Mining Comparative Guide

1 Legal and regulatory framework

1.1 Which legislative and regulatory provisions govern mining in your jurisdiction?

The Philippine mining industry is governed by:

• the Philippine Constitution;
• pertinent laws passed by Congress; and
• regulations issued by administrative agencies such as:
• • the Department of Environment and Natural Resources (DENR); and
  • the Mines and Geosciences Bureau (MGB)

Under the Constitution:

• the state owns all natural resources, including minerals; and
• the exploration, development and utilisation of mineral resources are under the control and supervision of the state.

The state may directly undertake mining activities or enter into co-production, joint venture or production sharing agreements with Filipino citizens or entities – the latter of which are defined as corporations or associations with at least 60% capital being owned by Filipino citizens. Furthermore, the president of the Philippines may also enter into agreements with foreign-owned corporations involving either technical or financial assistance for large-scale exploration, development and utilisation of minerals, petroleum and other mineral oils.

The principal mining laws in this jurisdiction are:

• Republic Act 7942, the Philippine Mining Act of 1995; and
• DENR Administrative Order 2010-2, the Revised Implementing Rules and Regulations of the Mining Act.

Mining companies must likewise comply with:

• their respective mineral agreements;
• the ordinances of the concerned local government units at the places where they operate; and
• the regulatory requirements and submissions for corporations.

1.2 When was the mining legislation last reviewed?

The DENR began a review of the Mining Act in 2023. During her speech before the Philippine Mining Club in March 2023, the DENR secretary explained that the review of the Mining Act and related laws is intended to address gaps in the procedures in relation to the economic and financial impact of mining on the Philippines. It has been reported that the ongoing review of the Mining Act is a rolling one being undertaken by the DENR with all other environmental laws and in consultation with other government agencies and concerned stakeholders.

To date, however, there have been no formal revisions to the Mining Act.

1.3 What other legislative and regulatory provisions have relevance for mining operations in your jurisdiction?

Other relevant laws include the following:

• Republic Act 7076, the 1991 People's Small-Scale Mining Act, which aims to promote the development of small-scale mining in the Philippines while minimising the adverse environmental impact of mining activities;
• Republic Act 8371, the Indigenous People's Rights Act (IPRA), which safeguards the priority rights of indigenous cultural communities/indigenous peoples to their ancestral lands;
• Republic Act 6969, the Toxic Substance and Hazardous and Nuclear Wastes Control Act, which regulates the import, manufacture, processing, sale, distribution, use and disposal of chemical substances that present unreasonable risk to the health of the populace or to the environment;
• Republic Act 8749, the Clean Air Act of 1999, which is the state's comprehensive air quality management policy and programme;
• Republic Act 9275, the Philippine Clean Water Act of 2004, which aims to protect the Philippines' bodies of water from pollution from land-based sources (industries and commercial establishments, agriculture and community/household activities). It provides for a comprehensive and integrated strategy to prevent and minimise pollution through a multi-sectoral and participatory approach involving all stakeholders; and
• Presidential Decree 1586, the Act Establishing an Environmental Impact System, Including Other Environmental Management Related Measures and for Other Purposes, which provides the legal and procedural framework for conducting environmental impact assessments (EIAs). The EIA system was designed to safeguard the Philippine environment and natural resources in the face of growing industrialisation and urbanisation.

1.4 Are there any regional treaties or laws that need to be taken into account?

The Philippines is not a party to any international treaties or conventions that specifically apply to mining. The Philippines, however, has bilateral investment agreements and tax treaties with other countries and economic unions that may be used by foreign entities to efficiently structure their operations.

The Philippines has signed bilateral investment agreements with the following countries:

• Argentina;
• Australia;
• Austria;
• Bahrain;
• Bangladesh;
• the Belgium-Luxembourg Economic Union;
• Cambodia (not in force);
• Canada;
• Chile;
• China;
• the Czech Republic;
• Denmark;
• Finland;
• France;
• Germany;
• India;
• Indonesia (not in force);
• Iran (not in force);
• Israel (not in force);
• Italy;
• Korea;
• Kuwait;
• Laos;
• Mongolia;
• Myanmar;
• the Netherlands;
• Pakistan (not in force);
• Portugal;
• Romania;
• Russia (not in force);
• Saudi Arabia;
• South Korea;
• Spain;
• Sweden (not in force);
• Switzerland;
• Syria;
• Taiwan;
• Thailand;
• Turkey;
• the United Arab Emirates (not in force);
• the United Kingdom;
• the United States; and
• Vietnam.

Likewise, the Philippines has executed tax treaties with the following nations:

• Australia;
• Austria;
• Bahrain;
• Bangladesh;
• Belgium;
• Brazil;
• Canada;
• China;
• the Czech Republic;
• Denmark;
• Finland;
• France;
• Germany;
• Hungary;
• India;
• Indonesia;
• Israel;
• Italy;
• Japan;
• Kuwait;
• Malaysia;
• Mexico;
• the Netherlands;
• New Zealand;
• Nigeria;
• Norway;
• Pakistan;
• Poland;
• Qatar;
• Romania;
• Russia;
• Singapore;
• South Korea;
• Spain;
• Sri Lanka;
• Sweden;
• Switzerland;
• Thailand;
• Turkey;
• the United Arab Emirates;
• the United Kingdom;
• the United States; and
• Vietnam.

