28 JUL 2014
Republic of the Philippines fete fin
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
Second Regular Session

4780

HOUSE BILL NO.

Introduced by Rept Alfredo “Albee” B. Benitez

EXPLANATORY NOTE

In July 2012, President Benigno Simeon C, Aquino III issued Executive Order No. 79
halting the issuance of mining licenses and banned mining from some seventy-eight (78)
areas considered sensitive ecosystems, crucial to farming or tourism or unsuitable for
other reasons, The Executive Order also created the Mining Industry Coordinating Council

(MICC) with the mandate to review the national policy on mining.

Notwithstanding the issuance of the order, magnetite sand or black sand mining
continued unabated in Northern Luzon, particularly in the Hocos and Cagayan Valley
regions wherein several mining companies vigorously conducted mining operations for
magnetite sand that are being exported to other countries as raw materials. Indeed, the
large-scale extraction of the valuable mineral, onshore and offshore, has been inevitable
due to the massive international demand for magnetite sand as a major source of high-
grade steel and ingredient of high-strength concrete, Magnetite sand is also being used as
an industrial mineral essential in the production of iron sulfate used to purify water,

magnets, counterweights, inks, papers, jewelries, cosmetics, and other high value products.

Indubitably, the mining companies engaged in magnetite sand mining in Northern
Luzon and in other areas of the country with large deposits of the magnetite sand had been
reaping huge profits. However, it is undeniable that the Philippine economy is actually
losing billions of dollars as a result of the trade imbalance arising from the cheap export
price of magnetite sand as raw material vis-a-vis the expensive cost of processed products

imported from other countries. We are also losing more in terms of unrealized potential
revenues that could be derived from the production of high-value products if we shall



undertake the advance processing of magnetite sand in the Philippines rather than merely
s the

exporting it as a raw material. Of cow
adverse environmental impact of the highly-destructive, illegal operations of several
unscrupulous mining companies that has already extracted magnetite sand in critical areas

, we are yet to quantify in financial tern

for the past decade.

Notwithstanding the current disadvantageous situation wherein the Philippines has
not been able to greatly benefit from the exploitation of its abundant magnetite sand
resources, the tremendous economic gains that can be derived from magnetite sand cannot
be ignored. Significantly, no less than the incumbent Chief of the Mineral Economics
Division of the Mines and Geosciences Bureau (MGB) of the Department of Environment

and Natural Resources (DENR), Mr, Manuel Banaag has consistently maintained that
“mining magnetite, also known as black sand, has the potential of boosting the country’s
mineral sector, create more jobs and start the local steel industry rolling.” Yet, this can only
be achieved if the national government could muster the political will to require the
establishment of steel manufacturing plants and/or advance processing facilities for
magnetite sand in the Philippines. Indeed, this will significantly lessen our dependency on

imported steel which translates to more infra-structure projects all over the country.

Hence, this bill proposes to prohibit the export of magnetite sand as raw material to
other countries and to require all magnetite sand mining companies to individually or
collectively establish or rent magnetite advance processing plants in the provinces where
they are actually conducting extraction/ mining operations of magnetite sand. Only final
marketable forms of the magnetite sand-based products will be allowed for export.

The passage of this bill will not only create jobs and catalyze economic development
in the respective communities/provinces where the valuable natural resource is being
tapped but shall likewise reduce the volume of extraction to ecologically sustainable levels

pre-empting the adverse environmental impact of mining operations.

In view of the foregoing, the immediate passage of this crucial legislation is

ALFRED| el are

earnestly sought.


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
Second Regular Session

4780

HOUSE BILL NO,

Introduced by Rep. Alfredo “Albee” B. Benitez

AN ACT PROHIBITING THE EXPORTATION OF RAW MAGNETITE SAND

sembled:

Be it enacted by the Senate and the House of representatives in the Philippines a

SEC. 1. Short Title. - This Act shall be known as the “Magnetite Sand Processing Act of
2014”.

