Overview of Extractives Industries

ABIGAIL OCATE

Technical ManagerPH-EITI Secretariat

RELEVANT LAWS

Philippine Mining Act of 1995 (RA No. 7942)

Institutionalizing and Implementing Reforms in the Philippine Mining Sector, Providing Policies and Guidelines to Ensure Environmental Protection and Responsible Mining in the Utilization of Mineral Resources (EO 79)

Mineral Industry Statistics

Total operating metallic mines: 41

Gross production value:

Large-scale metallic: 102 billion

Small-scale gold mining: 0.7 billion

Non-metallic mining: 73.6 billion

Contribution to GDP: 0.6%

Metallic contribution to total exports: 4.1%

Contribution to total employment: 0.5%

OVERVIEW OF THE 3rd REPORT

The Report has 2 chapters:

Ch 1: Contextual information about the extractive sector– Legal and institutional framework governing the extractive sector – Summary of Extractive Sector contribution to the economy– Distribution of revenues– Social and economic spendingCh 2: Reconciliation Report and MSG recommendations

(with assessment of progress)– Presents the results of the reconciliation procedures and contains

information on the material revenue streams from the extractive industry

– Recommendations formulated by the PH-EITI MSG

Independent Administrator:

Isla Lipana & Co. PwC Philippines

SCOPE OF THE REPORT

13 revenue streams including 8 mandatoryexpenditures and funds

36 participating companies (31 large-scale metallicmining, 5 oil and gas)

7 government agencies (BIR, MGB, DOE, NCIP, PPA,BOC and DBM)

63 local government units

REVENUE STREAMS

BIR revenue streams (6):

1.Corporate income tax2.Excise tax on minerals3.Withholding tax on foreign shareholder

dividends, on profit remittance to principal and on royalties to claim owners

4.Value added tax on importations

REVENUE STREAMS

DOE – Government share from oil and gas

production

MGB – Royalties from mining operations

BOC – Customs duties

LGU – Business tax and RPT

NCIP – Royalty to IPs

COMPARING THE FIRST THREECOUNTRY REPORTS

1st Report

(FY 2012)

2nd Report

(FY 2013)

3rd Report

(FY 2014)

Number of participating companies 36 36 36

Mining 30 31 31

Oil and gas 6 5 5

Number of reporting government

agencies7 7 7

Number of participating LGUs 32 59 63

Number of covered revenue streams 19 13 13

1. AAM-PHIL Natural Resources Exploration

and Development Corporation

2. Adnama Mining Resources, Incorporated

3. Apex Mining Company, Inc.

4. BenguetCorp Nickel Mines, Inc.

5. Cagdianao Mining Corporation

6. Carmen Copper Corporation

7. Carrascal Nickel Corporation

8. Citinickel Mines and Development

Corporation

9. Filminera Resources Corporation

10. Greenstone Resources Corporation

11. Hinatuan Mining Corporation

12. Johson Gold Mining Corporation

13. Krominco, Inc.

14. Lepanto Consolidated Mining Company

15. Leyte Ironsand Corporation

16. Libjo Mining Corporation

17. LNL Archipelago Minerals, Incorporated

18. Marcventures Mining and Development

Corporation

19. Mt. Sinai Mining Exploration and

Development Corporation

PARTICIPATING COMPANIES

Mining

20. OceanaGold (Philippines), Inc.

21. Ore Asia Mining and Development

Corporation

22. Pacific Nickel Phils., Inc.

23. Philex Mining Corporation

24. Philippine Mining Development

Corporation

25. Philsaga Mining Corporation

26. Platinum Group Metals Corporation

27. Rio Tuba Nickel Mining Corporation

28. Sinosteel Phils. H. Y. Mining Corporation

29. SR Metals, Incorporated

30. Taganito Mining Corporation

31. TVI Resources Development Philippines,

Inc. – Cagdianao (Canatuan)

Mining

1. Chevron Malampaya LLC

2. Galoc Production Company

3. Nido Production Galoc

4. PNOC - Exploration

Corporation

5. Shell Philippines Exploration

B.V.

Oil and Gas

KEY FINDINGS

The Report covers 93% of total revenues in the

mining, oil and gas sectors.

Total reconciled revenue for 2014 (excluding

funds and mandatory expenditures):

PhP 53,852,731,024

KEY FINDINGS

Distribution of Total

Reconciled Collections

KEY FINDINGSMajor Collecting Agencies

• BIR revenue streams (6):1. Corporate income tax

2. Excise tax on minerals

3. Withholding tax on foreign

shareholder dividends, on profit

remittance to principal and on

royalties to claim owners

4. Value added tax on

importations

• DOE revenue stream (1):

Government share from oil and

gas production

• MGB – royalties from mining

operations

• BOC – Customs duties and

VAT

• LGU – Business taxes and

RPT

• NCIP – Royalty to IPs

DOE

BIR

MGB

BOCLGU NCIP

KEY FINDINGS

Agencies with least amount of discrepancy

DOE: PHP 0 (0%)

BOC: PHP 58,962 (0%)

Entities with highest percentage of

unexplained variance

NCIP: PHP 117,136,422 (38.6%)

LGUs: PHP 56,618,678 (17.7%)

PROPORTION OF REVENUE STREAMS

MINING OIL&GAS

Corporate income tax

Royalty on mineral reservation

Excise tax

Withholding tax-Foreign shareholder dividends

Others

Corporate income tax

Government share from oil and gas production

Withholding tax- Profit remittance to principal

DISTRIBUTION OF

LGU RECEIPTS FROM THE

MINING SECTOR

Region VII

Region XIII

Region V

Region II

Region IV-B

Region XI

LGU’s percentage share in total collection:

PHP 320,782,806 (1%)

Highest-collecting LGUs:

Region VII: PHP 79.7m (24.8%)

Region XIII: PHP 74.1m (23.1%)

Region V: PHP 52.4m (18.32%)

NCR does not host any mine project but host most principal offices received 4%

ISO 14001

Companies that are considered compliant as of 20 December 2016 are as follows:

• AAM-Phil Natural Resources Exploration and Development Corporation

• Benguet Corp.

• BenguetCorp. Nickel Mines, Inc.

• Cagdianao Mining Corporation

• Carmen Copper Corp.

• Carrascal Nickel Corporation

• Citinickel Mines and Development Corporation

• Coral Bay Nickel Corporation*

• CTP Construction and Mining Corporation

• Eramen Minerals, Inc.

• FCF Minerals Corporation

• Filminera Resources Corp.

• Greenstone Resources Corp.

• Hinatunan Mining Corp.

• Krominco, Inc.

• Lepanto Consolidated Mining Co.

• LNL Archipelago Minerals, Inc.

• Marcventures Mining and Development Corp.

• Mindanao Mineral Processing and Refining Corporation*

• OceanaGold (Philippines), Inc.

• Philex Mining Corp.

• Philippine Gold Processing and Processing Corp.*

• Philsaga Mining Corporation

• Platinum Group Metals Corporation

• Rio Tuba Nickel Mining Corp.

• SR Metals, Inc.

• Taganito Mining Corp.

• TVI Resource Development, Inc.

• Westernshore Nickel Corp.