The aforementioned investment agreements generally include:

• a prohibition on the expropriation of investments in the Philippines of nationals or permanent residents of a contracting state; and
• an obligation to accord fair and equitable treatment to foreign investors and investments.

1.5 Which bodies are responsible for enforcing the applicable mining laws and regulations? What powers do they have?

Under Executive Act 192, the DENR is the agency responsible for the conservation, management, development and proper use of the country's environment and natural resources, including mineral resources. Under Section 5, the powers and functions of the DENR include:

• formulating and implementing the government's policies and programmes on the management, conservation, development, use and replenishment of the country's natural resources;
• promulgating rules and regulations governing the exploration, development, conservation, extraction, disposition, use and other activities which cause the depletion and degradation of natural resources;
• exercising supervision and control over mineral resources, among other things, and imposing and collecting appropriate fees and charges for the exploration, development, utilisation or gathering of such resources;
• promulgating rules and regulations to achieve its mandate, including in order to:
• • expedite mineral resources surveys;
  • promote the production of metallic and non-metallic minerals; and
  • encourage mineral marketing;
• regulating the development, disposition, extraction, exploration and use of the country's mineral resources; and
• exercising such other powers and functions as may be necessary, proper or incidental to the attainment of its mandates and objectives.

Under the DENR are two line bureaus:

• the MGB; and
• the Environmental Management Bureau (EMB).

The MGB is responsible for:

• the proper management and disposition of mineral lands and mineral resources; and
• the promotion of sustainable mineral resources development.

Among other things, the EMB:

• sets air and water quality standards and monitors ambient and point source pollutants;
• manages hazardous and toxic waste; and
• implements the EIA system.

1.6 What is the regulators' general approach in regulating the mining sector?

Generally, regulatory agencies take their cue from the incumbent administration.

The Constitution mandates that the state protect and advance the right of the Philippine people to a "balanced and healthful ecology in accordance with the rhythm and harmony of nature". Thus, the state must balance its duties to regulate the mining industry and protect the environment. Harmonising these responsibilities can occasionally lead to imbalances. Previously, there was a national ban on open-pit mining and a nine-year moratorium on new mineral agreements, which were only lifted in 2021.

The incumbent president has stated that mineral exploration and extraction are important to his economic plans. His strong support has renewed interest in the Philippine mining industry.

Consistent with this, the DENR is taking steps to improve efficiency in the processing of mining permits. It aims to fully digitise exploration permits and mineral production sharing agreement applications. There are also efforts to digitise MGB data and streamline procedures to reduce processing time. The DENR is also working with other government agencies to implement the parallel processing and approval of permits in order to expedite the process.

In this regard, the Anti-Red Tape Authority is collaborating with the DENR to streamline the permitting process across government offices. It is standardising regulatory fees, including those the local level.

The National Commission on Indigenous Peoples is also addressing issues in the mining sector by:

• reviewing the current free, prior and informed consent (FPIC) guidelines; and
• considering a single FPIC that covers all stages of the mining process (see also question 4.6).

2 Mining industry

2.1 How mature is the mining industry in your jurisdiction?

The Philippines is one of the world's most richly endowed mineral resources countries. It is estimated to have about $1 trillion worth of untapped copper, gold, nickel, zinc and silver reserves. However, only 5% of these reserves have been explored and just 3% are covered by mining contracts. Moreover, recent reports from the Mines and Geosciences Bureau (MGB) show that there are only 56 operating metallic mines, 59 operating non-metallic mines and seven processing plants/smelters in the country.

However, dramatic growth in the mining industry is expected because of President Marcos' pro-mining policies. The current administration has publicly stated that it advocates responsible and sustainable mining practices, striking a balance between:

• protecting the environment;
• benefiting local communities; and
• supporting the government's socioeconomic agenda.

This is a welcome signal to potential investors and businesses interested in the country's vast resources at a time when mineral prices are high and demand for critical minerals is strong.

2.2 What are the key minerals which are mined in your jurisdiction and where is mining activity typically based?

The major mining products of the Philippines are:

• copper;
• gold;
• cobalt;
• nickel;
• calcite;
• chromite;
• feldspar;
• gypsum;
• iron;
• mica;
• quartz; and
• sulphur.

Much of the country's mining activities are focused on the provinces of:

• Nueva Vizcaya;
• Benguet;
• Cebu;
• Compostela Valley;
• Davao;
• Masbate;
• Palawan; and
• Surigao.

2.3 Are any minerals deemed strategic and, if so, what impact does this have?

Based on data from the MGB, significant deposits of critical minerals such as copper, gold, nickel, zinc and silver are located in the Philippines. Industry projections forecast a 230% increase in global demand for copper, nickel and other critical minerals driven by the widespread adoption of renewable energy sources. Certain critical minerals – lithium, cobalt, copper and graphite – are fundamental to the manufacture and development of batteries for both the electric vehicle and the renewable energy industries. Domestically, the current administration is pushing for the development of the electric vehicle industry in the Philippines. The president has ordered the relevant government agencies to expedite the implementation of the various approved action plans to achieve this. This includes instructing the Department of Energy to study the integration of the electric vehicle industry to develop local manufacturing and supporting battery charging mechanisms.

