@ECENVED
vate 15 AUG 2016

Republic of the Philippines
HOUSE OF REPRESENTATIVES

SEVENTEENTH (17") concnest

First Regular Session

f.
House Bill No. 2229 RECISTRATION UNIT
"BILLS AND INDEX SERVICE

Introduced by: REP, JOSEPH STEPHEN S. PADUANO

EXPLANATORY NOTE

This Bill seeks for the development of our mineral ores. It is very inopportune for our
country that our mineral ores, after mining or extraction, are exported directly to foreign
countries as raw materials. We have not yet developed the downstream mining industry and

thus, cannot maximize the benefits or value-added from mining.

I believe that this is now the proper time for the mining industry to concentrate on the
processing of the minerals value chain and encourage the establishment and development of

processing plants that use new processing in manufacturing mineral ores.

‘The Mines and Geosciences Bureau, an attached agency of the Department of
Environment and Natural Resources has studied the significant impact of the Philippine
mining industry. We should help encourage the downstream industries on the processing of
mineral ores such as copper, nickel, gold and chromite and other strategic mineral ores so as
to develop community based supplier industries and services, improve government benefits

for the mining industry and control the export of unprocessed minerals. In this case, we are

not only advancing said industry but paving the way for the industrialization of the entire

country.

This is a refiled bill and was approved at the committee level during the 15"

Congress; hence, the approval of this bill is earnestly sought.

REP. JOSEPH STEPHEN S. PADUANO

Hous FR “PRESENTATIVES

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Republic of the Philippines
HOUSE OF REPRESENTATIVES

SEVENTEENTH (17") CONGRESS
First Regular Session

2915

House Bill No.

Introduced by: REP. JOSEPH STEPHE?

PADUANO

AN ACT PROMOTING THE DEVELOPMENT OF MINERALS PROCESSING AND
IN THE PROCESS BANNING THE EXPORT OF IRON, NICKEL, CHROMITE,
MANGANESE, BLACK SAND AND OTHER STRATEGIC METALLIC ORES, AND
FOR OTHER PURPOSES

Be it enacted by the Senate and the House of Representatives of the Philippines in Congress
assembled.

SECTION 1. Development of Minerals Processing — The State shall promote
industrialization and full employment through industries that make full and efficient use of
human and natural resources, and which are competitive in both domestic and foreign
markets.

The State recognizes that the revitalization of the mining industry can contribute

greatly to the country’s industrialization. The State shall therefore, promote the development
of minerals processing to maximize the benefits or value-added from mining. Towards this
end, it shall encourage the establishment and development of mining firms and
manufacturing plants that will utilize locally processed products and process mineral ores

first before exporting them to other countries.

SECTION 2. Entities Engaged in Minerals Processing ~ For purposes of this Act, an
individual, partnership, cooperative, corporation or other entity shall be considered as one
engaged in Minerals Processing if it is engaged in the milling, beneficiation or upgrading of
ores or minerals and rocks or similar means that convert the same into marketable products.

However, not all entities engaged in Minerals Processing shall be entitled to the incentives

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provided under Section 4 of this Act. The incentives under Section 4 shall not be available to
entities engaged in processing where the ore or minerals and rocks merely undergo a process
or technology, without which, the resource will not be developed of the mining activity could

not be possibly undertaken such as sorting, crushing, washing, drying and other similar

For nickel, chromite and iron, an additional processing step that will add further value
to the mineral end product such as, ferro-nickel, mixed sulphides, nickel pig iron,
ferrochrome or refractory bricks, shall be required before the entity can avail of the incentives
under Section 4.

SECTION 3. Minerals Processing Permit — no individual, partnership, cooperative,
corporation or other entity shall engaged in the processing of minerals without first securing a
Minerals Processing Permit from the Secretary of the Department of Environment and
Natural Resources

In the case of small-scale miners, the processing of mineral ores and minerals they
produce, as well as the licensing of their custom mills or processing plants, shall continue to
be governed by the provisions of Republic Act No. 7076.

In the case of individuals, corporations, partnerships, cooperatives or other entities
who are parties to a Mineral Agreement or a Financial or Technical Assistance Agreement,
holders of Quarry and Industrial Sand and Gravel Permits, the Approved Work Program for
the production period shall be sufficient requirement for them to process their minerals in liew

of a Mineral Processing Permit.

