BALCAC-YALONG, Faydes W.

ESTACIO, Mayumi
SAGAYO, Andrea

V. Mining Contribution to Economy

It is stated in Section 2 of the Philippine Mining Act of 1995, “All mineral resources
in public and private lands within the territory and exclusive economic zone of the
Republic of the Philippines are owned by the State. It shall be the responsibility of the
State to promote their rational exploration, development, utilization and conservation
through the combined efforts of government and the private sector in order to enhance
national growth in a way that effectively safeguards the environment and protect the rights
of affected communities. “
Mining in the Philippines has been known early as year 1521. The Philippines is
actually the fifth most mineral-rich country in the world for copper, nickel, gold and
chromite. This has been a home to the largest copper-gold deposit in the world.
According to Mines and Geo-sciences Bureau the country has $840 billion worth
untapped mineral wealth.
Some research shows that mining industry in the Philippines contributes only
little amount in the country’s economy despite of ranking fifth in the most mineral-rich
country in the world. This is supported by a newspaper clipping of Manila Times which
states that “In 2016, there are 236,000 workers in the mining industry. The mining
industry’s contribution to the country’s GDP is at 0.6 percent in the same year. The
contribution of minerals and mineral products to the country’s total exports is at 4
percent and 0.3 percent for non-metallic mineral manufacturers. According to MGB, the
mining industry’s gross production value declined in the last two years. From P208.2
billion ($4.2 billion) in 2014 to only P100.6 billion ($2 billion) in 2016.”

Additional data shows how rich our country because of its mineral. The
Philippines is rich in mineral deposits. According to estimates, the Philippines have the
fifth largest reserve of gold and copper in the world. The Mines and Geosciences
Bureau (MGB) of the Department of Environment and Natural Resources (DENR)
estimated gold reserves to be at 967,180,197 MT while Copper was put at
5,301,507,657 MT (2002). According to the National Economic Development Authority
(NEDA) in 2005, the Philippines have a total of USD 840B worth of mineral wealth just
waiting to be exploited
Most mining sites are located in Indigenous People’s lands such as here in
Cordillera. For instance, Baguio’s development is in part due to the “boom” of the mining
industry in its surrounding provinces as may be gleaned by the news article below:
“The real gold boom, however, occurred in 1936 and the wildest stock-market
speculation focused on Benguet Consolidated and the Balatoc Mining Company. Other
mines in the area which were very much in contention included Antamok Goldfields,
Gold Creek, Itogon, Baguio Gold, Benguet Exploration, Big Wedge, Atok and
Demonstration. The trading of Benguet Consolidated shares was regarded as a
phenomenon in the mining-share market at the beginning of the gold boom. But how is
gold buying regulated in order to benefit the locale?
The BSP, in its Gold Buying Program, provides guidelines governing the buy and
sale of extracted gold thusly;

“The BSP purchases gold from small-scale miners in accordance with Republic Act No.
7076 (People’s Small Scale Mining Act of 1991) and from other sources. It then refines
the gold purchased to forms acceptable in the international bullion markets. Gold may
be sold to the Bangko Sentral ng Pilipinas (BSP) through its Gold Buying Stations (GBS)
in the Mint and Refinery Operations Department (MROD) in Quezon City and in the
BSP Regional Offices in Davao City (BSRO-Davao), Zamboanga City (BSRU-
Zamboanga), Baguio City (BSRU-Baguio) and Naga City (BSRU-Naga) during
business days from 9:00 a.m. to 2:00 pm.”

We interviewed some workers in the small scale mining in Itogon, according to them
they are usually into groups and they added that “every week ag-gilgiling kmi ti paltek
ngem no two weeks nga maurnong santo mi gilingen ti naba,. Malpas ti giling alan ni
bossing santo kami rumwar amin apan ilako ken apan mangan ijay city, isu jay kunan
mi nga panag bibingay.”

We asked them if they are paying taxis and this was their answer, “ awan a madam, ni
bossing samet ti agbaybayad tax na ta bassit lang met bingay mi no mamingsan mayat
ti diskitar santo kami met makagatang ti pantalon mi kasjay.”They added that they sell
their goods not to Bangko Sentral representatives but at Lakandula, Shopper’s Lane,
black market, and Dangwa station.The value of the gold depends it usually ranges from
1200-2300 per gram. These kinds of transaction shows that there is a possibility that
actual income recorded being taxed in the BIR and local office are not that the true
income received by the workers and by the financers.