2.4 Who are the key players in the mining industry in your jurisdiction?

Sagittarius Mines, Inc (SMI): SMI is the proponent of the Tampakan Copper/Gold Project, which spans four provinces:

• South Cotabato;
• Davao del Sur;
• Sultan Kudarat; and
• Sarangani.

Its development is a national government priority project.

All government permitting has been completed and the Tampakan Project is expected to start operation in 2026. Once operational, it will be the largest mine in the Philippines and one of the largest copper mines in the world, with an estimated 15 million tons of copper and 17.6 million tons of gold.

Silangan Mindanao Mining Co, Inc: Silangan Mindanao Mining Co, a subsidiary of Philex Mining Corporation, is developing the Silangan Project – an underground mine located in Surigao del Norte. An in-phase mine plan feasibility study was completed in January 2020 and Philex Mining Corporation has reportedly raised the $70 million required to develop the Silangan Project. Operations are expected to begin in the first quarter of 2025.

St Augustine Gold & Copper Ltd: St Augustine Gold & Copper is the developer of the King-king copper-gold mine located in Davao d Oro. It is projected to supply 3.16 billion pounds of copper and 5.34 million ounces of gold over its 25-year lifetime.

2.5 In addition to exploration rights and mining rights, what other mining rights and titles exist (eg, artisanal or small-scale mining rights)?

Small-scale mining is permitted under the Small-Scale Mining Act. Small-scale mining:

• is limited to Filipino citizens;
• is restricted to the use of simple implements and methods instead of explosives or heavy equipment; and
• may only be conducted in established people's small-scale mining areas.

The Small-Scale Mining Act also requires small-scale miners to adopt environmentally sound methods of mining and other appropriate measures to minimise the impact of their mining activities on the environment.

3 Exploration rights

3.1 What licences are required to undertake prospecting and exploration activities in your jurisdiction? Do these vary depending on the type of mineral or the location of the activity?

An exploration permit is required to undertake exploration activities. The issuance of an exploration permit and the manner in which it is procured are not dependent on the type of mineral involved or the location of the activity. By virtue of an exploration permit, the holder acquires mining rights over a specific area and has the right to conduct exploration for all minerals for a period of six years, extendable for another two years; the total term may not exceed eight years for metallic mineral exploration. The holder of the exploration permit has the first option to develop and utilise the minerals discovered within this specified area and subject to the approval of the declaration of mining project feasibility. Furthermore, all exploration activities should be based on a work programme approved by the Mines and Geosciences Bureau (MGB).

3.2 What requirements must be satisfied to obtain a licence?

An applicant for an exploration permit must be a 'qualified person', defined as:

A 100%-owned foreign corporation is qualified to hold:

• an exploration permit;
• a financial or technical assistance agreement (FTAA); or
• a mineral processing permit.

3.3 What is the procedure for obtaining a licence? How long does this typically take?

An exploration permit application must be filed with the MGB regional office, subject to the submission of the following, among other requirements:

• a location map/sketch plan of the permit area;
• a two-year exploration work programme;
• proof of technical competence and financial capability;
• a certificate of environmental management and community relations record (CEMCRR)/certificate of exemption;
• an environmental work programme (EWP);
• a National Commission on Indigenous Peoples certification precondition; and
• such other supporting documents as the MGB may require

3.4 Who can own exploration rights in your jurisdiction? Do specific requirements or restrictions apply to foreign operators?

Please see question 3.2.

3.5 What fees and other charges are incurred in obtaining a licence?

Department of Environment and Natural Resources (DENR) Department Administrative Order (DAO) 2005-08, Providing for New Fees and Charges for Various Services of the Mines and Geosciences Bureau sets out the following fees and charges, among others:

• Applications for exploration permits and mineral agreements: PHP 60 per hectare or fraction thereof but not less than PHP 50,000 per application.
• Applications for financial or technical assistance agreements (FTAAs): PHP P60 per hectare or fraction thereof but not less than PHP 100,000 per application.
• Clearance fee: PHP 5,000 per application.
• Registration fee:
• • PHP 5,000 per permit for exploration permits.
  • PHP 20,000 per contract for mineral agreements.
  • PHP 50,000 per contract for FTAAs.
• Occupation fee (for exploration permits, mineral agreements and FTAAs):
• • Mineral reservation areas: PHP 100 per hectare or fraction thereof.
  • Non-mineral reservation areas: PHP 75 per hectare or fraction thereof.
• Evaluation of the feasibility study report/environmental protection and enhancement programme (EPEP): PHP 20,000 per study report or EPEP.
• Application for CEMCRR: PHP 5,000 per application.

The above are the basic charges and do not include:

• fees related to conversion from an exploration permit to a mineral agreement or FTAA; or
• assignment/transfer fees.

3.6 What is the duration of a licence? What is the process for renewal?

Please see question 3.1 for the term of an exploration permit.

