PRESS

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Republic of the Philippines ij
HOUSE OF REPRESENTATIVES ie & RECE! IyED * ae
Quezon City 3 pater 27 wm
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NINETEENTH CONGRESS * TIME; OO 0.51. g
First Regular Session oe, ny
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Introduced by Rep. Ray T. Reyes
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EXPLANATORY NOTE

Despite being a mineral-rich country, data from the past year shows that the
mining and quarrying industry contributed less than 1% to the Gross Domestic
Product (GDP) of the Philippine Economy. It is also worrying that out of the over 47
milion Filipinos in the work force, only 170,000 are employed in the mining industry,
equivalent to 0.36% of the total employment rate.

Raw ores such as nickel laterite and iron in the form of black or magnetite
sand are raw materials which are the primary additives in iron and steel making, as
well as in the manufacture of paints, magnets, inks and the likes. It is clear that these
mineral resources are an important part in nearly every aspect of every day life due
to its versatility and abundance in the country. This bill seeks to safeguard these
mineral resources by partially and gradually restricting their export as they are mostly
being processed elsewhere; taking away from the Philippines the chance to
economically benefit from our own resources.

As the country slowly recovers from the effects of a global pandemic, it is the
Government's responsibility to ensure that the country's resources are protected —
not just natural but economic and human resources as well. The passage of this bill
not only increases the mining industry's contribution to the GDP of the country, but
also increases employment opportunities for our countrymen in the mining
profession by incentivizing local mineral processing and promoting the use of
renewable energy.

In view of the foregoing, the passage of this bill is earnestly sought

Representative,



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

NINETEENTH CONGRESS
First Regular Session

4.77599 ERB

HOUSE BILL NO.

Introduced by Rep. Ray T. Reyes

AN ACT PROMOTING THE DEVELOPMENT OF LOCAL MINERALS
PROCESSING AND VALUE-ADDING AND IN THE PROCESS
GRADUALLY/PARTIALLY RESTRICTING THE DIRECT SHIPMENT OF NICKEL
LATERITE ORES, MAGNETITE SANDS/IRON CONCENTRATES AND OTHER
RAW METALLIC ORES TO FOREIGN DESTINATIONS AND FOR OTHER
PURPOSES

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

SECTION 1. Short Title. - This Act shall be known as the “Promotion of Local
Mineral Processing Act”.

SECTION 2. Declaration of Principles. —

a) All mineral resources in public and private lands within the territory and
exclusive economic zone of the Republic of the Philippines are owned by the
State. It shall be the responsibility of the State to promote their rational
exploration, development, utilization and conservation through the combined
efforts of government and the private sector in order to enhance national
growth in a way that effectively safeguards the environment and protect the
rights of affected communities.

b) The State must ensure that the Filipino people benefit extensively from its
mineral resources, and therefore, it shall encourage mineral processing,
value-adding, and development of downstream industries to maximize the
mining industry's economic contributions and to pave way for the generation
of more jobs.

SECTION 3. Definition of Terms. —

a) Black Sand or Magnetite Sand refers to beach, river, onshore, nearshore, and
offshore sands containing high concentration of magnetite, an iron oxide,


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which results from the weathering and erosion of metamorphic and igneous
rocks.

Contractor means a Qualified Person acting alone or in consortium who is a
party to a Mineral Agreement or FTAA.

Direct Shipping Ore (DSO) refers to the bulk raw ore product of mining
operations that are shipped out or exported from any mining site in the
Philippines to any foreign country.

Downstream Industries refer to industrial firms that process the output of other
firms into a finished or different product.

Financial or Technical Assistance Agreement (FTAA) means a contract
involving financial or technical assistance for large-scale exploration,
development, and utilization of mineral resources.

Government means the Government of the Republic of the Philippines
Gradual or Partial Restriction refers to the plan of the Government to
gradually or partially restrict direct shipping of ores to any foreign country and
encourage domestic processing and value-adding of these ores.

