The Philippines is a country rich in mineral resources, particularly metals such as nickel, copper, and chromium, which exhibit considerable complementarity with China’s resources. As a result, the Philippines has become one of the key destinations for Chinese mining enterprises seeking to “go global.” In recent years, the Philippine government has introduced a series of policies and measures to promote the development of the mining sector, leading to promising developments in mining activities and attracting significant attention from international mining investors—including Chinese mining companies.

I. Mining Management

(1) The Power of the State and the Government

The primary legal basis for mining management in the Philippines is the Mining Act (Republic Act No. 7942), enacted in 1995. This Act stipulates that all mineral resources are owned by the state, and any exploration, development, utilization, and processing of mineral products must be subject to state supervision and control. The state may also directly engage in such mining activities or participate in mining operations through mineral agreements entered into with contractors. In accordance with the law, the state will recognize and protect the rights of indigenous cultural communities to their ancestral lands.

When national interests so require—for instance, to safeguard strategic raw materials critical to the nation’s development or to preserve certain minerals of scientific, cultural, and ecological value—the President, upon recommendation by the competent central government authority, shall decide on the storage of relevant minerals and the designation of mineral reserve areas. The government authorities concerned shall periodically review existing mineral reserve areas with the aim of determining whether continued preservation of these reserves remains in the best interest of the nation. Based on the recommendations of the competent minister, the President may announce changes or modifications to the boundaries of mineral reserve areas, or, without prejudice to any pre-existing rights, revert such reserve areas back to public land. The competent central government authority is responsible for the protection, management, development, and rational utilization of the nation’s mineral resources, including those located within reserve areas, underwater zones, and public lands. The Minister is authorized to sign mineral agreements on behalf of the government and to issue regulations and rules necessary for implementing the purposes and provisions of mining legislation.
  
(2) Government Competent Authorities

The Philippine government has a multi-tiered mining regulatory framework. The Department of Environment and Natural Resources (DENR) serves as the central government’s lead agency, responsible for the integrated management of various natural resources, including mineral resources. Its key functions include: 1) submitting policies, plans, and programs related to environment and natural resources to Congress and the Cabinet; 2) enacting and enforcing relevant laws, regulations, and standards, issuing pertinent permits, and collecting taxes and fees; 3) controlling and managing natural resources—including classifying, cataloging, exploring, protecting, rehabilitating, and equitably distributing benefits derived from these resources. Specifically in the area of mining regulation, the Department’s responsibilities encompass: granting and overseeing mining rights to regulate the exploration, development, and utilization of mineral resources; supervising mine safety and ensuring healthy working environments; conducting geological hazard and groundwater resource surveys to support mineral resource development and safeguard water resources; carrying out research and providing laboratory services in geology, mining, metallurgy, and geological environmental studies to enhance productivity, resource regeneration, environmental protection, and restoration; and promoting the advancement and development of mining and earth sciences.

The Bureau of Mines and Earth Sciences, under this ministry, is responsible for the specific management of the mining sector. This includes managing and allocating mineral sites and mineral resources, issuing various types of mining rights certificates, and supervising mining activities. The Bureau also conducts geoscientific surveys and research in areas such as geology, mining, mine environmental issues, metallurgy, mineral economics, and mine geology, as well as geological surveys and mineral exploration. It provides technical support to small- and medium-sized mining enterprises and local governments. The Bureau is tasked with advising the Minister on matters related to the signing of mineral agreements with duly qualified parties and is responsible for monitoring contractors’ compliance with the terms and conditions of these agreements. The Bureau of Mines and Earth Sciences requires contractors, by order issued by the Bureau’s Director, to submit security deposits, performance bonds, and surety contracts. When necessary, the Director has the authority to appoint any organization or unit of the Philippine National Police, courts, officially registered non-governmental organizations, or any qualified individual as representatives to oversee all mining activities.

The Bureau of Mines and Earth Sciences is also responsible for establishing a mineral resource database system, and the mining rights management system should be one of the components included in this database. The Bureau shall publish and distribute a national mineral report at least once a year, which shall include: an updated list of mining rights, maps indicating the locations of mining rights, mining rules and regulations, other laws and regulations affecting mining activities, as well as other information relevant to the development of mineral resources, thereby providing information services to the relevant departments. Funding for the establishment of the system and publication shall be included within the Bureau of Mines and Earth Sciences’ regular budget.