In 2021, the DENR issued DAO 2021-12, covering all exploration permits, mineral production sharing agreements (MPSAs), FTAAs and other similar mining tenements under the exploration stage.

Under DAO 2021-12, the exploration period under MPSAs and FTAAs (and other similar mining tenements), as well as exploration permits, is automatically renewed without the need to file applications for renewal. However, contractors/holders of the tenements must submit certain requirements as enumerated in DAO 2021-012, including a renewal fee, within 60 days of the expiration of the exploration period of the tenement or the exploration permit, as the case may be. If the holder of the exploration permit fails to file a declaration of mining project feasibility (DMPF) during the eight-year period, the permittee may apply for further renewal of the permit, subject to the approval of the secretary of environment and natural resources. If the permit expires before the DMPF is approved and the mineral agreement or FTAA application is filed, it is automatically extended until the mineral agreement or FTAA application is approved. In the event of a failure to file the application or to secure the approval of the DMPF within the prescribed period, the exploration permit is relinquished and the area that is the subject of the exploration permit will be immediately opened to new mining applications.

3.7 What are the operator's rights and obligations under the licence?

Section 23 of the Mining Act sets out the general rights and obligations of an exploration permit holder. The holder of an exploration permit, and heirs or successors-in-interest, have the right to enter, occupy and explore the area subject of the exploration permit. However:

• if private or other parties are affected, the permit holder will first discuss with those parties the extent, necessity and manner of their entry, occupation and exploration; and
• in case of disagreement, a panel of arbitrators will resolve the conflict or disagreement.

The permit holder must undertake exploration work on the area that is the subject of the exploration permit as specified by its permit based on an approved work programme. Any expenditure in excess of the yearly budget of the approved work programme may be carried forward and credited to the succeeding years covering the duration of the permit.

The holder of an exploration permit may apply for a mineral agreement, such as an MPSA or FTAA, over the area that is the subject of the exploration permit. The application will be granted if the permittee meets the necessary qualifications and the terms and conditions of any such agreement, and the exploration period covered by the exploration permit will be included as part of the exploration period of the mineral agreement or FTAA.

3.8 Are there any requirements re relinquishment of an exploration licence or part of the area covered by an exploration licence?

The holder of an exploration permit must annually relinquish:

• at least 20%of the permit area during the first two years of exploration; and
• at least 10% of the remaining permit area annually during the extended exploration period.

However, if the permit area is less than 5,000 hectares, the holder of an exploration permit need not relinquish any part thereof.

3.9 Can licences be transferred? If so, how and subject to what consents? Do any restrictions or taxes apply to direct or indirect transfers?

Yes. Under Section 25 of the Mining Act, an exploration permit may be transferred or assigned to a qualified person subject to the approval of the secretary of environment and natural resources upon the recommendation of the director of the MGB.

3.10 Does an exploration licence give any priority when applying for a mining right?

Please see question 3.7.

4 Mining rights

4.1 How is ownership of mining rights determined in your jurisdiction?

Private parties may acquire mining rights through:

• an exploration permit;
• a mineral agreement; or
• a financial or technical assistance agreement (FTAA).

A mineral agreement grants the holder exclusive rights to conduct mining operations and to extract all mineral resources discovered within the area specified in the agreement. A mineral agreement may be:

• a mineral production sharing agreement (MPSA);
• a co-production agreement; and
• a joint venture agreement.

An FTAA grants the holder the right to provide financial or technical assistance directly to the government to undertake large-scale exploration, development and utilisation of minerals.

4.2 What are the key requirements in order to apply for a mining right?

To be granted a mineral agreement, the applicant must be determined to be a qualified person (please see question 3.2). The key documents for a mineral agreement are as follows:

• corporate documents;
• a location map/sketch plan;
• a three-year development/utilisation work programme;
• proof of technical competence and financial capability;
• a mining project feasibility study;
• a final exploration report;
• an environmental report;
• an approved survey plan;
• an environmental compliance certificate (ECC);
• an environmental protection and enhancement programme (EPEP);
• a certificate of environmental management and community relations record (CEMCRR); and
• a National Commission on Indigenous Peoples (NCIP) certificate precondition.

FTAAs are likewise reserved for qualified persons, including foreign companies, which are determined to have the technical and financial capability to undertake large-scale exploration, development and utilisation of mineral resources, with a minimum investment of:

• $50 million for infrastructure and development; and
• minimum authorised capital stock of $10 million.

The key documents required for the issuance of an FTAA are as follows:

• corporate documents;
• a location map/sketch plan;
• a two-year exploration work programme;
• proof of technical competence and financial capability;
• a financial guarantee/performance bond and letter of credit;
• a CEMCRR;
• an environmental work programme;
• an approved survey plan;
• an ECC;
• an EPEP;
• a social development and management programme; and
• a NCIP certificate precondition.

4.3 What fees and other charges are incurred in obtaining a mining right?

Please see question 3.5.

