Mining and Resources Law Review 2012 PDF

Puno
& Peñarroyo Law Of7ices
Mining and
Resources Law
Atty. Fernando S. Penarroyo

Na$onal Ins$tute of Geological Sciences
Geology Board Review
01 August 2012

About the Lecturer
•  BS Geo, Bachelor of Laws (UP), Master of Laws (Univ.
of Melbourne)
•  Managing Partner, Puno and Penarroyo Law
(www.punopenalaw.com)
•  Trustee, Philippine Mineral Explora$on Associa$on
•  Trustee, Na$onal Geothermal Associa$on of the
Philippines
•  Director, Interna$onal Geothermal Associa$on
•  Professorial Lecturer, De La Salle-‐FEU MBA-‐JD
Program
•  hPp://www.philippine-‐resources.com/
Contents
•  Recent Global Trends
•  Philippine Mining Industry Update
•  Mining Laws and Regula$ons
-‐ Cons$tu$on
-‐ Mining Act
-‐ EO 79 and other Relevant Laws
Recent Trends in the Resources
Industry
Richard Heinberg's theory of "peak everything"
•  The world is running short of vital assets like
clean water, carbon-‐free air, some minerals, fish
stocks and the cheap fossil fuels that have
powered the world economy and helped rein in
the price of food.
•  However, alterna$ve energy sources, as well as
renewable energy, are more expensive and
would force the world into a more frugal future
according to Heinberg.
Industry
“Resources Curse”
•  (paradox of plenty) countries with an abundance
of natural resources, specifically minerals and
fuels) tend to have less economic growth and
worse development outcomes than countries
with fewer natural resources)
•  oil in Nigeria, blood diamonds in Sierra Leone
and Angola
•  “Dutch Curse” – increased wages and exchange
rates, making other products more expensive to
produce and sell abroad
Industry
•  One-‐third of the world's Top 100 mining stocks,
measured by value, now hail from China, India
and Indonesia, with the majority from China.
•  Western oil companies have access to only 25%
of the world’s known reserves, the rest lies in
the hands of state-‐run companies in autocra$c
countries in the Middle East, Africa, and Asia
•  Drive for size – mergers and acquisi$ons
•  New fron$ers for petroleum
Industry
Petroleum new fron@ers
•  Tight oil -‐ hydraulic fracturing (US)
•  Arc$c offshore
•  Presalt deepwater (Brazil)
•  Oil shale – shale contains kerogen that has to be
mined and then reheated to separate oil from
shale (US)
•  Oil sands – loose sand or sandstone saturated
with bitumen that are exploited through open
pit mines (Alberta, Canada)
Industry
Golden Age of Gas (IEA, 2011)
•  More ambi$ous presump$ons about gas use in
China;
•  Greater use of natural gas in transporta$on;
•  Assump$on of slower growth in global nuclear
power capacity; and
•  More op$mis$c outlook for gas supply –
primarily through the availability of addi$onal
unconven$onal gas supplies at rela$vely low
cost.
Industry
Unconven@onal gas resources
•  Shale gas – natural gas contained in low
permeability shale forma$ons; gas that has
remained trapped in, or close to, its source rock
•  Coalbed methane – coal seem gas, natural gas
contained in coal beds
•  Tight gas – low permeability gas reservoirs that
cannot be produced economically without the
use of technologies to s$mulate flow of the gas
towards the well, such as hydraulic fracturing
GRAPHIC OF HYDRAULIC FRACTURING
Industry
Global Environmental Issues
•  Greenhouse climate change
•  Biodiversity loss – UN’s Millennium Ecosystem
Assessment study “The Economics of Ecosystems
and Biodiversity”
•  Land use compe$$on and environmental
accoun$ng
•  Renewable energy and biofuels (feed in tariffs)
•  Nuclear energy
Recent Economic Trends
Con@nuing commodi@es super cycle not all about
China any more
•  days of 10% growth in the Chinese economy are
almost certainly over, more likely 7.5% growth
•  world's popula$on is likely to reach 8 billion people
by 2020, Africa is likely to pick up the baton – as
Africa's popula$on is rising 5 $mes faster than
China’s
•  India and Indonesia are two countries with very
similar demographics, shijing from low produc$vity
agriculture to higher produc$vity industrial output,
and a number of South American countries can grow
strongly as well
Industry
Rise of China
•  Leading exporter of manufactured goods
•  Wages in China have been rising rapidly since the
mid-‐2000s especially for low-‐skilled workers which
has been more or less doubling in real terms from
2001 to 2010
•  Output in academic publica$ons has soared in the
last decade, reaching 112,000 in 2008 (8.5% of the
global output), and Chinese research publica$ons
have become leaders in the fields of materials
science, physics, chemistry and mathema$cs.
•  Patent applica$ons to the WIPO increased from
23,000 in 1996 to 290,000 in 2008.
Industry
Rise of China
•  A small but growing number of Chinese companies
have actually reached or are approaching the
“technological fron$er” (ZTE and Huawei in the ICT
industry, Suntech Power in the solar industry, Dalian
Machine Tool Group in engineering).
•  Chinese companies are excelling in areas such as
PVCs, biopharmaceu$cals, nanotechnology, stem
cell therapeu$cs, high density power baPeries,
supercomputers and shipping computers
•  In the heavy industry, China has provided new
op$ons for buyers of construc$on and mining
machinery
Industry
Industry
Rise of China
•  In 2009, China surpasses Japan and became the
con$nent’s largest importer of mineral resources
•  China’s energy policy has increased its focus on
commercial $es with countries rich in natural
resources and related technologies, and more
specifically those that can help China unlock its huge
reserves of unconven$onal (shale) natural gas.
Chinese energy companies are racing to meet its
aggressive produc$on growth forecasts to power
the economy and convert coal fired power plants
and hea$ng facili$es to natural gas
Industry
Rise of China
•  Rela$ve to the size of its economy, it’s overseas
investments remain quite modest, only 5.3% of
GDP well below the average of 27.7% for OECD
countries.
•  China’s OFDI flows have become compara$vely
larger. In the next five years US$ 560 billion will
be made.
•  Resources will con$nue to occupy a central
posi$on: iron ore, copper, aluminium and energy
resources have recently received the most
aPen$on.
Recent Trends in the Mining
Industry
New gold finds not keeping up with resource deple@on
•  significant gold finds (of at least 2 million ounces) over
the past 14 years could only replace around 56% of the
es$mated amount of gold mined over the same period
•  increasing risk of poli$cal, regulatory, and tax instability
in many resource-‐rich na$ons, declining grades, rising
costs, and drama$cally longer development $mes, the
amount of gold available for produc$on in the near term
is likely far less than has been found
•  excessive profits from high metals prices tends to
generate demands from the governments (in both
developed and developing na$ons) of countries in which
the deposits are mined for an ever-‐increasing slice of the
cake either through increased royal$es and taxes, larger
par$cipa$on stakes and even na$onalisa$on
Recent Trends in the Mining
Industry
Impacts
•  Corporate consolida$on/mergers and buy-‐outs
•  Interna$onal repor$ng standards (JORC, PMRC)
•  Demand for professionals in the resources
industry
•  ‘competent person’ report
Coal won the energy race
in the first decade of the 21st century
Incremental world primary energy demand by fuel, 2000-‐2010
Coal accounted for nearly half of the increase in global energy use over the past decade,
with the bulk of the growth coming from the power sector in emerging economies
© OECD/IEA 2011
Asia: the arena of future coal trade
Share of global hard coal trade
70% India