In one report published it can give us picture of how much money the Itogon
receives from mining industry.
Itogon officials noted the delay in the release of their mining shares. The first quarter
share amounting to P4.57 million was only released on July 29, 2015 while the second
quarter share was released on November 10, 2015 in the amount of P4.62 million.
Itogon is entitled to receive its mining wealth tax share from the government covering
the special share of local government units in the utilization and development of national
wealth from mining taxes.The 2014 tax shares of the municipality amounted to P18
million and was supposedly released last year. For the 2015 shares, Itogon Municipal
Treasurer Angela Cariño estimated an amount of P20 million to be released by quarters
of 2016.
 “While the municipality appreciates the release of our National Wealth Tax
Shares, the municipality may incur deficit in the estimated budget for the utilization and
development of our national wealth from mining taxes,” the resolution added. DMB has
yet to release the mining wealth shares of Itogon for the third and fourth quarters of
2014 in the total amount of P8.83 million. This shows that worth of million tax is being
given to the municipality as a share from the mining industry. This amount of money is
very much helpful in the economy of the place but one official says that this is not
enough because the amount itself is not sufficient to support the implementation of
projects of ‘good mining’.
The Department of Environment and Natural Resources (DENR), in Section 4 of
Administrative Order No. 20017-12 released on June 20, 20017, further provided the
following:

“The Basic Government Share shall consist of all direct taxes, royalties, fees and
related payments required by existing laws, rules and regulations to be paid by the
Contractor. It shall be the minimum share that Government shall receive during any
Calendar Year. The following national and local taxes, royalties and fees paid by the
Contractor to the Government during a Calendar Year constitute the Basic Government
Share:

1. (a) Contractor’s income tax;

2. (b) Customs duties and fees on imported capital equipment;
3. (c) Value-added tax on imported goods and services;
4. (d) Withholding tax on interest payments on foreign loans;
5. (e) Withholding tax on dividends to foreign stockholders;
6. (f) Documentary stamps taxes;
7. (g) Capital gains tax;
8. (h) Excise tax on minerals;
9. (i) Royalties for Mineral Reservations and to Indigenous Peoples, if
applicable;
10. (j) Local business tax;
11. (k) Real property tax;
12. (l) Community tax;
13. (m) Occupation fees;
14. (n) Registration and permit fees; and
15. (o) All other national and local Government taxes, royalties and fees as of
the effective date of the FTAA.

Related payments made by the Contractor for Special Allowance and Royalty to
Indigenous Peoples or Indigenous Cultural Communities, if applicable, and which
are subject of agreements entered into by and between the Contractor and
concerned individuals or private parties, and were duly approved by the
Government, shall be considered as part of the Basic Government Share. “
 Collections from taxes, government shares in mining profits and livelihood
to the work force are only some of the benefits derived from mining industries which
contribute to the growth of the economy and development of the country as a whole. The
proper management of benefits derived from extractive industries will gradually result to
Philippine economy which is globally competitive and beneficial to all the State’s
constituents.

It is a challenge now to show that, while mining is really the backbone of economic
growth, the mining industry should operate within the framework of pursuing genuine
industrialization and support genuine ecological and environmental reform. Mining
industries should unabridgedly conform and adhere to the provisions granted by the
law. Any unlawful acts of mining industries should immediately be punished by
withdrawing their permits. As much as possible, mining firms in the country should
promote environmental awareness among miners, mine inspector and mine supervisors
themselves. Although mine safety has improved greatly in recent decades, mining still
must be considered as a hazardous industry, and because of its nature is likely to
continue to be so. This calls for even greater efforts on the part of the government and
industry to improve the situation including technology and regulation.