4.4 What is the duration of a mining right? What is the process for renewal?

A mineral agreement has a term of up to 25 years and is renewable for up to another 25 years under the same terms and conditions, without prejudice to changes mutually agreed upon by the government and the contractor. Likewise, an FTAA has a term of up to 25 years and may be renewed for a further term not exceeding 25 years under such terms and conditions as may be provided by law and mutually agreed by the parties.

Much like exploration permits (please see question 3.6), the exploration periods of mineral agreements and FTAAs are also automatically renewed without the need for an application, subject only to:

• the submission of the requirements under Department Administrative Order 2021-12; and
• payment of the renewal fee.

4.5 Who can own mining rights in your jurisdiction? Do specific requirements or restrictions apply to foreign operators?

As discussed in questions 3.2 and 4.2, pursuant to the Philippine Constitution, only Filipino citizens – including corporations whose capital is at least 60% owned by Filipino citizens – may enter into mineral agreements. Non-Filipino nationals or corporations that are 100% foreign-owned may secure exploration permits and enter into FTAAs as long as they:

• are qualified persons; and
• have met the requirements for the large-scale exploration, development and utilisation of gold, copper, nickel, chromite, lead, zinc and other minerals, except for cement raw materials, marble, granite, sand and gravel and construction aggregates.

4.6 Do any indigenous ownership requirements apply in your jurisdiction?

The Philippine Constitution and the Indigenous People's Rights Act (IPRA) afford priority rights to indigenous cultural communities (ICCs)/indigenous peoples (IPs) over their ancestral lands. Under the IPRA, ICCs/IPs are entitled to a share in the benefits from mineral resources exploration, development and utilisation in their ancestral domains. Furthermore, the Mining Act and the IPRA require that mining operators:

• secure the free prior and informed consent of ICCs/IPs before carrying out mining operations on ancestral lands; and
• pay royalties of no less than 1% of the value of gross output of minerals sold by the pertinent mining operator.

4.7 What role does the state play in the mining industry in your jurisdiction?

All natural resources are owned by the state and all mining operations are carried out with the approval and under the regulation of the state.

4.8 Are there requirements for the government to enter into a mining development (or similar) agreement in addition to the licences/permits? When is this required or available?

No, there are no requirements for the Philippine government to enter into mining development or similar agreements aside from those outlined in questions 3.3 and 4.2.

However, under the Department of Environment and Natural Resources is the Philippine Mining Development Corporation (PDMC), which is primarily tasked with exploring, developing, mining, smelting, producing, transporting, storing, distributing, exchanging, selling, disposing, importing, exporting, trading and promotion of:

• gold;
• silver;
• copper;
• iron; and
• all kinds of mineral deposits and substances.

While the original mandate focused on resolving conflicts in Diwalwal, where small-scale mining is prevalent, PMDC is also responding to the challenges of revitalising the Philippine mining industry. It does not compete with privately owned mining projects, but positions itself as a catalyst for the development of mining projects in areas which private investors find difficult to enter.

4.9 Can mining rights be transferred? If so, how and subject to what consents? Do any restrictions or taxes apply to direct or indirect transfers?

Under Section 30 of the Mining Act, mineral agreements may be assigned or transferred, subject to the approval of the secretary of environment and natural resources. Under Section 40 of the Mining Act, FTAAs may be transferred, in whole or in part, to another qualified person subject to the approval of the president and notification thereof to Congress.

4.10 Can security be taken over mining rights?

Yes – subject to government approval, rights granted under an exploration permit, an MPSA or an FTAA may be mortgaged to secure mine financing. In such cases, the creditor may designate its assignee of the rights in the event of default, provided that:

• such assignee is a qualified person; and
• the assignment is approved by the secretary of environment and natural resources.

4.11 What provisions apply with regard to closure or abandonment of a mining right?

The Mining Act and the Revised Implementing Rules and Regulations of the Mining Act require that all mining operators have a duly approved final mine rehabilitation and/or decommissioning plan (FMRDP) integrated into the EPEP (please see question 4.2) containing the transition programmes of the mining contractor from active mining to eventual mine closure and rehabilitation of excavated, mined-out and disturbed areas. The FMRDP contemplates the following over a 10-year period:

• the mine's closure scenarios and related costs, including maintenance and monitoring; and
• employee and other social costs, including residual care, if necessary.

The state has likewise established an environmental guarantee fund mechanism, known collectively as the 'contingent liability and rehabilitation fund', which comprises:

• a mine rehabilitation fund (MRF);
• mine waste and tailings fees; and
• a final mine rehabilitation and decommissioning fund (FMRDF).

Failure to establish an MRF or an FMRDF is sufficient grounds to suspend or cancel the mining operations in the mining areas.

5 Surface rights

5.1 Does the law of your jurisdiction distinguish between mining rights and surface rights? If so, how does an owner of mining rights acquire surface rights?

The state has full control and supervision of mining rights and, thus, owners of the corresponding surface rights do not automatically have rights over mineral resources found within their property. Conversely, exploration permit, mineral agreement and financial or technical assistance agreement (FTAA) holders only have exploration and mining rights but no title over their respective mining areas. However, under the Mining Act, they likewise have certain easement rights. They may, upon written notice and payment of just compensation to the surface owners, enter, occupy and explore their assigned mining areas. These easement rights prevent surface owners from denying exploration permit, mineral agreement and FTAA holders, as the case may be, from entering their contract areas.