60% China

50% Japan

40% European Union

30%
20%
10%
0%
2009 2020 2035

Interna$onal coal markets & prices become increasingly sensi$ve to developments in Asia;
India surpasses China as the biggest coal importer soon ajer 2020
© OECD/IEA 2011
Changing oil import needs are set to
shij concerns about oil security
Net imports of oil

14
2000

12
2010
10

2035
8
6
4
2
0
China India European United Japan
Union States
US oil imports drop due to rising domes$c output & improved transport efficiency: EU imports
overtake those of the US around 2015; China becomes the largest importer around 2020
© OECD/IEA 2011
Russia remains a cornerstone
of the global energy economy
Russian revenue from fossil fuel exports

2010 2035
$255 billion $420 billion
Other
Other 17%
China 21%
European European
2% China Union
Other Union
Europe 61% 20% 48%
16%
Other
Europe
15%
An increasing share of Russian exports go eastwards to Asia,

providing Russia with diversity of markets and revenues
© OECD/IEA 2011
Golden prospects for natural gas
Largest natural gas producers in 2035
Russia Conven$onal
United States
Unconven$onal
China
Iran
Qatar
Canada
Algeria
Australia
India
Norway
0 200 400 600 800 1 000

bcm
Unconven$onal natural gas supplies 40% of the 1.7 tcm increase in global supply,
but best prac$ces are essen$al to successfully address environmental challenges
© OECD/IEA 2011
Rising transport demand & upstream
costs reconfirm the end of cheap oil
Major changes in liquids supply, 2010-‐2035
The MENA region is set to supply the bulk of the growth in oil output to 2035,
while companies opera$ng elsewhere turn increasingly to more difficult & costly sources
© OECD/IEA 2011
Coal won the energy race in the
first decade of the 21st century
Growth in global energy demand, 2000-‐2010
1 600
1 400 Nuclear

1 200 Renewables

1 000
800 Oil

600
400 Natural gas

200
0
Total non-‐coal Coal

Coal accounted for nearly half of the increase in global energy use over the past decade,
with the bulk of the growth coming from the power sector in emerging economies
© OECD/IEA 2011
Natural gas & renewables
become increasingly important
Shares of energy sources in world primary energy demand
Global primary energy demand grows by 40% between 2009 & 2035,
oil remains the leading fuel though natural gas demand rises the most in absolute terms
© OECD/IEA 2011
Emerging economies con$nue
to drive global energy demand
Growth in primary energy demand

