Types of Mining Rights
Under RA No. 7942 or the Philippine Mining Act of 1995, the following mining rights can be acquired by a qualified person for the exploration, development, utilization and processing of mineral resources:
• Mineral Agreements (such as Mineral Production Sharing Agreement, Joint Venture Agreement, and Co-Production Agreement);
• Financial or Technical Assistance Agreement (FTAA); and
• Mineral Processing Permit (MPP)
Exploration can be undertaken only either through an EP or an FTAA. For projects that have concluded a Mining Project Feasibility Study, the proponent may apply for an MPSA. Projects that require processing only of minerals may apply for a Mineral Processing Permit (MPP).
Exploration Permit
An Exploration Permit (EP) allows a qualified person to undertake exploration activities for mineral resources in certain areas open to mining. The EP has a term of two (2) years, renewable for like periods but not to exceed a total term of four (4) years for the exploration of non-metallic minerals or six (6) years for the exploration of metallic minerals. The maximum area that each qualified person may apply for or hold at any one time is:
Note: One (1) meridional block is equivalent to approximately 81 hectares.
EP holders may submit a Declaration of Mining Project Feasibility and apply for an MA or an FTAA, and proceed to development/ construction and commercial utilization.
Mineral Agreements
A Mineral Agreement is an agreement between a Contractor and the Government wherein the Government grants to the Contractor the exclusive right to conduct mining operations within, but not title over, the contract area. Mining operations that are allowed under Mineral Agreements include exploration, development and utilization of mineral resources.
A Mineral Agreement is exclusive to Filipino individuals and corporations. It has a term of twenty-five (25) years, renewable for another twenty-five (25) years under the same terms and conditions, without prejudice to changes mutually agreed upon by the Government and the Contractor. After the renewal period, the operation of the mine may be undertaken by the Government or through a Contractor.
There are three (3) modes of Mineral Agreements, namely:
• Mineral Production Sharing Agreement (MPSA). A mineral agreement wherein Government shares in the production of the Contractor, whether in kind or in value, as owner of the minerals, and the Contractor gets the rest. In return, the Contractor provides the necessary financing, technology, management and personnel for the mining project.
• Co-Production Agreement (CPA). An agreement wherein the Government provides inputs to the mining operations other than the mineral resources; and
• Joint Venture Agreement (JVA). An agreement wherein the Government and the Contractor organize a joint venture company, with both parties having equity shares. The Government is entitled to a share in the gross output of the mining project aside from its earnings in the equity of the company.
A qualified person may apply for or hold at any one time under a Mineral Agreement the following maximum areas:
Onshore
i. In any one province:
ii. In the entire :
Offshore, in the entire ,beyond five hundred meters (500 m) from the mean low tide level:
Financial or Technical Assistance Agreement
The Financial or Technical Assistance Agreement (FTAA) is an agreement for the large-scale exploration,development and utilization of minerals. An FTAA requires a minimum authorized capital of Four Million Dollars (US$ 4,000,000) and a capital investment of Fifty Million Dollars (US$ 50,000,000) for infrastructure and development in the contract area.
The FTAA is available to both domestic and foreign corporations. It has a term of 25 years, renewable for another 25 years. The FTAA prescribes minimum exploration ground expenditures during the exploration and pre-feasibility periods. The maximum area that a Qualified Person may apply for or hold in the entire are:
• Onshore -81,000 hectares;
• Offshore -324,000 hectares; or
• Combination of 81,000 hectares onshore and 324,000 hectares offshore.
FTAAs are not allowed for cement raw materials, marble, granite, sand and gravel and construction aggregates.
FTAA Contractors who have determined a viable mining project can be pursued are required to submit a Declaration of Mining Project Feasibility. The approval of this Declaration shall authorize the FTAA Contractor to proceed to development/ construction and commercial utilization.
FTAA Contractors are allowed to recover their pre-operating expenses, which shall be for a period of five (5)years or until the date of actual recovery, whichever comes earlier, or for a longer period for projects requiring large investments with high production rates and extensive mine life, as determined by the MGB and upon negotiation with the FTAA Negotiating Panel and with the approval by the DENR Secretary.From the approval of the Declaration of Mining Project Feasibility up to the end of the recovery period, corporate income tax, customs duties and fees on imported capital equipment, value-added tax on imported goods and services,withholding tax on interest payments on foreign loans and on dividends to foreign stockholders, and other national taxes, except excise tax on minerals,shall not be collected from the Contractor. After the recovery period, the Contractor is required to pay all applicable taxes, fees, royalties and other related payments to the national and local governments.
Mineral Processing Permit
A Mineral Processing Permit (MPP) is the permit granted to a qualified person for the processing of minerals. The Mining Act defines mineral processing as the milling, beneficiation, leaching,smelting, cyanidation, calcination or upgrading of ores, minerals, rocks, mill tailings, mine wastes and/or other metallurgical by-products or by similar means to convert the same into marketable products.
An MPP is open to both domestic and foreign corporations. It has a term of five (5) years renewable for like terms but not to exceed a total of twenty five (25) years.
The major requirement in applying for an MPP is the proof of supply of minerals from a holder of a valid mining right.