Approval soon: Fiscal Regime for Philippine Mining Industry Most mineral resources abundant in the Philippines will continue to be in high demand as the digital economy increases the demand for electronics, Salceda said. There is no better time to maximize our mineral resources than now. https://businessmirror.com.ph/2021/01/05/ok-of-law-seeking-fiscal-rules-for-mining-sought/ OK of law seeking fiscal rules for mining sought January 5, 2021 WITH a digital economy increasing demand for electronics, the chairman of the House Committee on Ways and Means is pushing for the immediate approval of House Bill (HB) 6135 or the Fiscal Regime for the Mining Industry. House Ways and Means Chair Joey Sarte Salceda emphasized the importance of HB 6135, in view of the critical importance of the natural resource trust fund it creates, which could serve as a model for other resource-intensive and resource-seeking industries in the country as well as the opportunities it creates in this global period of higher prices for extracted resources.n his aide memoire to the House leaders, Salceda wrote that gold will continue to be in high demand for as long as the period of post-Covid monetary expansion continues, as the metal is viewed as an inert store of value against inflation. The lawmaker further explained that nickel and copper (and their byproduct, cobalt) are poised to be in greater global demand with the rise of the electric vehicle sector. Most mineral resources abundant in the Philippines will continue to be in high demand as the digital economy increases the demand for electronics, Salceda said. There is no better time to maximize our mineral resources than now. According to the lawmaker, there are two ingredients to maximizing the benefits of mining for the economy: a trust fund that taxes the sector when global prices are high and domestic industries that use up the minerals for higher-value exports during periods of low mineral prices. The problem with the current Philippine mining sector is it exports most of its production instead of linking it with the domestic manufacturing sector, Salceda said. And we do not keep its windfall profits for the future. The lawmaker said this results to straightjacketing mining communities in poverty because the attribution of benefits is not direct, while the economy does not get to maximize value-added.As a result of this policy gap, Salceda said, we mistake it [mining] for a low-value sector. Thats not the right way to view it. The world will always need mining, because there is no digital economy without mining. Every essential part of the digital economy, from data storage to transmission to data generation, uses mineral products. Mining is an essential ingredient to the future, Salceda added. The bill has been approved by the Committee on Ways and Means on January 30, 2020, and has been included in the official business for the plenary since February last year. Under the bill, revenues of margin-based royalties collected from large-scale mining operations shall accrue to a Natural Resource Trust Fund, a special account under the Bureau of Treasury. The trust funds proceeds can be used by local governments where mining operations are located to support educational programs, technological research programs of local relevance, disaster risk management, rehabilitation of abandoned mines, health services programs of communities directly affected by mining activities. Stagnant industry CITING a US State Department paper, Salceda estimated the Philippines to have $840 billion in untapped metallic mineral reserves. The lawmaker estimates that, under current production levels, it will take four centuries before the Philippines realize the potential of its reserves.Without a fiscal regime for mining, this stagnation in the sector will continue, Salceda said. The lawmaker pointed to Executive Order 79, series of 2012, as having prevented the grant of new mineral agreements until a legislation rationalizing existing revenue sharing schemes and mechanisms shall have taken effect. In the past, our approach was to just ignore the whole industry, because we couldnt figure out how to manage it better. In fact, if we use our policymaking tools more wisely, we can also regulate this essential industry better. Salcedas paper cites data that indicates gross production value for metallic resources has remained between P100 billion to 150 billion. At this rate, the country will take 400 years to realize the potential of untapped reservesa waste of opportunity when our stage of development requires rapid economic growth within the next 10 to 20 years, he added. According to him, the country should strive, for one, for a robust ecosystem that has domestically-extracted mineral wealth as an input to higher-value exports. For another, the state should also strive to create a system of capturing surplus value in raw commodity exports during periods of global price hikes, most plausibly through a natural resource trust funds that reserve such value for future use, especially in periods of low global commodity prices.That way, Salceda added, the country benefits from low prices through manufacturing exporters and from high prices through robust public revenues.