Bantay Kita stands strong in opposing Mining Reform House Bill 8937 (Committee Report No. 720), for its deliberate measure to decrease the current mining royalties and shadowy provisions on profit-based royalties and windfall tax design. While the current mining fiscal regime lacks strong accountability measures to ensure human, environmental and economic due diligence within the Philippines’ mining industry, this proposed fiscal regime provides more protection from financial risks of mining companies and decreases wealth shares of mining host communities.
Beyond the economic externalities of the proposed mining bill, HB 8937 will also lead to the intensification of social, environmental and cultural impacts of extraction upon mining-affected communities.
Salient features of House Bill 8937 include:
The increased complexity within the proposed mining fiscal regime poses detrimental consequences to exacerbating social, environmental and economic inequities across the nation. The proposed tax reforms have the potential to intensify inadequate transparency measures within mineral production and revenue agreements, calling for an increased risk of tax evasion and corruption.
The Philippine mining sector contributes a minuscule 0.6% to the GDP, with large-scale mining provinces host to some of the nation’s highest poverty incidences. The alleged aim of the proposed fiscal regime is to raise national revenues within the mining industry. However, by alleviating tax burdens for corporations and dispossessing governments and local communities of their revenue share, the proposed tax reforms underline the government’s prioritization of corporate profit maximization at the expense of community livelihoods and critical ecosystems.
Rapid scale-up of renewable energy remains a primary solution to addressing the climate crisis across nations and within the 2023 Philippine Energy Plan and 2023 Philippine Development Plan. A global and national energy transition from fossil fuels to renewable energy has called for the insatiable demand for critical minerals necessary to produce low carbon technologies. The Philippines is host to the fifth largest nickel reserves, and fourth largest copper and cobalt reserves, globally, which remain the leading raw materials for the production of green technologies.
Mineral reservation areas are located in Dinagat Islands, Surigao del Sur, Surigao del Norte, Agusan del Norte, Palawan, and Tawi-Tawi, where the majority of the nation’s nickel reserves lie. These areas are host to some of the Philippines’ most biodiverse ecosystems yet remain amongst the most climate-vulnerable and economically marginalized. The decreased government and community shares in the proposed mining bill will challenge the current weaknesses of the government in the implementation of safeguards to protect mining-affected communities from the loss of critical ecosystems, watersheds, and livelihoods resulting from the increasing attractiveness of mining in the Philippines under the proposed mining reform and global transition mineral demand.
The nation is under increasing global pressure to provide the critical minerals necessary for the energy transition, with international and domestic corporations looking to expand transition mineral mining in the Philippines to capitalize on global demands.
Moreover, the Philippines contributes 0.35% to global greenhouse gas emissions, yet remains amongst the top three nations most vulnerable to climate change. The alleviation of tax burdens remains a financial incentive for domestic and foreign investors to expand rampant mining operations in the Philippines. Increases in mining operations alongside a lack of human and environmental rights due diligence will lead to the continued devastation of critical climate mitigating ecosystems, leaving mining affected communities - and the nation as a whole - increasingly vulnerable to natural disasters, livelihood loss, and food insecurity.
Bantay Kita calls on the Congress to uphold public interests and reject House Bill 8937.
By Angela Asuncion
The province of Dinagat Island is a vast area rich in biodiversity and immense natural beauty. The island remains a critical habitat to approximately 100 bird and 400 plant species, with 20 globally threatened species listed in the International Union for Conservation of Nature. Dinagat remains home to some of the Philippines' most extensive bonsai forests, with endemic flora, wildlife sanctuaries and vital watersheds providing sustenance to local communities. Several watershed areas within Dinagat act as critical climate mitigating ecosystems. Typhoon Odette was the third category five typhoon to hit the Philippines in the last two years, with Dinagat being one of the most severely impacted regions. As the island remains amongst the most vulnerable regions in the Philippines to climate change and, resultingly, the increasing severity of natural disasters, the protection of these watersheds remain fundamental to food and water security, flood control, and disaster risk reduction.
Dinagat Island is located in the Caraga region, the mining capital of the Philippines. Juxtaposed against its natural beauty is Dinagat Island's mineral richness. Dinagat is a national leader in nickel ore production, with PHP 4.01 billion in gross outputs in 2019 (MGB, 2019).
In 1939 the province was declared a mineral reservation area due to its abundance of mineral richness. There are approximately 19 approved Mineral Production Sharing Agreements (MPSAs) and three joint operating agreements for large-scale mining operations. Mining claims encompass over half, 58,709 out of 80,212 hectares, of Dinagat Island's land mass. Although the province is known for its biodiversity, the primary land use in Dinagat has prioritized mining concessions. The islands' decades-long proclamation as a mineral reservation has led to overlaps between conservation areas and mining concessions.