Gross output means the actual market value of minerals or mineral products
or of bullion from each mine or mineral land operated as a separate entity,
without any deduction for mining, processing, refining (including all expenses
incurred to prepare the said minerals or mineral products in a marketable
state), as well as transporting, handling, marketing or any other expenses:
Provided, That if the minerals or mineral products are sold or consigned
abroad by the lessee or owner of the mine under C.F. terms, the actual cost
of ocean freight and insurance shall be deducted: Provided, however, That in
the case of mineral concentrate, not traded in commodity exchanges in the
Philippines or abroad, such as copper concentrate, the actual market value
shall be the world price quotations of the refined mineral products content
thereof prevailing in the said commodity exchanges, after deducting the
smelting, refining, and other charges incurred in the process of converting
mineral concentrates into refined metals traded in those commodity
exchanges.

Laterites refer to a type of soil, rich in nickel, iron, aluminum or magnesium
that formed through prolonged chemical and mechanical weathering in wet,
warm, tropical environments.

Magnetite concentrate refers to the magnetic portion of magnetite sand
produced by magnetic separation and/or gravity concentration, or other similar
means.

Minerals refers to all naturally occurring inorganic substance in solid, gas,
liquid, or any intermediate state excluding energy materials such as coal,
petroleum, natural gas, radioactive materials, and geothermal energy

Mineral Agreement means a contract between the Goverment and a
Contractor, involving Mineral Production-Sharing Agreement, Co-Production
Agreement, or Joint-Venture Agreement.


m) Mineral processing means the milling, beneficiation, leaching, smelting,
cyanidation, calcination or upgrading of ores, minerals, rocks, mill tailings,
mine waste and/or other metallurgical by-products or by similar means to
convert the same into marketable product

n) Mineral Processing Permit refers to the permit granted to a Qualified Person
for mineral processing.

©) Mineral Products mean materials derived from ores, minerals and/or rocks
and prepared into a marketable state by mineral processing.

p) Mining Operations mean mining activities involving exploration, feasibility,
development, utilization, and processing

q) Ore means naturally occurring substance or material from which a mineral or
element can be mined and/or processed for profit.

1) State means the Republic of the Philippines.

8) Value-adding refers to any economic, environmental, or social benefit that
results from further processing and manufacturing of minerals and metals.

CHAPTER II
‘SCOPE AND APPLICATION

SECTION 4. Coverage. - This Act shall apply to the following:

a) New Mineral Agreements and Financial or Technical Assistance Agreements
(FTAAs) covering large-scale mineral mining operations that shall be entered
into after the effectivity of this Act; and

b) Existing Mineral Agreements and FTAAs where such agreements provide that
any terms and conditions resulting from repeal or amendment of any existing
laws or regulation or from the enactment of a law, regulation or administrative
order shall be considered as part of said agreements.

SECTION 5. Mineral Processing. — Mineral processing shall be governed by
Pertinent provisions of Republic Act (RA) No. 7942, otherwise known as the
“Philippine Mining Act of 1995", and its Implementing Rules and Regulations, as
amended.

Contractors that do not intend to put up processing plants shall, at all times during
the existence of their mineral agreement, have an existing and valid contract with a
legitimate mineral processing plant for the processing of mineral ores mined under
the mineral agreement, or they may form consortiums to set-up common mineral
processing facilities to process their minerals: Provided, That they shall secure a
Mineral Processing Permit (MPP) within six (6) months from the effectivity of this Act.
Otherwise, such contractors shall eventually be banned to export their raw ores in
accordance with Section 8(a) of this Act.


SECTION 6. Applicable Minerals. — For purposes of this Act, raw nickel laterite
ores, magnetite sands/iron concentrates, and other raw metallic ores shall be
gradually/partially restricted for export and shall undergo domestic mineral
processing and value-adding for the production of mineral products such as refined
nickel/cobalt metals, ferroalloys, pig iron or steel ingots for export and domestic
consumption.