The Bureau of Mines and Geosciences comprises 10 divisions: 1) Planning and Policy Division; 2) Mineral Economics, Information, and Publication Division; 3) Mine Environment and Safety Division; 4) Mining Rights Management Division; 5) Terrestrial Geological Survey Division; 6) Marine Geological Survey Division; 7) Mining Technology Division; 8) Metallurgical Technology Division; 9) Administration Division; 10) Finance Division. The Bureau has 14 regional offices at the local level, which are responsible for handling matters related to this system.

(3) Types of Major Mining Rights and Relevant Regulations

The Philippine Mining Act stipulates that any individual or enterprise engaging in mining activities—including mineral exploration, development, processing, and transportation—in the Philippines must first obtain a government-approved mining right. The primary types of mining rights in the Philippines include: Exploration Permits (PE), Mineral Production Sharing Agreements (MPSA), and Funding or Technical Assistance Agreements (FTAA); as well as Mineral Processing Permits (MPP), Sand and Gravel Mining Permits (SGP), Quarry Permits (QP), Gemstone Mining Permits, Small-Scale Mining Permits, and Mineral Transportation Permits; and Joint Venture Agreements (JVA) and Cooperative Production Agreements (CPA). The basic framework of these mining rights was established in the 1995 Mining Act, which has since undergone several amendments, including adjustments to terms and permitted areas. However, the fundamental principles remain largely unchanged. According to information provided by the Philippine Bureau of Mines and Geology’s website in August 2008, the key provisions governing mining rights are as follows:

1. Exploration Permit (PE): The permit is valid for a period of two years and may be renewed, with each renewal extending the validity by another two years. The total duration of the permit shall not exceed four years for non-metallic minerals or six years for metallic minerals. The permitted exploration areas are as follows: (1) Onshore: In any single province, an individual is allowed an area of 1,620 hectares, while a company is allowed 16,200 hectares; nationwide, an individual is allowed 3,240 hectares, and a company is allowed 32,400 hectares. (2) Offshore areas (defined as regions located more than 500 meters from the shoreline at low tide): An individual is allowed an area of 8,100 hectares, and a company is allowed 81,000 hectares. The Exploration Permit is issued by the Director of the Bureau of Mines and Geology or the Director of the Regional Office. Any qualified Philippine citizen, a Philippine-controlled company (in which the Philippine side holds more than 60% of the shares), or a foreign-invested company (in which the Philippine side holds less than 50% of the shares, but the foreign investor may hold up to 100%) is permitted to carry out exploration activities for various mineral resources within the designated areas. If the exploration reveals that the mineral resource has commercial mining potential, the permit holder may submit a feasibility study for a mining project. Upon approval, the holder may apply to upgrade the Exploration Permit to a Mineral Agreement, a Funding Agreement, or a Technical Assistance Agreement.

2. Mineral Agreements (MAs), which include three types: (1) Mineral Production Sharing Agreements (MPSAs), under which the contractor is required to provide the necessary funding, technology, management expertise, and personnel to fulfill the agreement, while the Philippine government shares a portion of the total mining output; (2) Cooperative Production Agreements (CPAs), signed between the government and the contractor, under which, in addition to mineral resources, the government also provides inputs for the mining project. The government’s share will be determined through negotiation; (3) Joint Venture Agreements (JVAs), in which the government and the contractor establish a joint venture company. The government shares in the profits based on its contributed assets and also retains the right to receive a share of the total mining output. All three types of agreements grant exclusive rights to explore, develop, and extract mineral resources within the contract area.

Permit areas under the mineral agreement: (1) Onshore, for metallic minerals: Individual permit holders are allowed an area of 810 hectares; corporate entities (joint ventures or cooperative enterprises) are allowed an area of 5,000 hectares. For non-metallic minerals (excluding sand, gravel, stone, and cement raw material minerals): Individual permit holders are allowed an area of 810 hectares; corporate entities are allowed an area of 2,000 hectares. For sand and gravel: Individual and corporate permit holders are allowed areas of 20 hectares and 50 hectares, respectively. For marble, granite, and construction-material minerals: Individual and corporate permit holders are allowed areas of 50 hectares and 100 hectares, respectively. For limestone and other cement raw material minerals: Individual and corporate permit holders are allowed areas of 500 hectares and 1,000 hectares, respectively. (2) Offshore areas: Metallic minerals are permitted over an area of 5,000 hectares; non-metallic minerals are permitted over an area of 2,000 hectares.