SEC, 2. Declaration of State Policy.- Section 2, Article 12 of the Philippine Constitution
states that “All lands of the public domain, waters, minerals, coal, petroleum, and other
mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna,
and other natural resources are owned by the State. With the exception of agricultural lands,
all other natural resources shall not be alienated. The exploration, development, and

utilization of natural resources shall be under the full control and supervision of the State.”

SEC. 3. Definition of Terms, - As used in this Act:

a.) “Magnetite sand” commonly known as black sand, refers to the black colored sand
with high concentration of magnetite which is a magnetic and very dense mineral
iron.

b) “Raw material” refers to the magnetite sand extracted from the mining activities
prior to its processing into iron/ steel products and other value-added final
products.


c) “Processing plant” refers to the factory or manufacturing facility where magnetite
sand/ ores will be processed as raw materials into iron/ steel products and/or into
other final products.

d.) “Final products” refers to the magnetite-based products aside from iron/ steel
products that are produced with advance processing and specialized manufacturing
techniques in order to derive high-value, marketable products such as iron sulfate,
magnets, paints, inks, papers, jewelries, cosmetics, etc

e.) “Basic processing” refers to the rudimentary process of extracting the raw

materials from the mining area and separating the magnetite sand from ordinary
sand, rocks and other non-essentials with the use of magnetic separator. ‘This
process does not actually change the magnetite sand but merely enhances its
quality asa raw material by optimizing the magnetite content.

f) “Advanced processing” refers to the complex processing of the magnetite material
into Direct Reduced Iron (DRI) or into final marketable products like high-grade
steel, iron, magnets, paints, inks, papers, jewelries, cosmetics, and other final
products that resulted from advanced physical and/or chemical transformations of
the basic-processed magnetite.

g,) “Magnetite sand mining companies” refers to the private domestic corporations
duly registered under the laws of the Republic of the Philippines with valid and
existing mineral production sharing agreement (MPSA) that are actually engaged in
mining operations.

h,) “Magnetite sand trading companies” refers to private domestic and/or foreign-
owned corporations, partnerships, associations, or cooperatives duly registered in
accordance with law with pertinent permits and licenses to engage in the business of
trading magnetite sand and other minerals from mining companies.

SEC. 4. Export Prohibition. The export of raw magnetite sand and magnetite ores to other
countries is prohibited under this Act. The Magnetite Sand Mining/ Magnetite Trading
Companies shall only be allowed to transport and export magnetite-based materials in the
form of iron products, steel products, and other valued-added final products derived from
advanced-processed magnetite.

SEC. 5. Establishment of Advanced Processing Plants for Magnetite Sand like Iron/
Steel Manufacturing Plants and Commercial/ Industrial Processing Facilities. All
foreign and/or local magnetite sand mining/ magnetite sand trading companies are
required to bring their materials to basic and advanced processing plants based and
operating within the Philippines. The mining/ trading companies may, subject to existing
laws, establish their own magnetite sand processing facilities or may engage the services of
existing basic and advanced processing facilities based and operating in the Philippines.



SEC. 6. Implementing Rules and Regulations. The implementing rules and regulations for
this Act shall be promulgated by a joint committee comprised of competent representatives
of the Department of Environment and Natural Resources (DENR) and the Department of
‘Trade and Industry (DT!)

SEC. 7. Penal Provision. Any individual who violates any provision of this Act shall suffer
imprisonment of not less than two (2) years and a fine of not less than One Million Pesos
(Php1,000,000.00).

SEC, 8. Repealing Clause. All laws, decrees, orders, rules and regulations or other
issuances or parts thereof inconsistent with the provisions of this Act are hereby repealed
and modified accordingly

SEC.9. Separability Clause. If any clause, sentence, paragraph or part of this Act shall be
adjudged by any Court of competent jurisdiction to be invalid, such judgment shall not
affect, impair or invalidate the remainder of this Act, but shall be confined in its operation
to the clause, sentence, paragraph or part thereof directly involved,

SEC.10. Bffectivity, This Act shall take effect fifteen (15) days following the completion of
its publication either in the Official Gazette or in a newspaper of general circulation in the
Philippines.

Approved.