‘A Mineral Processing Permit shall be for a period of ten (10) years renewable for like
periods. Provided, that, the renewal of a Minerals Processing Permit shall not be allowed
unless the permit holder has complied with all the terms and conditions of the Mineral
Processing Permit and has not been found guilty of violation of any provisions of Republic
Act No. 7942 or the Philippine Mining Act of 1995, and its implementing rules and

regulations. Section 55 of Republic Act 7942 is hereby amended in so far as it is inconsistent

with this provisi

n.


After due process, a Minerals Processing Permit may be suspended, revoked or
cancelled by the Department of Environment and Natural Resources for violation of its terms

and conditions, or of pertinent laws, rules and regulations.

SE

TION 4. Incentives — Minerals Processing, which are entitled under Section 2 of this
Act, shall be included every year in the Investment Priorities Plan to be prepared by the
Board of Investments in accordance with Executive Order No. 226, as amended, otherwise
known as the Omnibus Investment Code of 1987 and shall be listed as a preferred area of
investment. Before being entitled to the foregoing incentives, the entity involved shall be
registered with the Board of Investment and satisfy the requirements for registration provided
for under Article 32 of Executive Order No. 226.

Individuals, partnerships, cooperatives, corporations or other entities engaged in
Minerals Processing shall be entitled to the incentives provided for under Chapter XVI of
Republic Act No. 7942 or the Philippine Mining Act of 1995, including those on incentives
for pollution control devices, income tax-carry forward of losses, income tax-accelerated

depreciation, and investment guarantees.

SECTION 5- Ad
An individual, partnership, cooperative, corporation or other entity engaged in Minerals

ional Incentives to Entities Who Can Generate Their Own Power —

Processing shall be entitled to generate its own electricity. Provided, that, it shall comply with

all pertinent laws, particularly those being implemented and enforced by the Department of

Energy. If such an entity is able to meet all or seventy percent (70%) of

s own energy

requirements, s

id entity shall be entitled to the following additional fiscal incentives.

a. Addi

al Deduction for Labor Expansion. Instead of being allowed an
additional deduction from taxable income of fifty percent (50%) of the
wages corresponding to the increment in the number of direct labor for
skilled and unskilled workers, in the first five (5) year from registration
only, said incentives shall be extended to the first six (6) years from

registration: Provided. that, in order to be entitled to this incentive, the


project must still meet the prescribed ratio of capital equipment to number
of workers set by the Board of Investments.

b. Tax and Duty Exemption on Imported Capital Equipment — Importations
of machinery and equipment and accompanying spare parts needed for the
construction, operation and maintenance of the power plant shall be
exempt to the extent of one hundred percent (100%) of the customs duties
and national internal revenue tax payable thereon: Provided, that, the
importation of machinery and equipment and accompanying parts shall
comply with the following conditions:

(They are not manufactured domestically in sufficient quantity,
or comparable quality and at reasonable prices;
(ii) ‘They are reasonably needed and will be used exclusively by the
entity involved in the generation of electricity, and
(iii) ‘The approval of the Board of Investments shall be obtained for
the importation of such machinery, equipment and spare parts.
¢. Tax Credit on Domestic Capital Equipment — A tax credit equivalent to
one hundred percent (100%) of the value of the national intemal revenue
taxes and customs duties that would have been waived on the machinery,
equipment and spare parts, had these items been imported shall be given to
the entities which purchase machinery, equipment and spare parts from a
domestic manufacturer; Provided, that, the said equipment, machinery and
spare parts are reasonably needed and will be used exclusively by the
entity in the generation of electricity.

d. Exemption from Contractor's Tax ~ The entity shall be exempt from the

payment of contractor's tax, whether national or local for the construction,

operation and maintenance of the power plant.

SECTION 6, Expenditure for Commu:
Technology — The grantee of a Minerals Processing Permit shall assist in the development of

Development and Science and Mining

the community in which its processing plants are established, the promotion of the general

welfare of its inhabitants and the development of science and mining technology.


