HOUSE OF 2 PRESENTATIVES

RECEINED
2 2 AUG 2016
Republic of the Philippines DATE:

DOuUuse OF REPRESENTATIVES + j.j2, Des

Quezon City, Metro Manila

By
Seventeenth Congress
First Regular Session

322

REQISTR \TION UNIT
BILLS AND INCE ¥ SERVICE

HOUSE BILL NO.

Introduced By:
REP. FRANCISCO JOSE F. MATUGAS II
1°" District, Surigao del Norte (Siargao Island)

EXPLANATORY NOTE

The Philippines is the fifth most mineral-rich country in the world for gold, nickel,
copper, and chromite. It is home to the largest copper-gold deposit in the world. The
country has an estimated $840 billion worth of untapped mineral wealth, The country’s
metal deposit is estimated at 21.5 billion metric tons and non- metallic minerals are at 19.3
billion metric tons,

In 2013, the Philippines accounted for 17% of the world production of mined nickel,
and 3% of mined cobalt. The country also produced other mineral commodities, such as
cement, chromium, copper, gold, marine salt, and silver, In the same year, however, mineral
exports of selected metals from the Philippines amounted to only $2.67 billion. This
included copper, gold, and nickel. This is equivalent to only about 1.08% to the Philippines!
gross domestic product (GDP).

It has been pointed that the insignificant contribution of the mining industry to the
Philippine economy is attributable to the lack of a definite program to develop the
downstream mining industry and a failure to maximize the benefits or value-added from
mining, Indeed, most of the mineral ores mined from the country are exported to other
countries without being processed first

To address this problem, the State must adopt a strategy for the industrialization of
the mining industry, including the promotion of the processing of mineral ores and other
downstream activities. Even the Speaker of the House of Representatives, during his
acceptance speech, considered this matter as a priority for the current Congress. This way,
we can maximize the potential that mining can contribute to the economy.

Thus, the approval of this bill is earnestly sought.

FRANCIS! SE F. MATUGAS II



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Republic of the Philippines

House of Representatives
Quezon City, Metro Manila

Seventeenth Congress
First Regular Session

HOUSE BILL NO. 8229

INTRODUCED BY REPRESENTATIVE FRANCISCO JOSE F. MATUGAS II

AN ACT PROMOTING THE DEVELOPMENT OF MINERALS PROCESSING
AND IN THE PROCESS BANNING THE EXPORT OF UNPROCESSED
MINERAL 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

SEC. 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. It shall not include processes where the ore or minerals and
rocks merely undergo a process or technology, without which, the resource will not
be developed or the mining activity could not be possibly undertaken such as
sorting, crushing, washing, drying and other similar activities. For nickel, chromite


and iron, an additional processing step that will add further value to the mineral end
product such as, ferro-nickel, mixed sulfides, nickel pig iron, ferrochrome or
refractory bricks, shall be required before the entity can be considered as engaged in
minerals processing.

SEC. 3. Minerals Processing Permit. - No individual, partnership, cooperative,
corporation or other entity shall engage in the processing of minerals without first
securing a Minerals Processing Permit (MPP) from 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 and P.D. No.
1899 and their implementing rules and regulations.

In the case 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 lieu of an MPP: Provided, That, they shall secure
an MPP within six (6) months from the effectivity of this Act.

In the case of individuals, corporations, partnerships, cooperatives or other
entities who are parties to a Mineral Agreement or a Financial or Technical
A nce Agreement, they shall secure an MPP within six (6) months from the
effectivity of this Act if they intend to put up their own minerals processing plant:
Provided, That, if said entities do not intend to put up their own processing, plants,
said entities shall at all times during the existence of the mineral agreement have an
existing and valid contract with a legitimate minerals processing plant for the
processing of mineral ores mined under the mineral agreement.

he terms of an MPP shall be for a period of ten (10) years, renewable for like
periods: Provided, That, the renewal of an MPP shall not be allowed unless the permit
holder has complied with all the terms and conditions of the MPP 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.

After due process, an MPP 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.

SEC. 4. Incentives. - Minerals Processing, as defined 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 always be
listed as a preferred area of investment. Before being entitled to the foregoing

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incentives, the entity involved shall be registered with the Board of Investments 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,

SE Additional Incentives to Entities Who Can Generate Their Own Power. - An
individual, partnership, cooperative, corporation or other entity engaged in Minerals
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 shall meet all or seventy percent
(70%) of its own energy requirements, said entity shall be entitled to the additional
fiscal incentives to be determined by the Department of Trade and Industry in the
Implementing Rules and Regulations of this Act.

SEC. 6. Expenditure for Community Development and Science and Mining
Technology. - The grantee of an MPP shall assist in the development of 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. Activities 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.

SEC. 7. Training and Development. - The grantee of an MPP shall maintain an
effective program for manpower training and development throughout the
effectivity of its MPP and shall encourage and train Filipinos to participate in all
aspects of its operations, including the management thereof.

SEC, 8. Safety and Environmental Protection. - The grantee of an MPP 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


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sanitary upkeep of its operations. Said grantee shall also undertake an
environmental protection and enhancement program covering the period of its MPP.
Such environmental program shall be incorporated in the Work Program which the
grantee shall submit as an accompanying document to its application for an MPP.

Before being granted an MPP, the applicant 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 require national
agencies to maintain ecological balance, and prior consultation with local
government units, nongovernmental and people's organizations and concerned
sectors of the community.

SEC. 9. Ban on the Exportation or Direct Shipping of Metallic Ores. - Minerals
Processing shall be prioritized by the State. For this purpose, it shall be unlawful for
any individual, partnership, cooperative, corporation or other entity, to export or
directly ship to any foreign country unprocessed mineral ores extracted from any
mining site in the Philippines.

SEC. 10. Penalty for Violation. - Any person who exports unprocessed mineral
ores shall, upon conviction, be imprisoned from six (6) years to one (1) day to twelve
(12) years and fined an amount equivalent to twice the value of the seized mineral
ores. In addition, the cargo containing the unprocessed mineral ores shall be
confiscated in favor of the State. If the offender is a corporation, association,
partnership or any juridical person, the penalty shall be imposed upon the
responsible officers, as the case maybe, 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.

SEC. 11. Transition Period. - The period from the approval of this Act until 1
January 2021 shall be considered the transition period to prepare the mining
industry for the total ban on the export and direct shipping of mineral ores. The
Department of Trade and Industry, and the Department of Environment and
Natural Resources shall develop the necessary guidelines during the transition
period to ensure that the mining industry is adequately prepared for the eventual
ban on export and direct shipping of ores.

SEC. 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.


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SEC. 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.

SEC. 14. Repealing Clause. All laws, presidential decrees, executive orders
presidential proclamations, issuances, rules and regulations or parts thereof which
are inconsistent with the provisions of this Act are hereby repealed or amended
accordingly.

SEC. 15. Effectivity Clause. - This act shall take effect fifteen (15) days from its
publication in the Official Gazette or in a newspaper of general circulation.

Approved,