5.2 Where surface rights are acquired, what are the operator's rights and obligations as regards the landowner? And what are the landowner's rights and obligations as regards the operator?

Please see question 5.1.

5.3 Please give an overview of the process for any mandatory acquisition of surface rights (eg, process and time to enforce).

The process and timeline for the acquisition of surface rights by the holder of an exploration permit, mineral agreement or FTAA will depend on the bilateral negotiations of the parties. If the parties cannot agree on the amount of just compensation or if surface rights holders refuse to allow permit holders entry into the mining area, the matter will be referred to the Panel of Arbitrators – the body created under the Mining Act which has exclusive and original jurisdiction to hear and decide disputes involving:

• rights to mining areas;
• holders of mineral agreements, FTAAs or permits; and
• surface owners, occupants and claim holders or concessionaires.

5.4 Are any native title issues applicable, either at the exploration licence stage or when a mining right is issued?

Please see question 4.6.

5.5 Are any other rights needed to use the land (eg, zoning permissions or planning requirements)?

As stated in question 1.1, exploration permit, mineral agreement and FTAA holders must comply with the ordinances of the concerned local government units within which they operate.

6 Environmental issues

6.1 What environmental authorisations are required to undertake prospecting, exploration and mining activities in your jurisdiction? Do these vary depending on the type of mineral or the location of the activity?

The proponent of a mining project must secure the following:

• an environmental compliance certificate (ECC), which is subject to the submission of an environmental impact statement that includes:
• • baseline environmental conditions;
  • impact assessments; and
  • proof of consultation with stakeholders;
• a certificate of environmental management and community relations record, which shows the operator's past environmental record;
• an environmental work programme (EWP), which sets out the operator's strategies/plans for environmental protection and enhancement;
• an environmental protection and enhancement programme (EPEP), which operationalises the operator's commitments in light of its ECC and its environmental impact statement; and
• a final mine rehabilitation and/or decommissioning plan (FMRDP) (see question 4.11).

6.2 What environmental obligations must the operator observe while the mine is operational?

An operator must comply with:

• the environmental laws listed in question 3.1;
• the strategies contained in its EWP;
• the conditions contained in its ECC; and
• the provisions of its EPEP and FMRDP.

6.3 What environmental obligations must the operator observe in relation to closure of the mine?

Please see question 4.11.

6.4 What are the potential consequences of breach of these requirements – both for the operator itself and for directors, managers and employees?

Please see question 4.11.

6.5 Which bodies are responsible for enforcement of environmental obligations?

Please see question 1.5.

6.6 What is the regulators' general approach in regulating the mining sector from an environmental perspective?

Please see question 1.6.

7 Health and safety

7.1 What key health and safety requirements apply to operators in your jurisdiction?

The Mining Act and the Revised Implementing Rules and Regulations of the Mining Act set out the principal health and safety requirements for the mining industry. Specifically, the Mining Act requires that all exploration permit, mineral agreement and financial or technical assistance agreement (FTAA) holders comply with Department of Environment and Natural Resources (DENR) Department Administrative Order (DAO) 2000-98 on Mine Safety and Health Standards, which provides rules for the safe and sanitary upkeep of mining operations. In addition, the Philippine Labour Code sets out health and safety regulations that apply to all workplaces, including those in the mining sector.

Generally, most mining permits contain a stipulation that the holder will comply with labour laws and safety and health standards. The Mines and Geosciences Bureau (MGB) also:

• requires exploration permit, mineral agreement and FTAA holders to submit annual safety and health programmes which the MGB monitors; and
• conducts safety inspections of all mining operations.

7.2 What reporting requirements apply with regard to mining accidents in your jurisdiction?

Under DAO 2000-98, a record must be kept of all occupational accidents and illnesses occurring in a mine in the form prescribed by the MGB. Furthermore, accidents in a mine resulting in the death of, or serious physical injury to, one or persons must be reported by the employer to the MGB within 24 hours, with a detailed report thereon to be submitted within 15 days. When any physical injuries result in death, this must be reported to the MGB without delay.

Likewise, all employers – not just mining companies – must submit an employer's work accident or injury report (WAIR) for every accident or illness to the Department of Labour and Employment (DOLE). In fact, pursuant to Labour Advisory 07, Series of 2022, all employers must submit a WAIR to the DOLE on the 30th of the month with or without any accident or illness to report. Furthermore, Rule 1050 of the Philippine Occupational and Safety and Health Standards requires all employers to report all work accidents and occupational illnesses resulting in disabling conditions to the pertinent DOLE regional office.

7.3 What are the potential consequences of breach of these requirements – both for the operator itself and for directors, managers and employees?

DAO 2000-98 provides that any employee who violates the provisions of this order, commits any unsafe act or endangers himself or herself, other persons or property will, on the initiative of his or her employer or upon recommendation of the MGB, be subject to disciplinary action. In case of refusal to do so by the employer, the MGB will act on the matter accordingly. If the employer violates any provisions of DAO 2000-98, the order provides for a series of fines for violations thereof.