Mineral processing and value-adding shall also be required for these minerals before
the entity can avail of the incentives under Chapter 3 of this Act.

CHAPTER Ill
INCENTIVES

SECTION 7. Incentives. — Individuals, partnerships, cooperatives, corporations, or
other entities engaged in mineral processing shall be entitled to the incentives
provided for under Chapter XVI of Republic Act No. 7942, including those incentives
under Executive Order No. 226, for pollution control devices, income tax-carry
forward of losses, income tax-accelerated depreciation, and investment guarantees

Individuals, partnerships, cooperatives, corporations, or other entities engaged in
mineral processing shall be entitled to additional incentives if they can generate their
own electricity through renewable energy, or source one hundred percent (100%) of
their energy requirements from suppliers of renewable energy: Provided, That it shall
comply with the provisions of Republic Act No. 9513, otherwise known as the
“Renewable Energy Act of 2008", and its Implementing Rules and Regulations.

CHAPTER IV
GRADUAL/PARTIAL RESTRICTION OF ORE EXPORT

SECTION 8. Gradual/Partial Restriction of Ore Export. ~ Mineral processing for
raw nickel laterite ores, magnetite sands/iron concentrates, and other raw metallic
ores shall be prioritized. For this purpose, all entities engaged in direct shipping of
nickel laterite ores, magnetite sands/iron concentrates, and other raw metallic ores
shall gradually reduce their export of the said mineral products on either of the
schemes listed below after the transition period provided under Section 9 of this Act.

a) Diminishing Export — In the case where a contractor's output is solely for
export, gradual/partial restriction of exported ores shall be imposed and shall


be computed based on fifty percent (50%) of the gross output from the
previous year until zero export.

b) 50:50 Scheme ~ In the case where a contractor's output is for both export and
local processing, the maximum allowable limit for export shall be fifty percent
(50%) of the gross output of the previous year: Provided, That, the remaining
fifty percent (50%) of the gross output shall be allotted for domestic
processing

It shall be unlawful for any individual, partnership, cooperative, corporation, or other
entity, to export or directly ship to any foreign country raw nickel laterite ores,
magnetic sands/iron concentrates, and other raw metallic ores extracted from any
mining site in the Philippines unless fifty percent (50%) of its gross output is
processed locally.

SECTION 9. Transition Period. - To prepare the mining industry for the
gradual/partial restriction of direct shipping of raw nickel laterite ores, magnetic
sands/iron concentrates, and other raw metallic ores, a period of five (5) years shall
be provided as transition phase after the approval of this Act.

CHAPTER V
MISCELLANEOUS PROVISIONS

SECTION 10. Community Development, and Safety and Environmental
Protection. — Individuals, partnerships, cooperatives, corporations, or other entities
engaged in mineral processing shall strictly comply with the pertinent provisions
under Chapter X and XI of Republic Act No. 7942 and its Implementing Rules and
Regulations, as amended, regarding community development, and safety and
environmental protection.

SECTION 11. Transitory Provision. — During the transition period, contractors
under Section 4(a) of this Act shall either put up their own processing plants, form
consortiums with other contractors to establish common processing plants or forge
supply contract agreement with Mineral Processing Permit holders to process their
ores. Otherwise, they will not be permitted to export their unprocessed nickel ores or
magnetic sand/concentrates in accordance with Section 8(a) of this Act.

SECTION 12. Penalty Provision. — Any person who violates any provision of this
Act 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 seized mineral ores.
In addition, the cargo containing the 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 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 13. Implementing Rules and Regulations. - Within three (3) 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
ules shall take effect upon its publication in two (2) newspapers of general
circulation.

SECTION 14. Separability Clause. - If, for any reason, any provisions of this Act
are 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 15. 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 16. Effectivity. - This Act shall take effect fifteen (15) days after its
publication in the Official Gazette or in a newspaper of general circulation.

Approved,