Although the Caraga region is known as the mining capital of the Philippines, it remains one of the most impoverished areas in the archipelago, with poverty incidences between 30-60%. Approximately 36% of families in Dinagat Island possess an income below the poverty line. However, rampant mining operations have led to extreme socio-environmental devastation across the island.
Livelihoods and critical water and mangrove ecosystems have become decimated from siltation and chemical runoff from mining operations. On top of surviving a global pandemic and the impacts of Super Typhoon Odette, one of the world's most severe natural disasters, farmers share stories of zero harvests during the past two years due to the spillover effects of nearby mining which has devastated the agricultural capacity of the land.
Community members have demanded accountability from the mines, but the companies profiting from this socio-environmental destruction have made a lack of reparations. To date, there remains a lack of regulatory oversight holding mining corporations accountable for the negligence of their operations. The infinite beauty of the region and the sustenance of the people relying on the land for survival in Dinagat remain threatened by the unruly impacts of unchecked mining operations. Today, affected local communities, farmers, fisherfolk, and women stand firm in their fight for land, water, food, identity and life. It is critical to ensure mining accountability safeguards are put in place, which prioritize local community livelihoods and the essential protection of climate-mitigating ecosystems over profits. Local communities are demanding change, aiming to hold corporations accountable, and we here at Bantay Kita are here to support them.
The Extractive Industries Transparency Initiative could consider sanctions for the Philippines, but is failing to hold Western oil, gas, and mining companies to the same standard.
By Anj Dacanay, Deputy National Coordinator of Bantay Kita
In recent years, it has become more and more dangerous to be an activist in the Philippines. In the extractives sector in particular, land and environmental defenders have been harassed, arrested and, in some cases, killed. Indigenous and local communities are commonly denied their legal right to free, prior, and informed consent (FPIC) for mining projects in their areas. And others from civil society organizations like myself fear for our lives because of continued intimidation and harassment from “red-tagging,” and being labeled a member of the government’s opposition. Under the current regime, there is little that we can do to preserve our rights.
However, pressure from international organizations can sometimes help curb oppression from our harsh government. The Philippines is currently under evaluation by the Extractive Industries Transparency Initiative (EITI), the global standard for transparency in oil, gas, and mining, for its compliance with the EITI Standard. This evaluation considers whether our country and the extractive companies operating within it disclose the payments that they make for oil, gas, and mineral resources. In addition to fiscal disclosure requirements, the Standard also mandates that a country allow civil society to operate freely and without constraint, engaging with the extractives sector to make citizens’ voices heard.
Civil society organizations have appealed to the EITI to use its position of power to help us Filipino activists on the ground by critically considering whether the country is meeting its civic space obligations under the Standard. If the EITI determines that the government is not complying with the organization’s rules and the country doesn’t take immediate steps to improve its actions, the Philippines can be suspended or even expelled from the organization.
EITI membership is extremely valuable to a country—it signals to investors and companies that the country is engaging in good governance and is a comparably stable and open place to operate. Suspension from the EITI would conversely signal to investors that governance in the Philippines has deteriorated and that they should take their business elsewhere. When used in this way, the EITI can be a powerful tool for those of us who have precious few options left for holding our government accountable.
Unfortunately, the EITI’s position as a global leader in good governance is under threat. In addition to rules that countries must abide by, the EITI Standard also includes expectations for companies that are part of the organization. Chief among these expectations is that they report the payments that they make to foreign governments wherever they are exploiting natural resources. These disclosures help curtail corruption and let citizens know what they are getting in exchange for their natural resources, allowing them to have a say in how those revenues are spent. Unfortunately, many EITI companies are not following the rules.
The EITI recently revealed that a significant number of its so-called implementing companies are not disclosing the payments that they make to governments. As with countries, companies gain reputational benefit and investor confidence by participating in EITI. However, it has become clear that for EITI supporting companies—unlike EITI implementing countries like the Philippines—there is no cost for not complying with the Standard.
The EITI has failed to take any action to hold companies accountable for their non-compliance. Even worse, an EITI Board Member—ExxonMobil’s representative to the board—was recently caught lobbying against the United States creating its own disclosure rule in line with the EITI Standard. Despite civil society bringing forth a complaint that called for his dismissal from the board, the EITI declined to hold him accountable for his subversive actions. It is becoming clear that the EITI has a different standard for developing countries than it does for major American oil companies.
There is often little that civil society in the Philippines or around the world can do to hold rich, powerful oil, gas, and mining companies like ExxonMobil accountable. The EITI is a global organization that brings together countries, companies, and civil society. It should be a tool that civil society can use to compel companies to operate transparently and with regard for helping citizens benefit from the extraction of their country’s natural resources. Unfortunately, the EITI cannot do this if it has been captured by rich and powerful corporations like ExxonMobil.