4 500
4 000 China
3 500 India
3 000 Other developing Asia
2 500 Russia
Middle East
2 000
Rest of world
1 500
OECD
1 000
500
0
2010 2015 2020 2025 2030 2035
Global energy demand increases by one-‐third from 2010 to 2035,
with China & India accoun$ng for 50% of the growth
© OECD/IEA 2011
Natural gas & renewables become
increasingly important
World primary energy demand
5 000
Addi$onal
to 2035
4 000
2010
3 000
2 000
1 000
0
Oil Coal Gas Renewables Nuclear
Renewables & natural gas collec$vely meet almost two-‐thirds

of incremental energy demand in 2010-‐2035
© OECD/IEA 2011
Oil demand is driven higher
by soaring car ownership
Vehicles per 1000 people in selected markets
800 2010
700
2035
600
500
400
300
200
100
0
United States European China India Middle East
Union
The passenger vehicle fleet doubles to 1.7 billion in 2035; most cars are sold
outside the OECD by 2020, making non-‐OECD policies key to global oil demand
© OECD/IEA 2011
Low-‐carbon power
technologies come of age
Global installed power genera@on capacity and addi@ons by technology
Renewables and nuclear power account for more than half

of all the new capacity added worldwide through to 2035
© OECD/IEA 2011
Power investment focuses on
low-‐carbon technologies
Share of new power genera@on and investment, 2011-‐2035

40%
Genera$on
35%
Investment
30%
25%
20%
15%
10%
5%
0%
Coal Gas Nuclear Hydro Wind Solar PV
Renewables are ojen capital-‐intensive, represen$ng 60% of investment for 30% of
addi$onal genera$on, but bring environmental benefits & have minimal fuel costs
© OECD/IEA 2011
Energy is at the heart of
the climate challenge
Cumula@ve energy-‐related CO2 emissions in selected regions

500
2010-‐2035

1900-‐2009
400
300
200
100
0
United States China European India Japan
Union
By 2035, cumula$ve CO2 emissions from today exceed three-‐quarters of the total since 1900,
and China’s per-‐capita emissions match the OECD average
© OECD/IEA 2011
The overall value of subsidies
to renewables is set to rise
Global subsidies to renewables-‐based electricity and biofuels by region
Renewable subsidies of $66 billion in 2010 (compared with $409 billion for fossil fuels),
reach $250 billion in 2035 as rising deployment outweighs improved compe$$veness
© OECD/IEA 2011
The overall value of subsidies
to renewables is set to rise
250
Biofuels
200 Electricity
150
100
50
0
2007200820092010 2015202020252030 2035
Renewable subsidies of $66 billion in 2010 (compared with $409 billion for fossil fuels), need
to climb to $250 billion in 2035 as rising deployment outweighs improved compe$$veness
© OECD/IEA 2011
World Geothermal Electricity (2005)
Bertani (2005) WGC2005

2010 Capacity and Use
Installed Energy
Power Use Capacity
Use (MW) (GWh/yr) Factor
Electric 10,715 67,246 0.72
Direct-‐use 48,483 117,778 0.28
Geothermal energy kept its promises!
Lund and Bertani, 2010, WGC and GRC

World Geothermal Electricity (2010)
18,500 MWe in 2015
August 1, 2012

40
1950 1960 1970 1980 1990 2000 2010
Bertani, 2010, WGC
2010 Worldwide Annual Use (TJ/yr)
Others 0.2%
Bathing and
swimming 24.9%
August 1, 2012
Cooling / snow
melting 0.5%
Industrial uses
2.7%
Agricultural drying Geothermal heat

0.4% pumps 49.0%
Aquaculture pond
heating 2.6%
Greenhouse
Heating 5.3%
Space Heating
14.4%

2010 Worldwide Installed Capacity
(MWt)
Cooling / snow Bathing and Others
melting swimming 0.1% Geothermal heat
August 1, 2012
0.7% 13.2% pumps
69.7%
Industrial uses
1.1%
Agricultural drying
0.3%
Aquaculture pond
heating
1.3%
Greenhouse
Heating
3.1%
Space Heating
10.7%
42