7.4 What best practices in relation to health and safety should operators consider adopting in your jurisdiction?

Generally, operators should comply with:

• the requirements of DAO 2000-98; and
• the applicable provisions of the Philippine Labour Code, including the Philippine Occupational and Safety and Health Standards.

7.5 Which bodies are responsible for enforcement of health and safety obligations?

The MGB and DOLE.

7.6 What is the regulators' general approach in regulating the mining sector from a health and safety perspective?

Please see question 1.6.

8 Processing, refining and export

8.1 What requirements and restrictions apply with regard to the processing or refining (beneficiation) or minerals?

An interested party must secure a mineral processing permit which grants a qualified person the right to engage in the processing/refining of minerals – that is, milling, beneficiation, leaching, smelting, cyanidation, calcination or upgrading of:

• ores;
• minerals;
• rocks;
• mill tailings;
• mine waste; and/or
• other metallurgical by-products.

8.2 What requirements and restrictions apply to the export of minerals?

There is no regulation that requires minerals locally extracted to be processed and/or sold in the Philippines. However, the government requires that the exporter secure the necessary transport and export permits. Furthermore, the government examines all sales and exportation of minerals and/or mineral products, including the terms and conditions thereof. To engage in mineral trading, the concerned party must:

• register with the Department of Trade and Industry; and
• be accredited by the Department of Environment and Natural Resources (DENR).

Marketing contracts and sales agreements involving the commercial disposition of minerals and by-products are subject to approval by the DENR upon recommendation of the Mines and Geosciences Bureau. In addition, such sales must be made at the highest commercially achievable market price and the lowest commercially achievable commissions and related fees under the prevailing circumstances. Sales terms and conditions must be compatible with world market conditions.

9 Taxes and royalties

9.1 What taxes, royalties and similar charges are levied on mining operators in your jurisdiction? How are these calculated?

Mining companies are subject to:

• income taxes;
• excise taxes;
• value added tax;
• documentary stamp taxes;
• customs duties;
• annual local business taxes; and
• real property tax.

The contractor must likewise pay:

• an annual occupation fee, based on the area occupied; and
• mine waste and tailing fees.

The government share in mineral production sharing agreements (MPSAs) is the 4% excise tax on the mineral product based on the actual market value of the gross output thereof at the time of removal. The government's share in co-production and joint venture agreements will be negotiated with the contractor considering:

• the capital investment;
• the risks involved;
• the contribution to the economy; and
• other factors.

The government will also be entitled to compensation for its other contributions, as agreed upon by the parties.

The government share in FTAAs is negotiated by the government and the contractor and consists of, among other things:

• the contractor's income tax;
• duties and fees on imported capital equipment;
• excise tax on minerals;
• royalties for mineral reservations and to indigenous peoples;
• local business tax; and
• other applicable royalties and fees.

Please refer to question 4.6 for royalties due to indigenous cultural communities/indigenous peoples.

Under the Small-Scale Mining Act, if an indigenous peoples' small-scale mining area is covered by an existing mining right, the small-scale miners may be required to pay royalties to the mining claim owner. Mining operations within mineral reservations are subject to a royalty paid to the Mines and Geosciences Bureau of not less than 5% of the market value of the gross output of the minerals or mineral products extracted or produced, exclusive of all other taxes.

9.2 Are any tax incentives available for mining operators?

Mining companies may avail of fiscal and non-fiscal incentives under the Mining Act and incentives for capital equipment under the Omnibus Investments Code, upon prior registration with the Board of Investments under its Investments Priorities Plan.

9.3 What other strategies might mining operators consider to mitigate their tax liabilities?

It is difficult, at this time, to advise on mitigation of tax liabilities for mining operators considering that there appear to be looming changes to the existing fiscal regime (please see question 9.4). Indeed, the Department of Finance has long advocated:

• a simplification of the existing mining fiscal regime from multiple regimes (ie, the fiscal regimes for MPSA holders within mineral reservations versus outside of mineral reservations versus that of FTAA holders); and
• the application of the ring fencing rule, such that a mining operator (ie, the same taxpayer) may not consolidate the income and expenses of all its mining projects preventing that operator from deducting losses from other mining projects from the more profitable ones.

This is a facet of the Philippine mining industry that must be closely monitored moving forward as the country attempts to re-energise the mining sector and Congress reviews the existing fiscal regime.

9.4 Have there been any significant changes to the taxation rates applicable to mining companies in the last three years?

Please see question 9.3.

While there have been no significant changes, the House of Representatives passed House Bill 8937 on 26 September 2023, which provides for differing tax rates on large-scale mining operations depending on whether the mining operations take place within mineral reservations or outside mineral reservations:

• Mining within mineral reservations is subject to a flat rate of 4% of the gross output; and
• A graduated margins-based royalty rate based on an eight-tier structure, with the topmost margin subject to a rate of 10% of gross output, is applied to mining operations outside mineral reservations.

Small-scale metallic operations are subject to a royalty rate of 1/10th of 1% of gross output. The bill also calls for a margins-based windfall profits tax ranging from 1% to 10%. The House of Representatives says that this simplified system will make the industry more attractive to investors. The Senate has yet to pass its own mining fiscal regime bill, but is currently considering adopting without amendment the House of Representativess' version of the bill.