The term of a mineral agreement shall not exceed 25 years and may be renewed, with any extension not exceeding another 25 years. Upon expiration of the agreement, the government or its designated contractor (the highest bidder in a public tender) shall take over operation. The original contractor may continue to hold the mining right after reimbursing the highest bidder for all reasonable expenses incurred. Any qualified Filipino citizen or a Philippine-controlled company (in which the Philippine side holds more than 60% of the shares) may apply for a mineral agreement. All applications for mineral agreements must be submitted locally to the competent authority in the region where the mineral-bearing area covered by the agreement is located; however, applications involving mineral reserve areas must be submitted to the Bureau of Mines and Geosciences. Mineral agreements shall be approved by the Secretary of Environment and Natural Resources, and a copy thereof shall be forwarded to the President. Within 30 days after the Secretary approves an agreement, the President shall provide Congress with a list containing details of each approved mineral agreement.

The transfer of the rights and obligations under the aforementioned mineral agreement shall first be subject to the approval of the Minister. If, at any time during the term of the agreement, the contractor believes that continuing mining operations has become neither feasible nor economically viable, it may apply for cancellation of the mineral agreement after providing appropriate justification. The Minister will consider the contractor’s submission and make a decision within 30 days, provided that the contractor has fulfilled its due obligations in terms of funding, finance, and law.

3. The Funding or Technical Assistance Agreement (FTAA): Implemented prior to the enactment of the 1995 Mining Act, this agreement was specifically designed for large-scale exploration and development projects and was primarily aimed at foreign capital. The 1995 Mining Act retained this type of agreement. Such agreements are personally signed by the President and must be filed with the Mines and Geosciences Bureau. Under these agreements, any qualified Filipino citizen, a Philippine-controlled company (with Philippine ownership exceeding 60%), or a foreign-invested company (with Philippine ownership below 50% and foreign ownership up to 100%) is permitted to carry out large-scale exploration, development, and utilization of mineral resources. During the contract period, contractors are required to make a minimum investment of US$50 million in the project (for infrastructure and mineral extraction). The FTAA covers minerals such as gold, copper, nickel, chromium, lead, and zinc, but does not cover raw materials for cement production, marble, granite, gravel, and other construction materials. The terms of the contract and the government’s equity stake are negotiable. The contract duration cannot exceed 25 years, though an extension may be requested, with any extension not exceeding another 25 years. The licensed area under the agreement is as follows: (1) 81,000 hectares on land; (2) 324,000 hectares in offshore areas. If the land and sea areas are contiguous, the total licensed area may also extend to the combined area of both regions.

The agreement requires making maximum use of local goods and services; restoring and protecting the environment; transferring technology to the government and local communities; and fulfilling social development obligations, among other things. The specific terms of each contract can be negotiated. Agreements on financial or technical assistance shall be initially negotiated and agreed upon by the Ministry of Environment and Natural Resources, and ultimately signed and approved by the President. All such agreements on financial or technical assistance must be reported to Congress by the President within 30 days after being signed and approved by the President. Once approved by the President, these agreements may be fully or partially transferred. If the contractor determines that the area covered by the agreement is no longer suitable for large-scale mining operations, it may apply to convert the agreement into a mineral exploration agreement, provided that the term of the mineral exploration agreement is limited to the remaining duration of the original agreement. In the case of foreign investors, their equity stake must also be reduced to below 40%.

4. The Mineral Processing Permit (MPP) is issued by the Secretary of Environment and Natural Resources. It permits any qualified Filipino citizen or a Philippine-controlled company (in which the Philippine side holds more than 60% of the shares) as well as foreign-invested companies (in which the Philippine side holds less than 50% of the shares) to establish and operate mineral processing plants. The permit is valid for a period of five years, renewable for additional five-year periods, but the total duration shall not exceed 25 years.