IEA’s Top 15 geothermal energy producing
countries, electricity and heat in 2009
If we don’t change direc$on soon,
we’ll end up where we’re heading
n In a world full of uncertainty, one thing is sure:

rising incomes & popula@on will push energy needs higher
n Oil supply diversity is diminishing, while new op@ons
are opening up for natural gas
n Coal -‐ the “forgo]en fuel” -‐ has underpinned growth, but its
future will be shaped by uptake of efficient power plants & CCS
n Power sector investment will become increasingly
capital intensive with the rising share of renewables
n The world needs Russian energy, while Russia needs to use less
n Despite steps in the right direc@on, the door to 2°C is closing
© OECD/IEA 2011
Developments in the Philippine
Resources Industry
•  100% foreign ownership allowed following the
December 2004, Supreme Court decision
abolishing all legal obstacles to the
implementa$on of the Philippine Mining Act of
1995 but…..
•  Tampakan, Southeast Asia's largest undeveloped
copper-‐gold prospect has come under threat
ajer the South Cotabato banned open pit
mining due to environmental concerns
•  EO 79
•  West Philippine Sea conflict
•  NCIP Revised Rules on free and prior informed
consent
Mining Laws and other Regulations
•  Philippine Cons$tu$on of 1987 (“Cons$tu$on”)
•  Philippine Mining Act of 1995 (“Mining Act”)
•  Mining Act Revised Implemen$ng Rules and
Regula$ons
•  EO 79
•  Other Laws
Constitution
•  All lands of the public domain, water, minerals,
coal, petroleum, and other mineral oils, all forces
of poten$al energy, fisheries, forests or $mber,
wildlife, flora and other natural resources are
owned by the state.
•  The explora$on, development and u$liza$on of
these natural resources are under the full
control and supervision of the State.
Constitution
•  The State has the op$on of entering into co-‐
produc$on, joint venture or produc$on sharing
agreements with Philippine ci$zens of Philippine
corpora$ons or associa$ons.
•  At least 60% of the capital of a corpora$on or
associa$on must be owned by Phil. Ci$zen to
qualify as a Philippine corpora$on or associa$on.
Constitution
•  Excep$on to the na$onality requirement: The
Cons$tu$on authorizes the President to enter
into agreements with foreign-‐owned
corpora$ons involving either financial or
technical assistance, for large-‐ scale explora$on,
development and u$liza$on of minerals,
petroleum and other mineral oils.
Constitution
•  Ownership of natural resources (Regalian
doctrine) – if an investor wishes to acquire the
right to extract or develop natural resources, he
must enter into an agreement with State
Mining Act
•  Explora$on Permit
•  Mineral Agreements
-‐ MPSA
-‐ Co-‐Produc$on Agreement
-‐ Joint Venture Agreement
•  Financial and Technical Assistance Agreement
•  Mineral Processing permits
Exploration Permit
•  Grant gives holder the right to conduct
explora$on for all minerals within a specified
area
•  Valid for 2 yrs, can be renewed for another two
but cannot exceed 6 yrs
•  If explora$on results reveal economic mineral
deposits and technically feasible for mining,
holder can file a declara$on of mining project
feasibility (MPF)
•  Approval of MPF shall grant the holder exclusive
right to Mineral Agreement or FTAA
Mineral Agreements
•  Mineral Produc$on Sharing Agreement (“MPSA”)
•  Co-‐Produc$on Agreement
•  Joint Venture Agreement
•  All agreements grant the contractor the
exclusive right to conduct mining opera$ons and
to extract all mineral resources in the contract
area
MPSA
•  Contractor provides the financing, technology,
management and personnel necessary for the
implementa$on of the MPSA
•  Valid for 25 yrs and renewable for another 25
•  Government is en$tled to a share in the gross
produc$on of the mining opera$on in the form
of excise tax
Co-‐Production Agreement
•  An agreement where the government provides

inputs to the mining opera$ons other than the
mineral resource
Joint Venture Agreement
•  An agreement under which the Philippine
government and the contractor organize a joint
venture company in which both par$es have
equity.
•  The government takes a share from equity
earnings as well as from the gross output of the
mining opera$ons.
Financial and Technical Assistance
Agreement (“FTAA”)
•  Pursuant to the Cons$tu$on, the Mining Act
provides that the President may enter into an
FTAA with 100% foreign-‐owned corpora$on for
the large-‐scale explora$on, development and
u$liza$on of mineral resources.
•  Minimum investment of US$50M
•  Not applicable to cement raw materials, marble,
granite, sand and gravel, and construc$on
aggregates
Mineral Processing Permits
•  Under the Mining Act, mineral processing means
the milling, beneficia$on or upgrading of ores or
minerals and rocks or by similar means to
convert the same into marketable products.
•  Valid for 5 yrs, renewable for like periods up to
25 yrs
•  Can be 100% foreign ownership
Important Laws Related to Mining
•  Indigenous Peoples Rights Act (“IPRA”)
•  Environmental Impact Statement (“EIS”) System
•  Local Government Code of 1991
•  Small Scale Mining Act
IPRA
•  Grants to indigenous cultural communi$es
certain preferen$al rights to their ancestral
domains and all resources found therein.
•  Royalty and right to benefits
•  No agreement shall be approved unless:
-‐ There is prior cer$fica$on from NCIP that area
does not overlap ancestral domain or
-‐ Prior free and informed consent has been
obtained from the ICC/IP concerned
BASIC PROCESS OF CP ISSUANCE
AGENCY
ENDORSEMENT
CP ISSUANCE FBI
FPIC
MOA
FPIC MANDATORY ACTIVITES
UNDER SEC 6 (A)
POSTING OF NOTICES
AND SERVING OF
INVITATION TO IP DECISION MEETING
ELDERS/LEADER
CONSULTATIVE CONSENSUS
COMMUNITY BUILDING
ASSEMBLY AND FREEDOM PERIOD
FPIC PROCESS FLOWCHART
OVERLAP PER
MASTERLIST OR PRE-FBI PAYMENT OF
ENDORSING NCIP MASTERLIST CONFERENCE FBI FEE FBI
GOVERNMENT REGIONAL NOT AVAILABLE
AGENCY OFFICE
NO OVERLAP FBI REPORT