10 Disputes

10.1 In which forums are mining disputes typically heard in your jurisdiction?

As stated in question 5.3, the Panel of Arbitrators is the body created under the Mining Act which has exclusive and original jurisdiction to hear and decide disputes involving:

• rights to mining areas;
• holders of exploration permits, mineral agreements and FTAAs; and
• surface owners, occupants and claim holders or concessionaires.

Decisions of the Panel of Arbitrators may be appealed to the Mines Adjudication Board and in turn to the Court of Appeals. Disputes falling outside the jurisdiction of the Panel of Arbitrators fall within the jurisdiction of the regular courts.

Administrative decisions of the Department of Environment and Natural Resources (DENR), the Environmental Management Bureau and the Mines and Geosciences Bureau may be appealed to the Office of the President. Further recourse may be made to the courts via the Court of Appeals and then the Supreme Court.

10.2 What issues do such disputes typically involve? How are they typically resolved?

As stated in questions 5.3 and 10.1, the Panel of Arbitrators has exclusive and original jurisdiction to decide disputes involving:

• rights to mining areas;

• holders of exploration permits, mineral agreements, FTAAs; and
• surface owners, occupants and claim holders or concessionaires.

Decisions of the Panel of Arbitrators may be appealed, within 15 days of receipt of notice, to the Mines Adjudication Board. Decisions and final orders of the Mines Adjudication Board may be appealed to the Court of Appeals.

10.3 Have there been any recent cases of note?

A recent ruling of note is the Court of Appeals 2022 decision in Blaan Indigenous Cultural Communities v Provincial Government of South Cotabato, CA-GR 05863-MIN (22 August 2022), which upheld a ban on open-pit mining contained in the Environmental Code of the province of South Cotabato (located on the island of Mindanao in the Southern Philippines), but only with regard to small-scale mining operations. In other words, the ban does not apply to large-scale mining.

This decision is of note because the Tampakan Project (please see question 2.4) is located partially in the province of South Cotabato and was delayed for several years because of the ban. Following the Court of Appeals decision, which was not appealed by the provincial government of South Cotabato, the Tampakan Project is expected to start operations in 2026.

11 Trends and predictions

11.1 What changes have there been to the mining landscape in your jurisdiction in the last five years?

One of the major changes has been the current administration's openness to, if not advocacy of, the mining industry. This comes on the heels of the lifting in 2021 of both the ban on open-pit mining and the moratorium on new mineral agreements. The president has publicly stated that mineral exploration and extraction are important to his administration's plans for the economy. The special assistant to the president for investment and economic affairs has also stated that:

• mining is one of five priority industries of the administration; and
• the government is eyeing shortening the processing time for exploration projects for nickel, copper and ore.

As discussed in question 2, the renewed focus on mining is closely related to the government's initiatives to grow the renewable energy and electric vehicle industries. The development of the renewable energy sector must also be viewed against the Department of Justice's issuance of Opinion 21, Series of 2022, which clarified that the exploration, development and utilisation of solar, wind, hydro and ocean or tidal energy are not subject to the 40% foreign equity limitation under the Philippine Constitution. This has heightened interest among investors in the domestic renewable energy industry. Both industries require the development of batteries and associated technology, which in turn rely on the availability of certain critical minerals (lithium, cobalt, copper and graphite) for their manufacture. This potential synergy between the mining industry and the renewable energy and electric vehicle projects of the administration has contributed to the resurgence of the mining industry.

11.2 How would you describe the current mining landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?

Please see questions 9.4 and 11.1.

12 Tips and traps

12.1 What are your top tips for mining operators in your jurisdiction and what potential sticking points would you highlight?

We recommend engaging with reputable local partners to assist foreign investors in navigating the local regulatory and commercial landscape. This is important as the government transitions from the current regulatory regime to a more streamlined process to further open up the industry to investors.

The administration is working to address the challenges to the mining industry. This involves:

• supporting local industries and partnering with the private sector and the international community to accelerate research and development and the commercialisation of green technologies and products;
• reviewing existing financing facilities and streamlining regulatory processes to reduce operating costs; and
• rationalising the mining fiscal regime.

Relatedly, the Chamber of Mines Philippines, the Philippine Nickel Industry Association, the Philippine Mine Safety and Environment Association and the Philippine Mining and Exploration Association, together with the secretary of environment and natural resources, signed a joint declaration on policy reforms to:

• enhance regulatory frameworks to protect biodiversity and the rights of local communities;
• promote environmentally friendly technologies and the rehabilitation of mining sites:
• encourage transparency and accountability in mining operations;
• enforce environmental laws and regulations; and
• create a conducive and stable policy environment.

Under the joint declaration:

• the Department of Environment and Natural Resources will station personnel in each active mine site for more efficient coordination and resolution of all operational concerns; and
• mining organisations will establish an ethics committee to oversee the environmental, social and governance performance of their members to ensure the highest standards of practice.

This quickly shifting landscape must be traversed by any investor.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.