5. After legally obtaining mining rights, the subsidiary mining rights contractor simultaneously possesses the following ancillary powers:

1) Logging Rights: The contractor may, in accordance with applicable forest regulations, harvest trees within the mining area as needed; however, upon completion of mining operations, the contractor must carry out reforestation. 2) Water Use Rights: The contractor may draw water from sources within the mining area for production purposes in compliance with relevant water regulations; yet, the government reserves the right to adjust water-use rights and reallocate water resources as necessary. 3) Right to Construct Ancillary Facilities: The contractor is entitled to build infrastructure within the mining area, including roads, railways, waste disposal sites, warehouses, storage areas, port facilities, airports, runways, substations, telephone lines, as well as engineering works such as wells, tunnels, canals, and new riverbeds. 4) Ownership of Explosives: With permission from the relevant government authorities, the contractor has the right to own and use explosives within the mining area. 5) The contractor has the right to enter private property or transitional zones, provided that such access does not damage the property of others.

(4) Mining Taxes and Fees

The taxes and fees associated with mining development primarily include corporate income tax, royalties, land occupation fees, and others. 1) Corporate Income Tax: The standard tax rate is typically 32%. 2) Royalties: For most metals and certain non-metals, royalties are levied at 2% of the actual total output value of mineral products—for example, gold, copper, iron ore, nickel, zinc, limestone, and coal at 10 pesos per ton. 3) Land Occupation Fees: Exploration licenses are subject to a fee of 5 pesos per hectare per year; mining agreements, funding agreements, or technical assistance agreements are charged at 50 pesos per hectare per year; and mineral reserve areas are taxed at 100 pesos per hectare per year. When public interest so requires, the Ministry of Environment and Natural Resources may increase these fees as appropriate. 4) Other Taxes and Fees: These mainly include indigenous community fees, fees for social development programs, environmental protection fees, fees for mining technology and geoscience R&D, and fees for mining tailings and waste disposal. Of the land occupation fees paid by onshore mining rights holders, 30% is allocated to the provincial treasury of the area where the mine is located, while 70% goes to the local municipal treasury. In municipalities that have been granted concessions, all land occupation fees are remitted directly to the municipal treasury. The 1995 Mining Law provides preferential treatment for mining projects, including: a four-year exemption from corporate income tax; duty-free or reduced tariffs on imports of capital equipment; a reduction in value-added tax; a five-year carryforward of losses within the first ten years; accelerated depreciation and deductions from taxable income; and government guarantees enabling companies to repatriate all their investment earnings without any risk of confiscation.

(5) Mining Safety and Environmental Protection Management

The Philippine Mining Act establishes stringent safety regulations that all contractors are required to comply with, including the following key provisions: 1. Individuals under the age of 16 are prohibited from engaging in any mining activities, and individuals under the age of 18 are prohibited from participating in underground mining operations; 2. Mines employing more than 50 workers must have at least one professional engineer with over five years of experience in mining and one registered foreman on staff; 3. Supervisory personnel from the regional office may at any time visit the site to inspect and monitor mining operations, require contractors to take corrective measures to eliminate potential hazards, and may suspend mining activities until the hazards have been eliminated; 4. In the event of a serious injury or fatality, contractors must promptly report the incident to the regional office. The Philippine Mining Act of 1995 and the amendments to its Implementing Rules and Regulations issued at the end of 1996 contain specific provisions for environmental protection in mining. Contractors are required to protect the environment throughout the duration of their mining contracts or permits and to develop comprehensive environmental protection plans. When submitting applications for mining contracts or permits, contractors or authorized permit holders must include an environmental protection permit and an environmental protection plan. Additionally, mining companies are mandated to establish post-mining land management plans for their open-pit mines, waste rock dumps, and tailings dams. They must allocate 10% of a mine project’s total costs to environmental protection efforts and set aside funds equivalent to 3-5% of the operating costs for mining and ore processing to support environmental protection initiatives. A fine of approximately US$2 per ton will be imposed for any leakage of mining waste.

(6) Protection of the interests of local residents, especially indigenous residents.