PER CNO ISSUED
MASTERLIST IN 3 DAYS
APPLICANT
OVERLAP NO OVERLAP
PROJECT CNO ISSUED

REJECTED PRE-FPIC BY REGIONAL
FPIC CONFERENCE DIRECTOR
MANDATORY PAYMENT OF
ACTIVITIES FPIC FEE
MOA &
SUPPORTING
DOCUMENTS PROJECT
ACCEPTED
COMMISSION EN
BANC
Major Projects (Sec. 6A)- 70 days processing
Small Scale Projects (Sec. 6B)-50 days processing
FBI - Field – Based investigation

CNO – Certificate of non-Overlap issued by Regional Director
MOA – Memorandum of Agreement
Local Government Code
•  Proponents applying for mining applica$ons
intended for explora$on ac$vi$es are required
to conduct consulta$on with all LGUs concerned,
or the legisla$ve councils (sanggunian) at the
provincial, city/municipal, and barangay levels.
Results of Anti-‐Mining Sentiment
•  LGUs issuing ordinances and resolu$ons against mining.

Leyte Mindoro Provinces
Romblon An$que
Zamboanga Sibugay Bohol

Zamboanga del Norte Samar
Marinduque South Cotabato

Bukidnon La Union

Capiz Negros Occidental
Results of Anti-‐Mining Sentiment
•  Congress passing resolu$ons and considering House Bills
declaring mining free provinces and ci$es.
Catanduanes
Sorsogon
Romblon
Southern Leyte
Eastern Samar
Nueva Viscaya
Cagayan de Oro
Davao City
EIS System under Presidential
Decree No. 1586
•  Project proponent of environmentally cri$cal
projects and projects within environmentally
cri$cal areas must obtain an environmental
compliance cer$ficate prior to commencement
•  EMB/DENR as lead agency
•  DAO 2003-‐30 Implemen$ng Rules and
Regula$ons
The Environmental Impact Assessment Process
SITE SCOPING
(Stake holder's perception of the Problems, Issues and Concerns of their present
Biophysical and Sociocultural Environment)
Baseline Data Collection

(Collection of Base-line data of the Bio-physical and
Environmental
STAKE Sociocultural Environment)
Consultants
HOLDERS:
Environmental Impact Assessment
• Direct and (Analysis of the Impacts and Mitigations based on secondary and
Indirect Impact base-line data collected.
Communities
I. Environment Management Plan
II. Social Development Plan
• LGU
• NGO s
EIS Document Preparation
• PO s
• GO s
EIA Review by EMB
PUBLIC HEARING
Disapproved
Approved
Issuance of Environment Compliance

Certificate
DENR – EMB organizing of the

Multipartite Monitoring Team
Issues in the Philippine
Mining Industry
•  Conflict between na$onal and local governments
over taxa$on
•  Insurgency/peace and order
•  “small-‐scale” mining
•  Unavailability of a good digital tenement and
mineral database
•  MGB proposal to establish mineral reserva$on and
impose 5% royalty to gross revenue on top of 2%
excise tax
•  Ancestral domain and protected areas