Acti

s that may be credited as expenditures for development of the community,

and science and mining technology are the following:

a. Any activity or expenditure intended to enhance the development of the
community other than those required or provided for under existing laws, or
collective bargaining agreements, and the like; and

b. Any activity or expenditure directed towards the development of geosciences and
mining technology such as, but not limited to, institutional and manpower
development, and basic and applied researches. Appropriate supervision and

control mechanisms shall be prescribed in the implementing rules and regulations

of this Act.

ing and Development — The grantee of a Minerals Processing Permit
shall maintain an effective program for manpower training and development throughout the
effectivity of its Minerals Processing Permit and shall encourage and train Filipinos to

participate in all aspects of its operations, including the management thereof.

SECTION 8. Safety and Environmental Protection ~ The grantee of a Minerals Processing
Permit shall strictly comply with all safety rules and regulations as may be promulgated by
the Department of Environment and Natural Resources concerning the safety and sanitary

upkeep of its operations.

Said grantee shall also undertake an environmental protection and enhancement
program covering the period of its Minerals Processing Permit. Such environmental program
shall be incorporated in the Work Program which the grantee shall submit as an
accompanying document to its application for a Minerals Processing Permit.

Before being granted a Minerals Processing Permit, the application shall be required
to procure an Environmental Clearance Certificate based on the environmental impact
assessment and procedures under the Environmental Impact Assessment System including
Sections 26 and 27 of the Local Government Code of 1991 which requires national agencies
to maintain ecological balance and prior consultations with local government units, non-

governmental and people’s organizations and concerned sectors of the community.


SECTION 9. Ban on the Exportation or Direct Shipping of Iron, Nickel, Chromite,
Manganese, Black Sand and Other Strategie Metallie Ores — Minerals Processing for
Iron, Nickel, Chromite, Manganese, Black Sand shall be prioritized. For this purpose, starting
January 1, 2019, it shall be unlawful for any individual, partnership, cooperative, corporation
or other entity, to export or directly ship to any foreign country iron, nickel, chromite,
manganese, black sand and other mineral ores extracted from any mining site in the

Philippines.

‘The President, may, upon recommendation of the Secretary of the Department of
Environment and Natural Resources or the Secretary of the Department of Trade and
Industry, endorsed by the National Economie Development Authority, or upon
recommendation of the National Economic Development Authority, ban the export or direct
shipping of other strategic metallic ores, apart from iron, nickel, chromite, manganese and
black sand if the same is crucial to the accelerated industrialization of the country or is
needed for economic development and national defense.

SECTION 10. Penalty for Violation- Any person exporting iron, nickel, chromite,
manganese, black sand or other metallic ores, the export of which has been banned by order
of the President, under Section 9 hereof, shall, upon conviction, be imprisoned from six (6)
months to six (6) years or fined Fifty Thousand Pesos (Php 50,000.00) to Two Hundred
Thousand Pesos (Php 200,000.00), or both, at the discretion of the court. If the offender is a
corporation, association, partnership or any juridical person, the penalty shall be imposed
upon the responsible officers, as the case may be, who participated in the commission of the
offense. If the offender is an alien, he shall, in addition to the penalty herein prescribed, be
deported without further proceedings after serving the prescribed penalties.

SECTION 11. Transi

n Period ~ The period from the approval of this Act until January 1,
2019 shall be considered the transition period to prepare the mining industry for the total ban
on the export and direct shipping of iron, nickel, chromite, manganese, black sand and other
strategic ores, the export of which has been banned by order of the President. The
Department of Trade and Industry, and the Department of Environment and Natural

Resources shall develop the necessary guidelines di

ing the transition period to ensure that
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the mining industry is adequately prepared for the eventual ban on export and direct shipping
of these ores.

SECTION 12. Implementing Rules and Regulations — Within six (6) months from the
effectivity of this Act, the Department of Environment and Natural Resources and the
Department of Trade and Industry shall promulgate the necessary rules and regulations for
the effective implementation of this Act. Such rules and regulations shall take effect upon its

publication in two (2) newspapers of general circulation.

SECTION 13. Separability Clause ~ If, for any reason, any provision of this Act is declared
to be unconstitutional, or invalid, the other sections or provisions thereof which are not

affected thereby shall continue to be in full force and effect.

SECTION 14. Repealing Clause — All laws, decrees, executive orders, rules and

regulations, and other issuances or parts thereof which are inconsistent with this Act are

hereby repealed, amended or modified accordingly

SECTION

complete publication in at least two (2) newspapers of general circulations.
plete pi papers of gs

}. Effectivity Clause — This Act shall take effect fifteen (15) days after its

Approved,