaration, mining operations in the area have been undertaken by the DENR directly like the PMDC Diwalwal Direct State Utilization Project. However which way one views it, the Compostela Valley Mineral Reservations is a glaring example of not acting until it is too late. To date, violence and impunity still mars the mining activities in that area.

The “national interest” advocated by Sec. Paje and the MGB, compared to the abovementioned Proclamation, falls on the provision “preserve strategic raw materials for industries critical to national development”. What Sec. Paje has in mind then is to declare minerals-rich and mineable areas into Mineral Reservations in order to acquire more non-tax revenues for the government and NEVER to preserve them for their “scientific, cultural and ecological value.”

And how much are we talking about here?

The IRR of the Mining Act of 1995 provides us with the following:

  • Taxes and Royalties
  • Excise Tax: 2% (BIR)
  • Royalty: 5% (Market Value of the gross output)
  • Sharing: 40% LGU
  • 60% National Government
  • Fees from permit applications

The MGB is looking at generating some 6.9 Billion[7]in revenues and royalties nationwide should the mineral reservation program materialize.

There are currently nine mineral reservations in the country located in the provinces of Ilocos Norte, Zambales, Bulacan, Camarines Sur, Samar Island, Surigao del Norte, Compostela Valley, Zamboaga del Norte, and all offshore areas throughout the country. DENR is planning to add 15 more minerals reservation.

It is my opinion that the Department of Environment and Natural Resources is suffering from its long-time bout of Schizophrenia. How can one be an agency that protects and at the same time exploits the environment? This program for the declaration of more minerals reservation in the country for the sole interest of its economic value and not for the preservation of its ecological value adds to the growing call for an alternative mining legislation that will finally put the cork to the many loopholes of the Mining Act of 1995.

And when will the DENR and the National Government wake up from their dreams that mining will be the virtual saviour of our economy?

(First posted February 4, 2011 in my blog panaghoytanodlupa.blogspot.com)

[1] Republic Act No. 7942, Section 5, under Mineral Reservations.

[3] Ibid.

[4] Presidential Decree No. 705, Revised Forestry Code, Section 18.

[5] Proclamation No. 297 Excluding a Certain Area from the Operation of Proclamation No. 369 Dated February 27, 1931, and Declaring the Same as Mineral Reservation and as Environmentally Critical Area.

[6] Ibid.

[7] MGB mulls Antique as Minerals Reservation Area,http://positivenewsmedia.net/am2/publish/ Cities_And_Towns_23/MGB_mulls_Antique_as_mineral_reservation_area.shtml


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