Issues with LGU
•  Local government veto/moratorium on mineral
development and produc$on
•  Integra$on of mineral development into local
development land use and resources use plans
•  Small scale mining regula$on
Issues on Gov’t Share
•  Na$onal government should develop a
transparent system of accoun$ng for and
alloca$on of sharing of revenues and taxes with
LGUs.
•  Expedite and streamline the release of LGU
share on revenues and taxes through a
simplified process with $meframe requirements
to lessen local opposi$on to mining projects.
•  Local taxa$on
Issues with IPRA
•  Iden$ty of proper IPs
•  Lack of clear cut rules on how to arrive at a
decision making process of IPs
•  Preferen$al rights of IPs
Risk Factors
•  Availability of geo-‐scien$fic informa$on and
professionals
•  Area status and clearance, conflict with other
land use
•  Surface/land Ownership
•  Procedural efficiency and coordina$on among
DENR agencies (EMB, FMB, PAWB)
•  Opposi$on by NGOs – Rules of Procedure for
Environmental Cases
Rules of Procedure for
Environmental Cases
•  Introduced new remedies for the “alleged”
viola$on of environmental laws: temporary
environmental protec$on order, writ of
con$nuing mandamus, writ of kalikasan
•  TEPO is in contraven$on of “no injunc$on rule”
under PDs 605 and 1818
•  harassment suits?
Pending Writ of Kalikasan Cases:
•  CA-‐GR SP No. 04339 “Tribal Coali$on of Mindanao, Inc., et al.
Pe$$oners vs. Taganito Mining Corpora$on, et al. Respondents,
in Surigao del Norte filed in May 2011.
•  G. R. NO. 197754 “Philippine Earth Jus$ce Center, Inc., et al.
Pe$$oners vs. Secretary of DENR, et al. Respondents.” in
Zamboanga Peninsula filed in July 2011.
•  G. R. NO. 201509 “Hon. Aquilino L. Pimentel III, et al.,
Pe$$oners vs. President Benigno S. Aquino III,……., Altamina
Explora$on and Resources Inc. et al. Respondents” in
Pangasinan and Ilocos Norte filed in April 2012. ]
Executive Order No. 79
•  Sets the policy framework that will guide government
and other stakeholders in the implementa$on and
opera$onaliza$on of mining laws, rules and regula$ons.
It also provides concrete steps and solu$ons to major
issues and concerns of the mining sector.
•  Sets the direc$on and lays the founda$on for the
implementa$on of responsible mining policies.
•  Aims to improve environmental mining standards and
increase revenues to promote sustainable economic
development and social growth, both at the na$onal and
local levels.
Speci7ic zones closed to mining
applications, either for contracts,
concessions or agreements
•  Areas in the Na$onal Tourism Development Plan
•  Cri$cal areas and island eco-‐systems
•  Prime agricultural lands covered by RA 6657
•  Strategic agriculture and fisheries development zones
and fisheries development zones and fish refuge and
sanctuaries declared as such by the Department of
Agriculture
•  Areas already iden$fied under the exis$ng laws on
mining, agrarian and protected areas, as well as in sites
that may be determined by the Department of
Environment and natural Resources (DENR)

No new mining operations will be
approved in Palawan:
•  Exis$ng laws such as RA 7942 (Mining Act) and RA 7586
(NIPAS Act)
•  Cri$cal areas, island ecosystems, and impact areas of
mining that will be declared by the DENR based on
exis$ng laws, rules and regula$ons
•  The ecological uniqueness of Palawan’s flora and fauna
and the need to protect the same is recognized
•  RA 7611 or the Strategic Environmental Plan for Palawan
calls for the protec$on of Palawan’s environment and
natural resources
•  Recogni$on of its poten$al for other forms of
investments (eco-‐tourism such as the Puerto Princesa
Underground River)
Measures to address the country's
economic or revenue-‐related concerns
•  Establishment of Mineral Reserva$ons for strategic
mineral reserves to be able to collect 5% addi$onal
royal$es, or higher (Sec 5, EO)
•  Opening of mining areas through compe$$ve public
bidding (Sec. 6, EO)
•  Disposi$on of abandoned ores and valuable metals in
mine wastes and mill tailings (Sec. 7, EO)
•  Value-‐adding ac$vi$es and development of downstream
industries (Sec. 8, EO)
•  Demand opera$onal and financial reports from both
large-‐ and small-‐scale miners at all stages of the mining
cycle (Direc$ves to MICC)

•  Conduct of verifica$on at the na$onal, regional and local
levels of taxes and fees payable and monitoring of all entry
and exit points of minerals in the country (Direc$ves to MICC)
•  Fast-‐track release and access of LGUs to their share from
mining revenues (Direc$ves to MICC)
•  Upda$ng of mineral commodity profile and database on new
products, markets and available technologies (Direc$ves to
MICC)
•  Conduct a study on exis$ng mechanisms for benefit sharing
and review of exis$ng taxes, fees and incen$ves receive by
mining companies (Direc$ves to MICC)
•  Study the terms and condi$ons of service contracts entered
into by the Department of Energy (DOE) for energy resources
for possible applica$on for mining agreements (Dir. to MICC)
•  Study the imposi$on of higher export fees for metallic and
non-‐metallic minerals in the country (Direc$ves to MICC)
•  Consider tapping 3rd party interna$onal auditors to validate
the volume and value of mineral exports from the Philippines
(Direc$ves to Good Governance Cluster)
•  Increase mine wastes and tailings and occupa$on fees and
impose processing fees for all mining applica$ons (Direc$ves
to DENR)
•  Provide benchmarks for the valua$on of minerals based on
prevailing interna$onal minerals market prices (Direc$ves to
DENR)
•  Prepare and maintain revenue baseline data and properly
account for all taxes and fees generated from mining
(Direc$ves to BIR)
Speci7ic legislative measures gov’t will
pursue in light of the EO
•  Ra$onaliza$on of revenue-‐sharing schemes and
mechanisms and incen$ves given to mining companies
•  Bigger LGU shares from mineral resource u$liza$on and
providing bePer mechanisms for the faster release of their
share
•  S$ffer penal$es for mining-‐related offenses
•  Possible inclusion of medium-‐scale mining among the
categories of mining
•  Stronger regulatory rules over traders and middlemen to
improve mineral produc$on monitoring and collec$on of
taxes and fees from mining
•  Stricter enforcement of environmental laws and rules, and
holding violators accountable (EO and Direc$ves to DENR)

