Feb 10, 2023

Rudiments of Philippine Mining

By: Tranquil G.S. Salvador III

“The maximum area for quarrying which a qualified person may hold at any one time shall be five hectares”

Mining plays a vital role in the country’s economic development. It opens employment opportunities, fuels infrastructure growth in and around the mining areas, generates foreign-exchange earnings from exports of mineral resources, and tax revenues for the government (Philippine Statistics Authority).

However, mining, if irresponsibly undertaken, may cause water pollution, land erosion, damage to rivers and inland waters, deterioration of rain forests, decline of wildlife populations, and displacement of indigenous communities, among others.

The 1987 Constitution mandates that “[A]ll lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned by the State…” (Article XII, Section 2).

Hence, if an owner of a piece of land discovers mineral resources therein, no exploration, development, and utilization may be had without the authority of the State. Conversely, mineral resources found in the land of another can be explored, developed, and utilized only with the consent of the State.

Furthermore, the 1987 Constitution expressly provides that the “[S]tate may directly undertake such activities, or it may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or corporations or associations at least 60 per centum of whose capital is owned by such citizens.”

Such agreements may be valid for a period not exceeding 25 years, and renewable for not more than 25 years (Article XII, Section 2, 1987 Constitution).

In the latter instance, “the State [shall] promote their rational exploration, development, utilization… through the combined efforts of government and the private sector…” (Declaration of Policy, Republic Act No. 7942).

However, mining shall not be allowed in: (a) military and other government reservations; and (b) “[n]ear or under public or private buildings, cemeteries, archaeological and historic sites, bridges, highways, waterways, railroads, reservoirs, dams or other infrastructure projects, public or private works including plantations or valuable crops…” (Section 19, Chapter III, Republic Act 7942).

Mining is also not allowed in areas covered by small-scale miners unless with the latter’s prior consent; it is also prohibited in old growth or virgin forests, proclaimed watershed forest reserves, wilderness areas, mangrove forests, mossy forests, national parks, provincial/municipal forests, parks, greenbelts, game refuges and bird sanctuaries (Section 19, Chapter III, Republic Act 7942).

Before individuals or corporations can develop or utilize the mineral resources of the State, they must apply for an exploration permit with the Mines Geoscience Bureau which grants them the right to conduct exploration for all minerals in certain specified areas (see Section 20, Chapter IV, Republic Act 7942).

An exploration permit shall be valid for a period of two years, subject to annual review and relinquishment or renewal upon the recommendation of the Director of the MGB.

An exploration permit shall grant to the permittee, his heirs or successors-in-interest, the right to enter, occupy and explore the area (Sections 21 and 23, Chapter IV, Republic Act 7942).

If private or other parties are affected, the permittee shall first discuss with the said parties the extent, necessity, and manner of his entry, occupation, and exploration and in case of disagreement, a panel of arbitrators shall resolve the conflict (Section 23, Chapter IV, Republic Act 7942).

The permittee shall undertake exploration work on the area as specified by its permit based on an approved work program.

Any expenditure in excess of the yearly budget of the approved work program may be carried forward and credited to the succeeding years covering the duration of the permit (Section 23, Chapter IV, Republic Act 7942).

The permittee may apply for a mineral production sharing agreement, joint venture agreement, co-production agreement or financial or technical assistance agreement over the permit area, which shall be approved if the permittee meets the necessary qualifications and the terms and conditions of any such agreement (Section 23, Chapter IV, Republic Act 7942).

Mineral production sharing agreement is an agreement where the Government grants to the contractor the exclusive right to conduct mining operations within a contract area and shares in the gross output.

The contractor shall provide the financing, technology, management and personnel necessary for the implementation of this agreement (Section 26, Chapter V, Republic Act 7942).

A co-production agreement is an agreement between the Government and the contractor wherein the Government provides inputs to the mining operations as well as benefiting from the mineral resource.

On the other hand, a joint venture agreement is an agreement wherein a joint-venture company is organized by the Government and the contractor with both parties having equity shares (Section 26, Chapter V, Republic Act 7942).

A mineral agreement shall grant to the contractor the exclusive right to conduct mining operations and to extract all mineral resources found in the contract area.

In addition, the contractor may be allowed to convert his agreement into any of the modes of mineral agreements or FTAA subject to the approval of the DENR Secretary (Section 26, Chapter V, Republic Act 7942).

“Any qualified person [or corporation] with technical and financial capability to undertake large-scale exploration, development, and utilization of mineral resources in the Philippines may enter into an [FTAA] directly with the Government…”.

An FTAA shall be negotiated by the DENR, executed and approved by the President, and reported to Congress within thirty (30) days from execution and approval thereof (Sections 33 and 36, Chapter VI, Republic Act 7942; see Article XII, Section 2, 1987 Constitution).

Except during the exploration period of a mineral agreement or FTAA or an exploration permit, an environmental clearance certificate shall be required based on an environmental impact assessment and procedures under the Philippine Environmental Impact Assessment System, and Sections 26 and 27 of the Local Government Code of 1991 (Section 70, Chapter XI, Republic Act 7942).

The ECC requires the national government agencies to maintain ecological balance, and prior consultation with the local government units, non-governmental and people’s organizations (NGO/PO) and other concerned sectors of the community.

The latter are allowed to participate in ensuring that contractors/permittees observe all the requirements of environmental protection (Section 70, Chapter XI, Republic Act 7942).

An activity less rigid than the subject of mineral agreements and FTAA is quarrying. It is the process of extracting, removing, and disposing quarry resources found on or underneath the surface of private or public land which may be permitted by the provincial governor subject to compliance with local rules and regulations (Section 3(ar), Chapter I, and Section 43, Chapter VIII, Republic Act 7942).

Examples of quarry resources are andesite, basalt, conglomerate, coral sand, diatomaceous earth, diorite, decorative stones, gabbro, granite, limestone, marble, marl, red burning clays for potteries and bricks, rhyolite, rock phosphate, sandstone, serpentine, shale, tuff, volcanic cinders, and volcanic glass (Section 43, Chapter VIII, Republic Act No. 7942).

The maximum area for quarrying which a qualified person may hold at any one time shall be five hectares.

However, for large-scale quarry operations involving cement raw materials, marble, granite, sand and gravel and construction aggregates, a qualified person and the government may enter into a mineral agreement as defined in the Philippine Mining Act of 1995 (Section 43, Chapter VIII, Republic Act 7942).

A quarry permit shall have a term of five years, renewable for like periods but must not exceed a total term of 25 years.

No quarry permit shall be issued or granted on any area covered by a mineral agreement or FTAA (Section 43, Chapter VIII, Republic Act 7942).

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