ECONOMIC CONTRIBUTION
The Philippines is the world’s biggest supplier of nickel ore and also among the top
producers of copper and gold. However, the sector contributes less than 1 percent to the
country’s economy, based on data from the Mines and Geosciences Bureau.
Section 151(a) of the National Internal Revenue Code fo 1997
Mineral Products. — (a) Rates of Tax. — There shall be levied, assessed and collected
on mineral, mineral products and quarry resources, excise tax as follows:
"(1) On coal and coke, a tax of ten pesos (P10.00) per metric ton.chanrobles virtual law
library
"(2) On non-metallic minerals and quarry resources, a tax of two percent (2%) based on
the actual market value of the annual gross output thereof at the time of removal, in the
case of those locally extracted or produced; or the value used by the Bureau of Customs
in determining tariff and customs duties, net of excise tax and value-added tax, in the
case of importation.chanrobles virtual law library
"(3) On all metallic minerals, a tax based on the actual market value of the gross output
thereof at the time of removal, in the case of those locally extracted or produced; or the
value used by the Bureau of Customs in determining tariff and customs duties, net of
excise tax and value-added tax, in the case of importation, in accordance with the
following schedule:

"(a) Copper and other metallic minerals:

 "(i) On the first three (3) years upon the effectivity of this Act, one percent (1%);
chan robles virtual law library
"(ii) On the fourth and fifth year, one and a half percent (1 1/2%); and
"(iii) On the sixth year and thereafter, two percent (2%).

"(b) Gold and chromite, two percent (2%).chanrobles virtual law library
"(4) On indigenous petroleum, a tax of fifteen percent (15%) of the fair international market
price thereof, on the first taxable sale, such tax to be paid by the buyer or purchaser within
15 days from the date of actual or constructive delivery to the said buyer or purchaser.
The phrase 'first taxable sale, barter, exchange or similar transaction' means the transfer
of indigenous petroleum in its original state to a first taxable transferee. The fair
international market price shall be determined in consultation with an appropriate
government agency.chanrobles virtual law library
"For the purpose of this subsection, 'indigenous petroleum' shall include locally extracted
mineral oil, hydrocarbon gas, bitumen, crude asphalt, mineral gas and all other similar or
naturally associated substances with the exception of coal, peat, bituminous shale and/or
stratified mineral deposits."

Section 151 of the NIRC, as amended,is hereby further amended to read as

follows:

“Sec. 151. Mineral Products.—

“(A) Rates of Tax.— There shall be levied, assessed and collected on minerals, mineral
products and quarry resources, excise tax as follows:

“(1) On domestic or imported coal and coke, notwithstanding any incentives granted in
any law or special law:

“Effective January 1, 2018, Fifty pesos (₱50.00) per metric ton;

“Effective January 1, 2019, One hundred pesos (₱100.00) per metric ton; and

“Effective January 1, 2020, One hundred fifty pesos {₱150.00) per metric ton.
“(2) On all nonmetallic minerals and quarry resources, a tax of four percent (4%) based
on the actual market value of the gross output thereof at the time of removal, in the case
of those locally extracted or produced; or the value used by the Bureau of Customs in
determining tariff and customs duties, net of excise tax and value-added tax in the case
of importation.

“(a) Copper and other metallic minerals, four percent (4%); and

“(b) Gold and chromite, four percent (4%).

“(4) On indigenous petroleum, a tax of six percent (6%) of the fair international market
price thereof, on the first taxable sale, barter, exchange or such similar transaction, such
tax to be paid by the buyer or purchaser before removal from the place of production. x x
x.
To date, only four (4) companies are engaged in large scale mining operations
namely: Philex Mining Corportion (copper), Lepanto Consolidated Mining Company
(gold), Itogon Suyoc Resources, Inc. (gold) and Benguet Corporation (gold) with
operations through the small scale miners as service contractors on a 60-40 percent
sharing where Benguet Corporation gets 40% and the service contractors get 60%, all
located in the province of Benguet.

