Royalty Payments from Mining to be Increased from 1% to up to 20% – PANGANIBAN


The House Committee on Indigenous Cultural Communities and Indigenous Peoples chaired by Rep. Nancy A. Catamco (2nd District, North Cotabato) has approved the creation of a technical working group (TWG) that will finalize the bills seeking to protect and promote the rights of indegenous peoples (IPs) affected by mining operations in ancestral domains.

The TWG to be headed by Rep. Jose T. Panganiban Jr.(Party-list, ANAC-IP) will consolidate House Bill 391 authored also by Panganiban and HB 4959 by Rep. Maximo B. Rodriguez Jr.(2nd District, Cagayan de Oro).

Both bills are titled “An Act To Protect And Promote The Rights of Indigenous Peoples Affected By Mining Operations In Ancestral Domains, Amending For the Purpose Republic Act No.7942, Otherwise Known As The “Philippine Mining Act Of 1995.”

Both measures seek to amend Section 16 of RA 7942 titled “Opening of Ancestral Lands to Mining Operations” so that “No ancestral land shall be opened for mining operations without the free and prior informed consent (FPIC) of the indigenous cultural community (ICC) and a certification of precondition issued for the purpose by the National Commission for Indigenous Peoples, as specified under Section 59 of RA 8371 or “The Indigenous Peoples’ Rights Act of 1997.”

The bills also seek to amend Section 17 of RA 7942 titled “Royalty Payments for ICCs so that in the event of an agreement with an indigenous cultural community pursuant to the preceding section, royalty payment, upon utilization of the minerals shall be given to the indigenous cultural community by the contractor, permit holder, or mining operator. The royalty shall form part of a trust fund for the socioeconomic well-being of the members of the ICC.”

According to Panganiban’s bill, the proposed royalty amounts to 20 percent of the gross output while Rodriguez’s bill proposed five percent.

The authors pointed out that Section 46 of RA 8371 provides that the Ancestral Domain Office shall also issue, upon the FPIC of the ICCs/IPs concerned, certification prior to the grant of any license, lease or permit for the exploitation of natural resources affecting the interests of ICCs/IPs or their ancestral domains and to assist the ICCs/IPs in protecting the territorial integrity of all ancestral domains. It shall likewise perform such other functions as the Commission may deem appropriate and necessary.

This provision has created confusion among the stakeholders of the mining sector because RA 7942 and its implementing guidelines do not explicitly provide for such requirement, according to the the authors.

Moreover, the authors cited that Section 17 of RA 7942 about royalty payments for ICCs provides that in the event of an agreement with an ICC pursuant to the preceding section, a royalty payment upon utilization of the minerals shall be agreed upon by the parties which shall form part of a trust fund for the socio-economic well-being of the ICCs/IPs, without indicating the exact amount to be paid by the contractor, permit holder or mining operator.

This particular provision has likewise led to disagreements concerning the royalty payments according to them.

Rep. Allen Jesse C. Mangaoang (Lone District, Kalinga) said that the agency that can address the issue on royalty is the Department of Environment and Natural Resources (DENR) while Rep. Wilter “Sharky” Wee Palma II asked if it is the NCIP that collects the royalties.

Pascual Patting, NCIP Development Management Officer III, said the NCIP is not the agency that collects the royalties from mining firms.

Panganiban explained the NCIP acts as a witness between the mining companies and the community and that the miners pay directly to the community through its elders.

Rodolfo Velasco, division chief of the Mines and Geosciences Bureau (MGB)-DENR said the provisions of Section 17 of RA 7942 were further expounded under the IRR through Administrative Order 2010-21.

The IRR states that in the event prior informed consent is secured in accordance with the preceding paragraph, the concerned parties shall agree on a royalty payment for the concerned ICC, which may not be less than one percent of the gross output, said Velasco.

Furthermore, the IRR provides the expenses for community development shall be credited to or charged against the said royalty.

Section 39 of the IRR on the terms and conditions of the mineral agreement stipulates that the contractors shall recognize the rights, customs and traditions of the local communities, particularly the ICCs.

The IRR also provides for the establishment of a social development and management program (SDP) for the host and neighboring communities within the mining operation that includes also the ICCs. The SDMP being funded by the mining companies is pegged at 1.5 percent of their operating cost.

Velasco said the DENR supports the bills, but it is apprehensive about the magnitude of royalty payment of 20 percent per HB 391 and 5 percent per HB 4959 of the gross output of mining and quarrying operations.

He said the position paper they are submitting to the body contains a comparison on the present one percent royalty payment being paid by the mining companies, and how much it will become under the 20 percent and five percent proposals.

For example, Velasco said, the one percent royalty being paid by Carrascal Mining Corporation amounts to P19 million, and this will become P382 million if the royalty will be raised to 20 percent and P96 million at five percent.

Panganiban said it was unfortunate that when the DENR made the IRR, it pegged the payment rate at 1 percent. “Unang-una, kawawa naman iyong mga IPs. Sa kanila na iyong lupa na durog na, bibigyan lang sila ng one percent. Nasaan naman iyong puso? The worst case is one percent na nga lang hindi pa binibigay, hindi pa binabayaran,” said Panganiban.

Panganiban said the 20 percent or P398 million in Velasco’s example will be used in the rehabilitation of lands mined, development efforts, and corporate social responsibility, among others.


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