MINING INDUSTRY

STANDARD:
IFRS 6 - INTERNATIONAL FINANCIAL
REPORTING STANDARD 6
 EXPLORATION FOR AND EVALUATION OF MINERAL RESOURCES

OBJECTIVE.
THE OBJECTIVE OF THIS IFRS IS TO SPECIFY THE FINANCIAL
REPORTING FOR THE EXPLORATION FOR AND EVALUATION OF
MINERAL RESOURCES.
SCOPE
01 02
An entity shall apply the IFRS The IFRS does not address
to exploration and evaluation other aspects of accounting
expenditures that by entities engaged in the
it incurs. exploration for and
evaluation of mineral
resources.
03
An entity shall not apply the
IFRS to expenditures
incurred:
(a) before the exploration for and
evaluation of mineral resources, such as
expenditures incurred before the entity
has obtained the legal rights to explore a
specific area.
(b) after the technical feasibility and
commercial viability of extracting
amineral resource are demonstrable.
INTRODUCTION 60

During pandemic mineral exports were

largely unaffected and employment in 40

mining was generally stable. Mining

companies were able to donate over P380
million, or about $ 8 million, to the
20
government’s fight against COVID-19..

In April 2021, the lifting of the moratorium

on new mining projects and, in December, 0
the lifting of the open pit mining ban. 2019 2020 2021 2022
 LATEST ISSUE:
SIBUYAN ISLAND RESIDENTS AND ALTAI PHILIPPINES MINING CORPORATION
(APMC) VIOLATIONS
Section 4 of Presidential Decree 1586 or the "Philippine Environmental
Impact Statement System,"

Republic Act (RA) 6969 or the "Toxic Substances and Hazardous and
Nuclear Wastes Control Act of 1990,"

RA 9275 or the "Philippine Clean Water Act of 2004" and;

Presidential Decree 705 for cutting trees without a permit.

 LATEST ISSUE:
SIBUYAN ISLAND RESIDENTS AND ALTAI PHILIPPINES MINING CORPORATION
(APMC) VIOLATIONS

"The DENR informs the public that it has issued a joint order to Altai
Philippines Mining Corp. on Feb. 6, 2023 through Regional Offices of
DENR, Mines and Geosciences Bureau, Environmental Management
Bureau in Region 4B (Mimaropa) regarding the illegal construction
of causeway and other related activities,"
 CONSEQUENCE:

APMC is ordered to stop the construction and operation of its

causeway in Sitio Bato, Barangay España, San Fernando, Romblon.

Ore transport permit issued to APMC is suspended,

APMC's application for miscellaneous lease agreement has been

denied for its violations of Commonwealth Act 141 or the "Public
Land Act."
MINING INDUSTRY IN THE PHILIPPINES ACCORDING TO MINES AND GEOSCIENCES
BUREAU (MGB) 2022 REPORTS
 PUBLICLY AVAILABLE INFORMATION
The MGB regularly publishes information on the mining industry
through its official website (www.mgb.gov.ph). The information
published includes details on existing

exploration permits (EPs)

mineral production sharing agreements (MPSAs)
financial and technical assistance agreements (FTAAs)
mineral processing permits (MPPs)
pending mining applications, and pending cases with the Mining
Adjudication Board and Panel of Arbitrators
 PUBLICLY AVAILABLE INFORMATION

The MGB also releases current and historical statistics on the

mining industry such as the production level and prices of each
type of mineral. There is also a list of currently producing mines
and a map of where these operate.
 Mineral Exports
01
US$ 6.27 Billion in 2021 Exports of metallic,
non -metallic minerals and mineral
products in 2021. Copper, gold and nickel
are the country’s top mineral exports.
Japan, Australia, Canada and China are
the major countries of destination.
Employment
02
183 ,852 in 2021 Workers currently
employed in the minerals industry.
Taxes Paid
03
PhP30.77 Billion in 2020 Amount of
national and local taxes, fees and
royalties that the minerals industry
generated.
Mineral Statistics
04
PhP 180.71 Billion Estimated production
value for metallic minerals in CY2021.
PRIMARY MINERAL COMMODITIES
Gold
PhP 72.21 Billion Estimated
value of gold produced in
2021

Nickel & Nickel Products Copper

PhP89.55 Billion Estimated PhP17.29 Billion Estimated
value of nickel and nickel value of copper produced in
products produced in 2021 2021
MINERAL RESOURCES DEVELOPMENT
PROJECTS
55 operating metallic mines

60 operating non -metallic mines

7 processing plants

49 Declared Minahang Bayan

4,416 small quarries and sand & gravel operations

covered by permits issued by LGU

 SOCIAL DEVELOPMENT AND MANAGEMENT

PhP27.58 Billion as of June 2022

Amount committed by mining companies for the Development of

the Host and Neighboring Communities (DHNC). The amount of
PhP20.69 Billion for the DHNC stands to benefit 1,060 barangays
from various identified programs/projects/activities.
ENVIRONMENTAL PROTECTION AND REHABILITATION

PhP386.7 Billion and PhP6.41 Billion as of June 2022

Amount committed by mining companies for the implementation

of approved plans/programs/projects/activities under their
Environmental Protection and Enhancement Program and Final
Mine Rehabilitation and/or Decommissioning Plan, respectively.
 PHILEX MINING CORP

Philex Mining Corporation (PSE: PX) is one of the oldest and largest
mining companies in the country with interests in large-scale
exploration and development of mineral resources.

copper
gold
silver
CHARACTERISTICS THAT GENERALLY DISTINGUISH MINING
INDUSTRY FROM OTHER COMMERCIAL ENTERPRISES
01 02
Nature Regulated by DENR

03 04
Governed by Internal Control
R.A. 7942 (Internal auditor concerns)
 NATURE OF MINING INDUSTRY
A country’s socio-economic development largely depends on the extent
and composition of its natural resources.

