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Legal issues hinder privatization of state mining assets — DoF

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A worker looks at an open pit mine in Albay province in this Feb. 5, 2007 file photo. — REUTERS/ROMEO RANOCO/FILE PHOTO

By Beatrice M. Laforga, Reporter

THE Department of Finance (DoF) has created a task group to address the lawsuits and other legal issues that are slowing the efforts to privatize state mining assets.

“We are forming an interagency team to study ways on how we can clear the path for these assets to be privatized and revive their operations,” Finance Secretary Carlos G. Dominguez III said in a statement.

The newly created body consists of representatives from the DoF, the Department of Environment and Natural Resources (DENR), Mines and Geosciences Bureau (MGB), the  Privatization and Management Office (PMO), and the Office of the Solicitor General (OSG).

Aside from legal issues, MGB Director Wilfredo G. Moncano said the technical working group will also look at economic, environmental, social and technical issues.

“It appears there are legal impediments in at least two of these assets, social and environmental issues in some, and therefore a resolution of all these challenges will be ideal before the privatization can proceed, or there may be potential investors willing to shoulder the risks, provided they knew prior that there is or are such issue(s) existing,” Mr. Moncano said in a Viber message on Sunday.

“The government agencies will work to mitigate if not eliminate these issues,” he added.

Chamber of Mines of the Philippines (COMP) Executive Director Ronald S. Recidoro said developing the old and unused mines could help with overall economic recovery as well as resolve the long-standing social and environmental issues surrounding the abandoned assets.

“Government can avail of a range of legal options to resolve the legal entanglements involving these assets. The interagency team can review these options and make the proper recommendations to the DoF. But if time is of the essence, they may opt to negotiate with the parties and arrive at a good faith settlement that will be beneficial for all parties,” Mr. Recidoro said in a Viber message Sunday.

However, he stressed that the privatization efforts should be completed as soon as possible so the mines can be productive again.

“Government may also want to look at its other mineral assets that are similarly burdened by legal issues and package these into projects that may be opened for bidding,” he added.

Among the government’s idle mining assets are the copper-gold project of the Maricalum Mining Corp. (Maricalum Mining) in Negros Occidental, the nickel mines of the Nonoc Mining and Industrial Corp. (Nonoc Mining) in Surigao del Norte, and the gold- and copper-rich North Davao Mining property (North Davao Mining) in Davao del Norte, according to the PMO.

The DoF said the copper mines of the Basay Mining Corp. (Basay Mining) in Negros Oriental and the nickel mine that had been operated by the Marinduque Mining and Industrial Corp. (MMIC Bagacay Mine) cannot be operated because of the “legal concerns” hindering the privatization of the assets.

Mr. Dominguez earlier this month said the government is looking at privatizing its mining assets to revive the industry, raise more revenues and provide more jobs especially in rural areas.

The DoF said it once tried to auction off some shares of these mining companies but when the highest bidder did not fulfill its obligations, this led to “decades of litigation” and left the assets idle.

PMO estimates showed Basay Mining may have at least 105 million tons of copper ore and could generate at least P1 billion. Its operations were suspended in 1983 due to insufficient funds. The company had obtained credit and loan accommodations from the Philippine National Bank (PNB) through its deed of assignment of mining claims and leasehold rights.

Executive Order 79, issued in 2012, placed a moratorium on new mining permits “until a legislation rationalizing existing revenue-sharing schemes and mechanisms shall have taken effect.”

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