MINERALS INDUSTRY IN THE

CORDILLERA ADMINISTRATIVE REGION
CLENDAR YEAR 2016

MINERAL PRODUCTION
Volatile global economic growth and lower demand affected the region’s metallic
production causing decrease by an average of seven percent (7.5%) for the mineral
production of silver and gold. Despite this fact, its value posted an increase of thirteen
percent (13%).
The regions’ production stream remains at three (3) gold mines, a copper mine with
gold and silver as by-product.
The quantity of gold production decreased by five percent (5.67%) with its production
recorded at 4,676.33 kg in 2015 and 4,410.99 kg in 2016. Despite the production
decrease, the value increased by fourteen percent (14.77%) with a production value of
seven billion pesos (₱7,457,135,745.97) in 2015 and eight and half billion pesos
(₱8,558,744,471.45) in 2016.
Silver production in 2015 was 4,845 kg and decreased to 4,394.42 kg posting negative
nine percent (-9.31%). Despite the lowered quantity of production, its value increased
from one hundred four million pesos (₱ 104, 789, 162.14) to one hundred eighteen
million (₱ 118, 923, 247.18) posting a 13.49% growth.
On the other hand, the quantity of copper concentrate production grew by four (4.46%)
with a seven percent (7.42%) corresponding growth in its value. The quantity of copper
concentrate production in 2015 was 69,988 DMT and increased to 73, 109 DMT in
2016. Its production value grew from 3.5 billion pesos (₱3, 520, 272, 985.00) to 3.78
billion pesos (₱3, 781, 363, 677.00). Philex Mining Corporation’s Padcal Copper-Gold
Project which is an underground mine is the sole producer of copper in the province of
Benguet.
Non-metallic mineral production increased due to greater demand specially for the
production of slaked lime which posted a five thousand percent (5,886.03%) increase
but a thirty seven percent decrease (-37.35%) in its production value. Production
quantity for slaked lime was 53.49 MT in 2015 and 3,201.75 in 2016.
Quicklime production quantity was recorded at 7,478.11 MT in 2015 and 9,253.79 in
2016 which equaled an almost eighteen percent (17.91%) growth, its value recorded an
almost thirty percent (29.92%) increase with the production value of one hundred twelve
million pesos (₱ 112, 810, 915.77) in 2015 and one hundred sixty three million pesos (₱
163, 621, 606.91) in 2016.
The quantity of sand and gravel production decreased by twelve percent (12.08%) but
the value increased by fifty eight percent (58.63%). The production quantity pegged at
876,120.26 CU.M. in 2015 went down to 770, 275 CU.M. in 2016, its value however
increased from one hundred twelve million pesos (₱ 112,810,915.77) in 2015 to one
hundred sixty-three million pesos (₱ 163,621,606.91) in 2016. This is basically affected
by the law of supply and demand where supply went down thereby increasing its value
due to greater demand.
EXPORTS
The export of minerals from the region posted an overall decrease among the different
commodities which could be attributed to the environment department’s review of
mining company operations last year, in this manner posing economic challenges to the
mineral export in general.
It is important to note that the decline in mineral production is tantamount to lower taxes,
fees and royalties collected by the government both national and local, as such, mineral
exports is expected to go down.
Gold and silver export value posted a decrease of fifty nine percent (-59.05%) from
three hundred billion dollars ($ 386,243, 123.24) in 2015 to one hundred fifty million
dollars ($153,468,992.32) in 2016.
The export value of silver registered a low seven percent (-7.5%) with more than three
hundred seventeen million dollars ($ 317,642,038,982.13) in 2015 down to one hundred
fifty eight million dollars ($ 158,144,131.83) in 2016.
Copper concentrate export value registered a slight decrease of one percent (-1.37%)
from seventy-four million dollars ($74,223,667.00) in 2015 to seventy-three million
dollars ($73,203,307.00) in 2016.
On metal prices, precious metals gold and silver both enjoyed growth of almost 17%
and 19% respectively. The average price of gold grew from $1, 163.59 per troy ounce
to $1, 360.85 per troy ounce, up by $197.26. Silver on the other hand, went up from
US$15.72 per troy ounce to US$18.63 per troy ounce up by US$2.91; while base metal,
copper recorded a decline of 3%. Copper slipped from US$2.48 to US%2.40 per
pound, pound year-on-year.