Mining and mineral processing are activities for extraction and

processing minerals for commercial use.

The mining sector is likely to contribute to the development of the

economy of any country through taxes from large-scale mining
companies and contribute to social–economic infrastructural
development within the area where the mine is located.
 NATURE OF MINING INDUSTRY
Mining according to UNEP could simply be “the extraction of minerals
from the earth”.

The “minerals” in this case would cover a wide variety of naturally

occurring substances extracted for human use.

Minerals are a non-renewable resource, so mining represents a

temporary use of the land.
MINING CYCLE
 THE EXPLORATION PHASE OF MINING
Exploration activities encompass all actions in the field that precede
feasibility studies.

Exploration activities include:

initial reconnaissance flights and geophysical surveys

stream sediment studies and other geochemical surveys
construction of access roads
clearing of test drilling sites
installation of drill pads and drilling rigs, benching, trenching/pitting,
erection of temporary accommodation
power generation for exploratory drilling.
 THE DEVELOPMENT PHASE OF MINING
The development of a mine consists of several principal activities:

conducting a feasibility study (including a financial analysis to

decide whether to abandon or develop the property)
designing the mine;
acquiring mining rights;
filing an Environmental Impact Assessment (EIA);
and preparing the site for production.
Mining and Milling (Production stage)
Extraction, milling and processing of raw materials, such as coal, metals,
industrial minerals and aggregate.

Smelting and Refining

The smelting process melts the ore, usually for a chemical change to separate
the metal, thereby reducing or refining it.

Mine closure
The period of time when the ore-extracting activities of a mine have ceased,
and final decommissioning and mine reclamation are being completed.

Rehabilitation
Rehabilitating the site to a stable and self-rejuvenating state, either as it was
before the mine was built or as a new equivalent ecosystem
PRINCIPAL LAWS THAT REGULATE THE MINING INDUSTRY, REGULATORY BODIES THAT
ADMINISTER THOSE LAWS AND ANY MAJOR AMENDMENTS IN THE PAST YEAR
The principal laws that regulate the mining industry are Republic
Act No. 7942, otherwise known as the Philippine Mining Act of
1995 (the Mining Act)

In 2012, Executive Order No. 79 (EO 79) was issued as the policy of
the Aquino administration.

The Duterte administration has not issued any order that has
repealed, amended or replaced EO 79.

DENR

MGB
CLASSIFICATION SYSTEM THAT THE MINING INDUSTRY USE FOR REPORTING
MINERAL RESOURCES AND MINERAL RESERVES

The mining industry uses the Philippine Mining Reporting Code

(PMRC) for the reporting of all solid minerals, including industrial
minerals and coal where public reporting is required by the
Philippine Stock Exchange (PSE). The JORC Code sets out minimum
standards for mining companies in accordance with the principles of
transparency, materiality and competence.
 ENVIRONMENTAL REVIEW AND PERMITTING PROCESS

An environmental compliance certificate (ECC) is required for mining

projects. To secure an ECC, a proponent must prepare and submit an
environmental impact statement (EIS).
TAXES PAYABLE
BY
PRIVATE PARTIES
TAXES PAYABLE BY PRIVATE PARTIES
 TAX ADVANTAGES AND INCENTIVES

The Mining Act provides that contractors in mineral agreements

and FTAAs shall be entitled to fiscal and non-fiscal incentives as
provided in the Omnibus Investments Code.
 TAX ADVANTAGES AND INCENTIVES
The Mining Act provides the following incentives:

pollution control devices acquired, constructed or installed by

contractors will not be considered as improvements on the land
or building where they are placed, and will not be subject to
property tax and other taxes or assessments;

a net operating loss without the benefit of incentives incurred in

any of the first 10 years of operations may be carried over as a
deduction from taxable income for the next five years
immediately following the year of such loss.
IMPORT OF FUNDS RESTRICTIONS
The Philippine government encourages inward foreign
investments in mining. As a rule, foreign investments need not be
registered with the Philippine Central Bank (BSP).

MINERAL RESTRICTIONS
There is no requirement that metallic minerals be processed or sold in
the Philippines. However, the Philippine government examines all sales
and exportation of minerals or mineral products, including the terms
and conditions of all sales commitments. The government must be
informed when any marketing agreement or sales contract is entered
into with foreign and local buyers.
 INTERNAL AUDITOR MUST ENSURE THAT
Various Periodical Report is conducted and submitted (Air
pollution and water testing)

Inspect pollution control equipment and its workings

Noise pollution level

Following the checks and balances as per the specific Company

normal applicable and obtained from mine closure.
AUDIT OBJECTIVES OF MINING COMPANY IS TO DETERMINE THE
FOLLOWING:
Mining activities are developed in accordance with government
policy and objectives

Compliance with Mining Act and applicable regulations

Compliance with PFRS 6

Internal Review and audit of payments

Prevention of Fraud and Transparency

 SPECIAL AUDIT CONSIDERATION ARISE BECAUSE:
Mining companies carry out various stages of development
necessary for the production over a long period for a high cost.

Mining operation typically require high level of capital

investment to develop, extract and process mineral.

Heavily regulated by DENR

Mining companies normally incur high cost at mine sites after

the minerals are extracted and the mine is closed.
 GROUP ACTIVITY:
Download the Latest audited FS (2020) of Philex mining

Observe the financial statements of Philex mining

company

List 10 unique accounts title or information mentioned

on the notes of financial that are unique to the mining
industry.

To be submitted after the Intrams week.