The 1996 Amendment to the Mining Act lays down specific provisions for protecting the interests of local residents, particularly indigenous peoples, in mining activities. Before conducting mineral exploration on lands traditionally owned by indigenous communities, mining developers must obtain their consent and pay them a royalty equal to 1% of the company’s future revenue generated from those lands. This royalty shall become part of a trust fund dedicated to the welfare of indigenous cultural communities. The Philippine Mining Act requires contractors, while operating mines, to also promote social development in mining areas as well as the advancement of earth sciences and mining technologies. The law mandates that contractors allocate at least 1% of their annual direct costs for mining and mineral processing to support mining area development, enhance the welfare of local residents, and foster improvements in mining science and technology. Specific measures include: 1. Strengthening the development of mining areas and neighboring communities by constructing public facilities such as community schools, hospitals, churches, roads, bridges, water and power supply systems, community housing, and training facilities; 2. Promoting advancements in local mining science and technology by providing equipment and funding to research institutions, disseminating mining processing technologies, environmental protection measures, and community development programs among Filipinos, and publishing scientific and technical publications to popularize mining knowledge; 3. Prioritizing the employment of Filipinos in mining operations and developing and implementing effective training programs to encourage Filipino participation in internships and management roles throughout all stages of mining production; 4. Giving preference to local products, services, and technologies whenever they are of equal quality; 5. Transferring infrastructure and equipment to local governments within one year prior to the termination of the contract, thereby ensuring the continued operation of the mine.

II. In recent years, the government has introduced important measures to revitalize the mining industry.

The Philippine mining industry once played a significant role in the country’s economy. Between the 1960s and 1980s, the Philippines was one of the world’s largest producers of copper, chromium, gold, and nickel. At that time, mining output accounted for 6% to 10% of the country’s GDP, and mining exports made up half of the nation’s total export earnings. However, since then, due to political instability, low international prices for mineral commodities, labor issues, natural disasters, and legal restrictions imposed by Philippine mining companies on foreign ownership stakes, the mining sector began to decline. By the year 2000, the mining industry’s share of GDP had fallen to around 1%. After President Arroyo took office in 2001, she resolved to reverse this trend. In January 2003, President Arroyo proposed a reform of the government’s mining development strategy, shifting from the previous approach of laissez-faire mining development to active government promotion. To revive the mining sector and attract investment, the government has implemented a series of measures, primarily including:

1. The Ministry of Environment and Natural Resources develops a mining revitalization plan.

To align with the government’s mining development strategy, the Philippine Department of Environment and Natural Resources has formulated a Mining Revitalization Plan—including policy reforms—aimed at attracting mining investments and creating more employment opportunities. The department has designated the revitalization of the mining sector as a top priority. The objectives of the Mining Revitalization Plan are: to establish a prosperous and competitive mining industry that injects vitality into economic growth and development; to encourage local communities to participate in mining development, thereby increasing local revenues and reducing poverty; and to foster sustainable mining practices through the implementation of best environmental, safety, health, and social management practices. Around the Mining Revitalization Plan, the Department of Environment and Natural Resources has also developed a medium- and long-term plan for the development of the Philippine mining sector. Under the 2004–2010 Medium-Term Development Plan, the Department identified 24 medium- and large-scale mineral resource development projects, primarily focused on copper, gold, silver, nickel, and cobalt mines. Through these projects, the government hopes to achieve its Mining Revitalization Plan. The development of the mining sector will also enhance government revenues, thereby alleviating the government’s fiscal burden to some extent. The total potential investment in these projects amounts to approximately US$6.5 billion, with projected annual sales reaching around US$3.1 billion, and they are expected to directly or indirectly create 200,000 jobs. Meanwhile, the government also plans to carry out 40 mineral exploration projects during this period, with potential investments totaling US$92.5 million.

2. Designate mining as a priority development sector.

The Philippines’ Medium-Term Development Plan for 2004–2010 identified the mining sector as a priority area for development and granted it policy and tax incentives. The government hopes that by developing the mining sector, it can promote the comprehensive development of the economy.

3. Simplify the approval procedures for mining rights.

In 2003, the Ministry of Environment and Natural Resources issued Order No. 2003-08, establishing One-Stop Service Committees (OSSCs) in all regional offices of the Bureau of Mining Geology, with support and coordination from the Mining Investment Assistance Center and all regional offices of the Ministry of Environment and Natural Resources. The OSSCs act as representatives of the Ministry of Environment and Natural Resources at the local level, exercising authority to approve mining rights, thereby streamlining approval procedures and reducing processing times. In 2004, the Ministry of Environment and Natural Resources announced that the processing time for mining permits in indigenous areas had been shortened from the previous 185 working days to 104 days, while the processing time for permits in non-indigenous areas was reduced from 65 days to 30 days. Some powers have also been directly delegated to the regional offices of the Bureau of Mining and Geology—for instance, regional heads of the Bureau of Mining and Geology can issue gravel-mining permits without first obtaining prior approval from the Director of the Bureau of Mining and Geology, provided that they submit a copy of the permit to the Director within seven days after issuance.

