Miners say attracting investment to require additional incentives

By John Victor D. Ordoñez, Reporter

MINERS said more fiscal incentives are needed to attract investment and called on Congress to ensure that any proposed mining fiscal regime should help raise the industry’s competitiveness.

“The inclusion of mining in Investment Priority Projects and the granting of fiscal incentives or novel mining projects, particularly those that will significantly improve employment or the economy in the area” were among the industry’s priorities, Michael T. Toledo, chairman of the Chamber of Mines in the Philippines, said in a Viber message.

He also urged Congress to pass a bill creating mining economic zones to regulate mining projects.

State Department Undersecretary for Economic Growth, Energy, and Environment Jose W. Fernandez has said Washington is hoping to establish more partnerships with the Philippines involving the processing of nickel, cobalt and copper.

He said that high energy costs are keeping miners and semiconductor companies from investing in the Philippines.

Miners are open to working with the US to enhance domestic mineral processing and boost ore exports, Mr. Toledo said.

“There are no ongoing talks of tie-ups yet as we know it and we have yet to see the details of this proposal,” he said.

“Nevertheless, any discussion on the expansion of our mineral export markets, be they ore or processed, is most welcome.”

He added that all supply agreements from Philippine ore exporters covered by contracts must still be honored following this development.

The House of Representatives in September approved on third and final reading a bill that seeks to establish a new fiscal regime for the mining industry through the imposition of margin-based royalties and a windfall profit tax on large-scale miners.

Mr. Toledo said the current mining fiscal regime is more burdensome than those of Indonesia, Chile, Peru and South Africa.

“The addition of income-based taxes being proposed in HB 8937 will make the structure (of mining taxes) more palatable as higher taxes will be paid at higher operating margins when metal prices are high,” he said. “And conversely, lower taxes when metal prices are low or when operations are not profitable.”

Mr. Toledo said the government must harmonize national and local laws on mining and taxation.

Under House Bill No. 8937, large-scale metallic mining operations inside mineral reservations will pay the government 4% of their gross output.

On the other hand, small-scale miners will be charged royalties equivalent to a 10th of 1% of their gross output.

Currently, mining firms must pay corporate income tax, excise tax, royalty, local business tax, real property tax, and fees to indigenous communities. A mining fiscal regime measure has yet to be filed before the Senate.

“The addition of income-based taxes being proposed in HB 8937 will help sustain existing mining operations and encourage quality investments in the hugely untapped Philippine minerals sector,” Mr. Toledo said.