•  Iden$fying addi$onal areas closed to mining
•  Review of the performance of mining opera$ons and
cleansing of non-‐moving mining rights holders (Sec. 3, EO)
•  Assess and improve small-‐scale mining condi$ons (i.e.,
establish minahang bayan, enforce compliance with
environmental impact assessment requirements, limit
mining to specific metallic minerals, prohibit the use of
mercury) (Sec. 11, EO)
•  Use of integrated maps and Programma$c Environmental
Impact Assessment (Sec. 16 and 17, EO)
•  Proper accoun$ng of Environmental Protec$on and
Enhancement Programs (EPEP) of mining companies
(Direc$ves to DENR)

•  Use of geo hazard and mul$-‐hazard maps and climate

change forecasts in determining “go” and “no-‐go” areas
(Direc$ves to DENR)
•  Explore use of mandatory and compulsory insurance
coverage for mining affected areas and adop$on of
Comprehensive Environmental Response, Compensa$on
and Liability Act of the USA (Direc$ves to MICC)
•  Resource accoun$ng or full-‐cost benefit analysis
(Direc$ves to MICC)

Bene7its of opening areas through
competitive bidding
•  The public bidding of the gran$ng of mining rights and
tenements over areas with known and verified mineral
resources and reserves will allow the government to
nego$ate for bePer terms in mineral agreements and
allow it and the public to maximize poten$al benefits. In
addi$on, public bidding will ensure transparency and
allow the State to deal with legi$mate and serious
mining investors and developers.
•  The specific parameters for the public bidding will be
provided for in the IRR, taking into considera$on exis$ng
best prac$ces in current government bidding procedures
and the principles of transparency and accountability.

Are indigenous people’s rights vis-‐a-‐vis
mining protected by the EO?
•  Yes. The EO reiterates the State policy on the recogni$on
of IP rights and the NCIP has drajed and issued its
revised guidelines for the FPIC process. Close
coordina$on with the NCIP will be undertaken to ensure
its proper conduct and implementa$on for the benefit of
all concerned stakeholders. In addi$on to this, the NCIP,
DSWD and the DENR are directed to ensure that the
social prepara$on for IPs to be affected by mining will be
conducted (Direc$ves to DENR, DSWD, and NCIP).
Complete cultural mapping to iden$fy IP areas will also
be undertaken to complete the ancestral domain
delinea$on process.

Does the EO address the concerns of
small-‐scale mining?
Yes. Several measures were undertaken to address the
issues concerning small-‐scale mining. These are:
•  Reitera$on of RA 7076 as the governing law in small-‐
scale mining
•  The cons$tu$on and opera$onaliza$on of the P/CMRBs
to ensure the proper management and regula$on of
small-‐scale mining opera$ons
•  The establishment of Minahang Bayan to provide specific
and exclusive areas for small-‐scale mining to avoid
overlaps and conflicts with other mining rights and
tenements holders

Does the EO address the concerns of
small-‐scale mining?
•  Small-‐scale mining of metallic minerals shall be limited to
gold, silver and chromite since these are the most
suitable for ar$sanal methods, which do not use
equipment, machinery and explosives (the defini$on of
small-‐scale mining per RA 7076 refers to mining ac$vi$es
which “do not use explosives or heavy mining
equipment”)
•  To help small-‐scale miners and to recognize them as a
formal sector; training and capacity-‐building measures in
the form of technical assistance will be conducted by
concerned agencies.

How does the EO reconcile the roles of
the national government and LGUs with
regard to mining?
•  The Na$onal Government shall coordinate and
cooperate with the LGUs in ensuring the proper
implementa$on of mining related laws, rules and
regula$ons, especially as regards small-‐scale mining
•  Local laws vs. na$onal laws (?)

Permitting
•  Moratorium on:
-‐ Acceptance and approval of mining applica$ons
except for sand and gravel and mineral processing
permits, and renewal of explora$on permits.
-‐ Issuance of ECCs except for sand and gravel permits.
-‐ Issuance of tree cuzng permits.
Other Laws Related to Mining
•  Ecological Solid Waste Management Act
•  Toxic Substances and Hazardous and Nuclear
Wastes Control Act
•  Clean Air Act
•  Clean Water Act
•  Pollu$on Control Law
•  Water Code
•  Na$onal Environmental User’s Fee of 2002
Other Laws on Resources
Development
•  Presiden$al Decree (P.D.) 87, as amended, "Oil
Explora$on and Development Act of 1972” for
petroleum service contracts
•  PD 972,as amended, introduced the coal service
contract system and established the guidelines
for coal opera$ons. – coal opera$ng contracts
•  RA 9513 “Renewable Energy Law of 2008” for
renewable energy service contracts
Important Features of RE Law
•  Defini$on of geothermal as mineral resource
paving the way for the entry of 100% foreign
ownership
•  Declara$on of RE sector as a priority investment
sector that will regularly form part of the
Philippine investment priority plan to qualify for
fiscal incen$ves
•  Provision allowing ECCs to be issued from the
appropriate DENR regional office
•  Ins$tu$onalize LGU share
Sustainable
Development
Sustainable Development
Ø Is mining inherently inconsistent with sustainable