4. The Mining Investment Assistance Center (MIAC) has been established.

In 2003, to further promote the increase in mining investment, the Philippine Department of Environment and Natural Resources (DENR) and the Department of Trade and Industry (DTI) jointly established the Mining Investment Assistance Center (MIAC). As stipulated in Joint DENR-DTI Memorandum Circular No. 2003-02, MIAC is assigned the following responsibilities: 1) Providing investors with technical, geological, legal, and investment-related information on potential mining investment opportunities; 2) Supplying investors with documents and forms required for applying for various mining permits, contracts, and agreements; 3) Offering legal and procedural guidance for doing business in the Philippines and providing assistance in accessing critical information; 4) Providing relevant technical and legal advice and making recommendations based on the varying requirements throughout the application, processing, evaluation, and mining rights approval processes; 5) Offering environmental and social feasibility consulting services for mining projects; 6) Conducting site-selection consultations for mining operations.

5. Open up more mining areas to the market.

The total land area of the Philippines is approximately 30 million hectares, of which 9 million hectares have been identified by the Philippine Bureau of Mines and Geosciences as geological prospective areas for metallic mineral resources. As of the end of 2005, the area covered by mining rights approved by the government accounted for about 6.33% of the aforementioned prospective areas, leaving over 8.4 million hectares of these geological prospective areas entirely unexploited for mineral development. To accelerate the development of these regions, the government is formulating plans to bring more mining sites onto the mining market. In June 2007, Reyes, the Philippine Secretary of Environment and Natural Resources, issued an order stating that the government would open to investors 65 previously revoked mining sites, with a total area exceeding 68,000 hectares.

6. Develop a mineral action plan to alleviate public pressure and gain support from the Supreme People’s Court.

Public opposition to mining activities in the Philippines represents a significant challenge to the country’s development, particularly due to deeply entrenched anti-mining sentiments among local governments, indigenous tribes, and social groups. The primary reasons behind public opposition to mining development in the Philippines include: First, a widespread misunderstanding of Philippine mining laws—specifically, the belief that allowing 100% foreign ownership in mining projects amounts to foreign exploitation of the Philippines’ mineral resources, undermining the country’s long-term interests and jeopardizing the survival and development of future generations. Second, some mining companies, driven by short-term profits, have engaged in illegal and destructive mining practices, causing severe damage to local ecosystems and disrupting the normal production and daily life of local communities. Additionally, mismanagement by local governments and corrupt practices among certain government officials have tarnished the overall image of government administration, further fueling public anti-mining sentiment. These strong public objections pose a serious obstacle to the development of the Philippine mining sector. A particularly emblematic case is the legal dispute over whether the provision in the Mining Act—the “Agreement on Financial or Technical Assistance”—which permits foreign investors to hold up to 100% equity in Philippine mining projects, is constitutional. On January 27, 2004, the Philippine Supreme Court issued a ruling declaring unconstitutional the provision in the Philippine Mining Act that allowed foreign companies direct participation in Philippine mining development. This decision dealt a severe blow to the confidence of international mining investors, affecting no fewer than 350 million U.S. dollars already invested in the mining industry. Some foreign investors even decided to abandon mining rights they had already secured.

Regarding the issues mentioned above, the government has already taken proactive measures to address them. In 2004, based on Presidential Decree No. 270, the Ministry of Environment and Natural Resources formulated a “Mineral Action Plan,” which outlines strategies for mitigating the negative impacts of large-scale mining operations. The Mineral Action Plan seeks to ensure the safe development of the mining industry through the following measures: 1) All projects must undergo an environmental impact assessment procedure; 2) A plan for protecting and improving the environment must be developed; 3) An Environmental Restoration Fund for Mining Areas and an Mining Environmental Restoration Committee must be established; 4) Management principles and standards for mining waste and tailings must be formulated; 5) Non-mandatory third-party audits must be conducted; 6) Abandoned mining sites must be reclaimed and cleaned up. In addition, the government has launched a series of information and awareness campaigns to enhance public understanding of mining development. The government has made it clear to the public that the country can fully achieve economic takeoff through the revitalization of the mining sector. As mining investments flow in, rural areas will see significant improvements in employment and productivity, infrastructure construction will receive robust development, and local communities will reap tangible benefits from these efforts. The government has pledged that the revitalization of the mining sector will never come at the expense of environmental degradation, and that the local environment will be comprehensively protected through the enactment of relevant laws and policies.

