Miners: House measure will kill the industry

All other companies that operate outside declared mineral reservations will no longer be exempted from royalty tax under the proposed measure.

Mining companies that operate outside declared mineral reservations will no longer be exempted from royalty tax under the proposed measure.

Baguio City — While the members of the Philippine Mine Safety and Environment Association (PMSEA) have expressed optimism over a more competitive fiscal regime, they however, have reservations over a proposed measure that hurdled the House of Representatives’ committee on ways and means.

They have asserted that the measure would ‘kill’ the industry.

On third and final reading the committee chaired by Albay Rep. Joey Salceda approved a new fiscal regime that will, among others, impose a 3 percent tax royalty on top of the 4 percent excise tax on mining companies that either operate inside or outside a mineral reservation area.

Salceda’s committee exempts non-metallic mines from royalty tax which is part of the consolidated mining fiscal regime bills in the House of Representatives.

While the Salceda-sponsored bill imposes a lower royalty tax for companies that operate within a mineral reservation area, all other companies that operate outside declared mineral reservations will no longer be exempted from royalty tax under the proposed measure.

The current fiscal regime imposes a 4 percent excise tax plus a 5 percent royalty on mining companies that operate within declared mineral reservation areas.

Though the non-metallic mining companies — which include stone, sand, rock or similar materials from natural deposits welcome the House committee-approved version, gold, copper, silver, and other metallic mineral companies have strongly opposed the proposed measure.

Said measure exempts small-scale mining from royalty, whether they operate in mineral reservation areas or not.

Speaking during a press conference at the kick-off ceremonies of the 66th Annual National Mine Safety and Environment Conference in Baguio City on Tuesday, Walter Brown, chairman emeritus of Apex Mining Co. Inc. and president of PMSEA said the House committee-approved version is “unfair” and will kill the metallic minerals industry.

The new tax regime passage was announced by Mines and Geosciences Bureau Director Wilfredo Moncano during the kick-off ceremonies of the annual safety conference in Baguio City.

Moncano, himself expressed dismay, noting that while the committee on ways and means chaired by Salceda accepted the MGB’s position on the proposed fiscal regime, he said it was not considered by the members of the committee.

Brown said PMSEA, a volunteer organization of mining companies which include quarry companies and mining-related industries, will communicate their concerns to the senate, with the hope that the senators will listen to the general sentiment of the industry.

Ultimately, PMSEA will elevate the concern of the mining industry to the Office of the President, said Brown.

He added that companies earn small revenues from with low-grade ore, like Carmen Copper. Hence, a gross-income based tax will hurt the company’s financial standing.

“If it is 3 percent royalty tax and all other taxes will be removed, then that is an excellent proposal. But a 3 percent royalty tax in addition to the excise tax, which is 4 percent, it will kill the producers. Because it depends on the grades of the ore. If the grade of the ore is low like (that of) Carmen Copper, then the net income is low,” he pointed out.