LOCAL SALES
Locally, gold sales suffered twenty-two percent (-22.19%) decrease from one billion
pesos (₱1,097,223,271.97) in 2015 to eight hundred million pesos (₱853,712,772.03) in
2016. This is due to lower volume sold by Benguet Corporation to the Baguio Gold
Buying Station of the Bangko Sentral ng Pilipinas.
Non-metallic mineral like the slaked lime registered a large decrease at fifty percent
(-52.35%) with sales value of four hundred fifteen thousand pesos (₱415,522.64) in
2015 down to one hundred ninety eight thousand pesos (₱198,012.03) in 2016.
Sales value of quicklime increased by nine percent (9.83%) with seventy-one million
pesos in 2015 (₱71,621,658.88) to seventy-eight million pesos (₱78,663,399.09) in
2016.
Sand and gravel however experienced a dramatic increase because of the great
demand for this commodity. An increase of three thousand nine hundred percent
(3,915.39%) was recorded with sales value of one hundred twelve million pesos
EMPLOYMENT
Direct jobs from the mining industry posted nine percent increase (8.7%) with an
employment of 8,175 in 2015 to 8,883 in 2016. While estimates vary, it is
conservatively projected that for every basic job in the mines, about four
ancillary/indirect jobs may be generated in the upstream and downstream sectors.

SOCIAL DEVELOPMENT AND MANAGEMENT PROGRAM

The total amount committed by mining companies in the region for the development of
their host and neighboring communities through approved Social Development and
Management program (SDMP) is ₱558 Million. SDMP refers to the comprehensive
5year plan of the Contractor authorized to conduct actual mining and milling operations
towards the sustained improvement in the living standards of the host and neighboring
communities by creating responsible, self-reliant and resource-based communities
capable of developing, implementing and managing community development programs,
projects, and activities in a manner consistent with the principle of people
empowerment.
Community Development Program
The amount of fifteen million pesos (₱15 Million) has been committed by companies
with exploration permit. CDP refers to the two-year plan of the contractor for the
development programs of the host community.
. MINING FOREST PROGRAM

Total Area
Total No. of No. of Surviving
REGION COMPANY Planted
Seedlings Planted Trees
(Ha.)

Philex Mining
2034.09 4,381,345
CAR Corporation 4,899,752
Benguet Corporation -
Benguet Gold 777.02 644,575
Operations 1,085,206
Lepanto Consolidated
442.25 2,366,664
Mining Corp. 2,623,978
Total 3253.36 7,392,584
8,608,936

8 Million seedlings of different species have been planted by the mining companies in
more than three thousand hectares of mined-out land and in different areas within their
host and neighboring communities; trees planted had an eighty five percent (85.87%)
survival rate.
 MINERALS INDUSTRY IN THE
CORDILLERA ADMINISTRATIVE REGION
CLENDAR YEAR 2017

MINERAL PRODUCTION

Volatile global economic growth and lower demand affected the region’s metallic
production causing decrease by an average of seven percent (-7.26%) for the mineral
production of silver and gold. Consequently, the value also decreased by more than ten
percent (-10.53%).

The region’s production stream remains at three (3) gold mines, a copper mine with
gold and silver as by-product.

The volume of gold production decreased by almost seventeen percent (-16.93%) with
production recorded at 4,411 in 2016 and 3, 664 in 2017. Corresponding value also
went down by thirteen percent (-13.13%) with value recorded at eight and a half billion
in 2016 (₱8,558,744,471.45) down to seven billion (₱7, 434,847,125) in 2017.

On the other hand, silver production increased by two percent (2.46%) from 4, 394 in
2016 to 4,502 in 2017. Its value dramatically increased by more than one hundred
percent (101.30%) with the amount of one hundred eighteen million (₱118, 923, 247.18)
in 2016 to more than two hundred million (₱239, 393, 556) in 2017.

Copper concentrate production decreased by ten percent (-10.68%), from 73, 109 in
2016 to 65, 300 in 2017. Despite the decrease in production its value however
increased by twenty three percent (23.82%) from 3. 7 billion pesos in 2016 to 4.6 billion
in 2017.

