Revenue-sharing Plan Confuses Mining Firms

Revenue-sharing plan confuses mining firms

By Othel V. Campos, Manila Standard - http://www.manilastandardtoday.com/?page=business4_july16_2007

16th July 2007

Mining companies with pending application for a Finance or Technical Assistance Agreement are confused over government rules defining the revenue-sharing scheme with private operators.

The FTAA is a mode of mining contract that allows majority foreign equity, and is open to large-scale mining projects with a capitalization of at least $50 million. A new regulation stipulates the benefit-sharing scheme between the FTAA contractor and the government, as owner of minerals.

The Department of Environment and Natural Resources has received 56 applications for FTAA covering several parts of the country. Many companies are also planning to convert their Mineral Production Sharing Agreements to FTAA.

In a dialogue Friday, members of the Chamber of Mines of the Philippines questioned the marketing aspect of the new rules, in which mining firms are being asked for increased transparency in releasing details of their marketing contracts.

“This new fiscal regime, as promulgated in a DENR memorandum order… is a scheme to harmonize profit-sharing of the state, who owns the minerals, and mining companies, who are operators of projects under their respective mining rights,” said chamber president Philip Romualdez.

He said the group would seek the comments of member-companies to assist the department in resolving the issue.

Meanwhile, Environment Secretary Angelo Reyes assured that the department would issue a clearer set of guidelines within the next few weeks.

He said the new rules required government approval on marketing contracts to ensure that the state got a fair share from the mining activity.