development?
Ø Is it possible to have sustainable development,
sustainable economic growth, sustainable
communi$es and a sustainable society without
mining?
Brundtland De7inition of SD
Ø Current genera$ons mee$ng their needs without
compromising the ability of future genera$ons to
meet their needs

IMPLIES:
•  Future genera$ons have rights over resources
•  Current genera$on has a duty to include future
genera$ons’ needs in its decision-‐making
•  An accoun$ng of social and environmental impacts
»  Who makes the call? Government, industry or the free market?
Business Case for SD
What is Responsible Mining
•  Financially viable mining development that takes
place in an environmentally and socially
responsible manner with sound governance that
provides las$ng benefits to the community.
Local Issues
•  Social and Community-‐Related Issues
-‐ Disclosure and informa$on sharing
-‐ Community development plans
-‐ Consulta$on throughout a project’s lifecycle
-‐ Compensa$on and resePlement
-‐ Local economic development
-‐ Mine closure
Local Issues
•  Environmental
-‐ Legacy issues
-‐ No-‐go zones for environmental impact projects
-‐ No-‐go technologies
•  Small-‐scale mining
-‐ Legal tenure
-‐ Technical including safety and environmental
-‐ Conflict resolu$on (with commercial mining)
National Global Level Issues
•  Governance
-‐ Transparency
-‐ Revenue management
•  Others
-‐ Human rights
-‐ Indigenous people
-‐ Impact on global climate change

Sustainable Development in the Context of
Mineral and Energy Development Encompasses:
Ø Economic Responsibility -‐-‐ shareholders, employees,
community, society
Ø Environmental Responsibility -‐-‐ society is more
concerned with mining’s impacts and behavior than its
products
Ø Resource Stewardship -‐-‐ wise and efficient use
Ø Community Engagement -‐-‐ shared objec$ves
Ø Product Stewardship
Ø Social License and Public Accountability– Miners mine
with the consent of the public
Lessons Learned
•  Consulta$on and rela$onship building between the
mine and affected people – star$ng at explora$on,
based on respect for local community culture and
land
•  Mine closure planning with strong focus on post-‐
closure sustainability
•  Local economic development plan and agreements –
hiring preferences, training, small businesses support
Lessons Learned
•  Revenue sharing framework with specific
benefits for local communi$es
•  Environmental and social protec$on plans and
agreements and independent verifica$on
What Resources Companies Have to Do
•  Obey the law

•  Pay proper taxes
•  Be civic minded, ac$vely financially support local
communi$es and adapt to grassroots businesses
•  Have Filipino staff
•  Build rela$onships – na$onal and local
•  Iden$fy tribal leaders and real IPs
Mining and
Resources Law
Atty. Fernando S. Penarroyo
Na$onal Ins$tute of Geological Sciences

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Puno

& Peñarroyo Law Of7ices

Share of global hard coal trade

Net imports of oil

Russian revenue from fossil fuel exports

An increasing share of Russian exports go eastwards to Asia,

Largest natural gas producers in 2035

0 200 400 600 800 1 000

Growth in global energy demand, 2000-­‐2010

Growth in primary energy demand

World primary energy demand

Renewables & natural gas collec$vely meet almost two-­‐thirds

Vehicles per 1000 people in selected markets

Renewables and nuclear power account for more than half

Share of new power genera@on and investment, 2011-­‐2035

Cumula@ve energy-­‐related CO2 emissions in selected regions

Bertani (2005) WGC2005

Geothermal energy kept its promises!

Lund and Bertani, 2010, WGC and GRC

August 1, 2012

Agricultural drying Geothermal heat

Lund and Bertani, 2010, WGC and GRC

n In a world full of uncertainty, one thing is sure:

• An agreement where the government provides

NO OVERLAP FBI REPORT

PROJECT CNO ISSUED

FBI - Field – Based investigation

Baseline Data Collection

Issuance of Environment Compliance

DENR – EMB organizing of the

• Use of geo hazard and mul$-­‐hazard maps and climate

Ø Is mining inherently inconsistent with sustainable

• Obey the law

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Growth in global energy demand, 2000-‐2010

Renewables & natural gas collec$vely meet almost two-‐thirds

Share of new power genera@on and investment, 2011-‐2035

Cumula@ve energy-‐related CO2 emissions in selected regions

•  An agreement where the government provides

•  Use of geo hazard and mul$-‐hazard maps and climate

Ø Is mining inherently inconsistent with sustainable

•  Obey the law