Judging from the current development trend, public hostility toward mining activities has eased somewhat—particularly thanks to the Supreme Court’s support for the government’s policies. On December 1, 2004, the Philippine Supreme Court issued a ruling overturning its earlier decision and upholding the provision in the Philippine Mining Act that allows foreign investment into the Philippine mining industry. The Philippine Supreme Court’s renewed endorsement of the Philippine Mining Act means that foreign investors can now acquire full ownership of Philippine mining enterprises through capital or technology assistance agreements. As a result, the biggest obstacle to the government’s efforts to revive the mining sector has been removed.

III. The Philippine government’s efforts to revitalize the mining industry have yielded significant results.

Currently, the government’s aforementioned measures have clearly yielded results, and the Philippine mining industry has experienced relatively rapid development. This is mainly reflected in the following aspects:

1. The output value of the mining industry has increased significantly.

The value of mining output has grown significantly over the past few years. In 2001, the total value of mineral production was only 29 billion pesos. Since then, mining output has been on the rise year after year. By 2005, the Philippines’ total mining output had reached 50.2 billion pesos (exchange rate in 2005: 1 U.S. dollar = 55.24 pesos), representing a 73.1% increase over the four-year period. Of this total, metal-mineral output amounted to 37.4 billion pesos, accounting for 74.5% of the total output. After 2006, driven by a substantial rise in international mineral prices, the Philippines saw an even sharper increase in its mining output, reaching 101.5 billion pesos in 2007—a more than doubling in just two years.


2. The contribution of the mining industry to national economic development has significantly increased.

In recent years, the Philippines has seen a more pronounced increase in the value-added of its mining sector as well as in the contribution of this value-added to the country’s GDP. In 2001, the mining sector’s value-added stood at just 21.6 billion pesos (excluding crude oil); by 2007, it had risen to 90.4 billion pesos—a growth of 318.5% over the six-year period. The mining sector’s contribution to GDP increased from 0.6% to 1.4%, representing a rise of 133.3% (Figure 2). Moreover, in 2007, mineral exports reached 2.548 billion U.S. dollars, accounting for 5.2% of the nation’s total export value—significantly higher than the 2% recorded six years earlier.
3. Mining activities are becoming increasingly active.

In recent years, thanks to the continuous improvement of the investment environment for the mining industry in the Philippines and the substantial rise in international mineral prices, mining activities in the country have become increasingly vibrant. In particular, in early December 2004, the Supreme Court of the Philippines ruled that the “Philippine Mining Act of 1995” was constitutional. This act allows foreign investors to hold 100% equity in mining companies. The ruling has been widely welcomed by the international mining community. Following the court’s decision, around 40 foreign mining companies expressed interest in participating in Philippine mineral development projects—including several major mining giants from the United States, the United Kingdom, and Australia. This development is set to bring billions of dollars in foreign capital into the Philippine mining sector.

In recent years, the total number of mining rights approved by the government has also been steadily increasing. In 2001, the number stood at 282, rising to 508 by January 2008 (Figure 3). Among these, production-sharing agreements (MPSAs) saw the fastest growth: from just 162 in 2001, their number had climbed to 262 by January 2008, representing an increase of 61.7%. Additionally, as of January 2008, there were still 2,224 mining rights applications awaiting approval (Table 1), including 54 applications for funding or technical assistance agreements—up 35% from 2004. Production-sharing agreements numbered 1,092, a decrease of 18.3%; exploration permits (PEs) totaled 1,148, an increase of 213.7%.
In short, the outlook for the mining industry in the Philippines is promising, with an increasing number of international mining investors entering the Philippine mining sector. Recently, Philippine authorities projected that investment in this sector would reach 10 billion U.S. dollars by 2011.