Non-metallic mineral production increased by almost fifty percent (49.32%) from 782,
730.99 in 2016 to 1, 168, 830 in 2017. Production value in pesos increased by one
seventy percent (173.69%) from 240, 571, 017.99 in 2016 to 658, 422, 598 in 2017.
Production of quicklime increased by one percent (1.36%) from 9,253.79 in 2016 to
9,380 in 2017; its value decreased by less than one percent (-.70%) from 76, 744,
197.90 in 2016 to 76, 205, 755 in 2017.
Slaked lime production decreased by almost one hundred percent (-98.31%) from 3,
201.75 in 2016 to 54 in 2017. Its value however increased by seventy percent (70.69%)
from 205, 213.18 in 2016 to 350, 285 in 2017.

Limestone production was recorded for this year at 10, 573 with a corresponding value
of four million (₱4, 725, 912).

Production of sand and gravel recorded an increase of almost fifty percent (49.14%)
from 770, 275.45 in 2016 to 1,148,823 in 2017. Its corresponding value pegged an
increase of two hundred fifty percent (252.73%).

Mineral 2016 2017

Commodity/Mineral
Products Quantity Value in Pesos Quantity Value in
Pesos
GOLD (Kg) 4, 411 8,558,744,471.45 3,658 7,429,082,125

Gold (Small Scale) 6 5, 765, 000

SILVER (Kg) 4, 394.42 118,923,247.18 4,502 239,393,556
TOTAL 8, 805.42 8,577,677,718.63 8, 166 7, 674, 240,
681

COPPER Concentrate 73, 109 3,781,363,677.00 65, 300 4,682,113,790

(DMT)
COPPER Metal Content 15, 860 13,608

TOTAL 88, 969 3,781,363,677.00 78, 908 4,682,113,790

Quicklime (MT) 9, 253.79 76,744,197.90 9,380 76,205,755

Slaked Lime (MT) 3, 201.75 205,213.18 54 350,285

Limestone 10,573 4,725,912

Sand and Gravel 770, 163,621,606.91 1,148,823 577,140,646

275.45
TOTAL 782, 240, 571, 017.99 1, 168, 658, 422, 598
730.99 830
LOCAL SALES
Metallic mineral sales increased by eleven percent (11.36%) from ten billion (10, 890,
976, 096.71) in 2016 to twelve billion (12, 127, 652, 132.57) in 2017.
EMPLOYMENT
Direct jobs from the mining industry decreased by thirteen percent (13%), with a total
employment of 8, 883 in 2016 to 7,193 this year. While estimates vary, it is
conservatively projected that for every basic job in the mines, about four
ancillary/indirect jobs may be generated in the upstream and downstream sectors.

SMALL SCALE MINING

Benguet has various municipalities that are declared and claimed as ancestral domains
by indigenous peoples and indigenous cultural communities.
Mining is the second major economic activity in the province, providing employment to
about 30% of its residents.

Taxes
Prior to EO 79 and the Revised IRR, the MGB Regional Office did not impose nor
collect any fees. Under the Revised IRR, the MGB Regional Office is now mandated to
collect application fees of P1,000 for a small-scale mining license by an individual miner
and P20,000 for a small-scale mining contract.

No collection was ever made based on the products from SSM, and not one
municipality was able to show data regarding gold production.
In 2017, Itogon was able to collect P 121,110.81 from business permits from small
scale mining and for 2018 the figure was fractionally lower at P 111,224.72. Also, as of
January 2018, Tuba collected P38,000 for only one business permit filed by a SSM
association (Camp 6 Small Scale
Mining Association Inc. (CSSMMAI). In 2017, Mankayan collected taxes from property
and buildings involved in SSM worth P43, 200.00; no updated data for January 2018 .
SOURCES
https://www.sunstar.com.ph/article/50820/ ITOGON-WANTS-MINE-TAX-SHARES-
449897 January 4, 2016
Section 2, Declaration of Policy, Philippine Mining Act of 1995
https://www.sunstar.com.ph/article/164949)
https://www.manilatimes.net/mining-industry-philippines/348610/)
http://www.bsp.gov.ph/bspnotes/bspgold.asp
http://reporter.ph/the-effects-of-mining-industry-in-the-philippines/
http://www.iohsad.org/11/06/mining/mining-philippines-and-effects-occupational-health-
and-safety-mine-workers%2A
https://palawan.wordpress.com/2011/03/24/the-environmental-impacts-of-mining-in-the-
philippines
mgb.car.gov.ph