Mining sector amenable to higher, but fair taxes

The mining sector is amenable to the government’s planned higher taxes as long as the move will not put them out of business and not discourage the strong interest by the world’s top mining giants to invest in the country.

Mike Toledo, president of the Chamber of Mines of the Philippines (COMP), confirmed to reporters after the US-Philippines Society press conference Tuesday, Jan. 31, that Finance Secretary Benjamin E. Diokno has initiated a review of the revenue sharing scheme between the government and mining firms.

Toledo said that Diokno has the support of Trade and Industry Secretary Alfredo E. Pascual and Socio Economic Planning Secretary Arsenio Balisacan. In addition, he said, Environment and Natural Resources Secretary Maria Antonia Yulo Loyzaga said that the agency’s decision would be based on data and science.

According to Toledo, Diokno’s proposal, which is still at a committee level in consultation with the private sector, is in recognition that the industry is a “big source of revenue”. He agreed the need for more government revenue to projects, which financing has been hampered by economic difficulties due government’s huge debt due to the pandemic crisis.

“But our taxes are already high, our excise tax is already at four percent, royalty, among others, aside from what we do to the community,” he said.

Thus, he said, the industry is negotiating for what is “just and fair” increase in taxes rate for both the government and industry. He expressed hope that the new tax rates would not put them “out of business.”

The planned increase in mining taxes also comes at a time when prospects are getting better. “Mining looks very bright,” Toledo emphasized.

Without revealing identities of potential investors, Toledo said there are lots of mining companies interested to invest in the country. These firms are interested to venture in nickel and copper mining.

“These are top five in the world,” he said noting the interests come from Canada and Australia.

Other challenges being faced by the industry are the issue of flip flopping of policies and strong voice against mining.

But since the Philippines is very rich in natural resources, Toledo expressed optimism on the government’s hopes of making it big as world’s major supplier of nickel. Demand for nickel is becoming robust in light of the ongoing shift to renewable energy, which fuels demand for electric vehicles (EV).

This means more mining firms will go into nickel, a major component in EV battery, he said.

Thus, he pointed out to the need for more volume in nickel processing in the country on top of the existing operators.

In addition, he said, investors also face high cost of power so it makes sense to provide incentives because putting up a processing plant is not cheap.