International civil society organizations from around the world are calling on the EITI to create sanctioning methods for companies that are not compliant with its Standard. EITI Board Chair, Helen Clark, has pledged that work on this would be “undertaken promptly” to submit to the Board for decision at its upcoming October 20-21, 2021 meeting.
We are waiting anxiously to see whether the EITI will be the powerful governance tool that we hope it can be, or whether it is merely a rubber stamp that companies can buy access to, exchanging membership contributions and modest lip service on transparency for reputational benefit. This case will set a precedent on whether and how EITI holds companies accountable—or fails to do so.
EITI has been a useful tool and valued platform for civil society, and especially in mining-affected communities. We want to ensure that companies in our country are held accountable. But how can we do this in the Philippines, if at the international level, EITI fails to hold even its own board members accountable for their actions?
When the Philippines first joined EITI, civil society feared that it may simply be used by corporations to enhance their reputations without engaging in meaningful change. As we watch this play out from the Philippines, we hope that the EITI will seize this moment to stand firm and tell companies that they must follow the rules.
For activists like me in countries like mine, the EITI maintaining its integrity and influence is critical to our ability to continue to operate freely. We hold out hope that the EITI can help us achieve better governance, but this won’t happen if it cannot govern itself.
Anj Dacanay is the deputy national coordinator of Bantay Kita (Publish What You Pay Philippines), which advocates for transparency and accountability in the Philippines’ extractive industries.
Bantay Kita is greatly dismayed and disheartened by the issuance of Executive Order 130, lifting the mining moratorium (Section 4 of Executive Order 79 s. 2012). This new executive order has taken many stakeholders by surprise and to our knowledge was issued without any prior consultation with relevant stakeholders.
EO 130 cites the increase of the excise tax from 2% to 4% (as contained in RA 10963 aka “TRAIN law”) as the justification for the lifting of the moratorium. This minor increase in excise tax is not the type of “[rationalization of] existing revenue sharing schemes” that was contemplated by EO 79. Bantay Kita believes that to be true to the spirit of EO 79, and before the lifting of the moratorium can even be considered, reforms in the fiscal regime of mining such as an increase in mineral royalty payments, the imposition of windfall gain tax, and the scrapping of unnecessary incentives should be enacted for a more fair economic contribution from the extractive industry.
Furthermore, reforms in the Philippine Mining Act of 1995 are urgently needed to ensure proper management and governance of our mineral resources, address social and environmental mining issues, and fully respect the rights of local communities, indigenous peoples, and local government units to approve or disapprove mineral extraction.
We call on the Department of Environment and Natural Resources, along with relevant government agencies such as the National Commission on Indigenous Peoples, to conduct a comprehensive review of existing mining contracts and agreements. Such review should include genuine stakeholder consultations with local government units and mining-affected communities.
We urge the Department of Finance and the Department of Environment and Natural Resources to actively support legislation rationalizing revenue sharing schemes and mechanisms that are fair and equitable, considering the one-time nature of mineral resource extraction.
Lastly, we urge the President to reconsider EO 130 and declare as urgent reforms in the mining fiscal regime to ensure a more equitable, transparent, and fair revenue sharing scheme and mechanism.
Bantay Kita, its partners, and communities will continue to be vigilant. We will continue to monitor mining operators and hold them to the principles of transparency and accountability.
On April 1, the second Extractive Industries Transparency Initiative (EITI) Validation commenced for the Philippines. The Validation is the assessment of EITI-implementing countries on their ability to meet the EITI Standard.
Countries will be scored based on three components of the Validation: 1) stakeholder engagement - participation of all stakeholders from government, industry, and civil society, 2) transparency - disclosure requirements such as beneficial ownership registry, and 3) outcomes and impact - addressing national priorities on natural resource governance.
The first Validation found the Philippines to have made Satisfactory Progress in 2017, the first EITI implementing country to achieve that status.
As civil society representatives to the PH-EITI Multi-stakeholder Group, Bantay Kita sees the Validation as an opportunity to further discuss challenges in implementing EITI and how it can be more relevant both at the national and subnational level.
“Over the past months, the PH-EITI MSG has been working to gather all evidence to show progress of the Philippines. All stakeholders, not only civil society, have contributed to communicating EITI data and initiated outreach activities from local communities to policymakers,” said Vincent Lazatin, National Coordinator of Bantay Kita.
Aniceta Baltar, a civil society representative to the PH-EITI MSG said that “Stakeholders involved in the Validation process would be honest and able to articulate what really is happening on the ground with the transparency initiative of extractive industries in our country. Beyond aiming to be on top, the one of greater value is knowing the real score, the PH-EITI's actual situation, and how we can perform better.”
“The Validation looks at how it continues to execute its mandate, and at what level it does. It also gauges what positive impacts the Initiative were able to bring across to its constituents and stakeholders,” she added.
The final result of the Validation is expected to be announced by the EITI Board around the fourth quarter of 2021.