By Kenneth Christiane L. Basilio, Reporter

A BILL establishing a new fiscal regime for large-scale miners has hit an impasse at the bicameral conference committee, with legislators failing to resolve a deadlock over a proposed ban on ore exports, a senior member of the House of Representatives said.

A “workable compromise” on the mineral ore export ban is necessary for the measure to move forward, Albay Rep. Jose Ma. Clemente S. Salceda told BusinessWorld.

“It’s an impasse,” he said via Viber, adding that such a compromise has not yet emerged.

The ore export ban, which Mr. Salceda said was supported by some Senators, is designed to force investment in domestic mineral processing facilities. The absence of such processing plants makes the mining industry an ore exporter, losing out on the opportunity to add value to the Philippines’ commodity mineral ores.

The Philippines is estimated to hold about $1 trillion worth of copper, gold, nickel, zinc and silver ore reserves, much of which is shipped in ore form to Japan or China in the absence of processing infrastructure and high power costs.

Mr. Salceda said the proposal to force investment in domestic smelting facilities “could backfire” because of the “risks of pushing exports underground, losing up to $4 billion (P223 billion) in legal trade, and scaring off investors already starting to process locally,” he said.

“We are not ready to refine everything here,” he added, noting that stubbornly high power costs are discouraging investment in smelting facilities. Electricity rates are among the highest in Southeast Asia, according to a 2022 Ateneo de Manila University report.

“Industrial power costs are over $0.10 per kilowatt-hour,” Mr. Salceda said. “Smelters need $0.05 to $0.07 to operate competitively.”

He said the government should levy an export tax instead of an outright export ban, but the Department of Finance is not supportive of his proposal to the bicameral conference committee.

The mining industry does not support an export ban nor an export tax over raw minerals, Chamber of Mines of the Philippines Chairman Michael T. Toledo said via Viber.

“We support neither proposal,” he said. “Imposing an export tax on miners while already increasing excise taxes on large-scale metallic mining… would result in an overlapping tax situation that would reduce the mining sector’s viability.”

He said potential investors may see the proposed tax regime as “unstable” and “overly burdensome,” which could discourage foreign direct investment in mining. 

“A balanced, transparent and stable tax policy is generally more effective for sustainable resource management,” Mr. Toledo said.

Authorities should instead look at improving infrastructure and making electricity cheaper while tweaking mining regulations to attract investment in mineral processing, he added.

The government is pushing to simplify its mining fiscal regime to capture a greater share of industry profits, with President Ferdinand R. Marcos, Jr. saying last year that rationalizing duties could create a more equitable wealth-sharing system from the industry while making taxes simpler to attract investment.

Tax obligations for miners currently vary depending on their agreements with the government.

A priority measure of the Marcos administration, the proposed mining fiscal regime overhaul intends to charge large-scale miners operating within mineral reservations 4% of their gross output, according to House Bill No. 8937, which was approved in September 2023.

Senators are pushing for a 5% rate in Senate Bill No. 2826, which passed in February.

The House also proposed an eight-tier margin-based royalty regime ranging from 1.5% to 5% and a 10-tier windfall profit tax system ranging from 1% to 10%; while the Senate is seeking a five-tier margin-based royalty system ranging from 1% to 5% and a windfall profit tax system ranging from 1% to 10%.

The bicameral conference committee has been meeting since February, not counting an election campaign break.

The 19^th Congress is set to resume session on June 2 for its last two weeks, which would be the final opportunity for both chambers’ representatives to finalize the measure before the new Congressional starts in late July.

Failure to pass the proposed mining fiscal regime would be a “waste of time” for “the industry, other private stakeholders and the government,” Mr. Toledo said adding that the lack of progress towards a signed law could cut into the government’s ability to effectively capture revenue from the industry.

SPEAKER Ferdinand Martin G. Romualdez directed a congressional think-tank to assess the feasibility of making the Marcos administration’s P20-per-kilo rice program available to half the population, with the study to evaluate the program’s fiscal requirements and the legislative means to move it forward.

The Congressional Policy and Budget Research Department was tasked with producing a report within 60 days, to guide legislators during budget hearings set later this year, Mr. Romualdez said.

“This study will not be limited to subsidy calculations. We need to overhaul the entire system — from seed to store shelf,” he said in a statement.

The government in early May started selling P20-per-kilo rice in some state-subsidized mini-markets, and plans to continue retailing the subsidized rice to low-income families and other disadvantaged categories until December.

President Ferdinand R. Marcos, Jr. campaigned in 2022 on a pledge to lower rice prices to P20 per kilo, but the early years of his administration have been marked by a surge in the cost of rice.

“If it can be done in some areas, it should be achievable nationwide,” Mr. Romualdez said. “It is now our job in Congress to support that vision with data, strategy and decisive legislation.”

The Speaker last month pledged to allocate funding for the rice subsidy program in the 2026 budget.

Mr. Romualdez said the program could cost the government about P51.1 billion annually, leading him to propose a four-year “phase-in plan” to ensure its sustainability.

“In 2025, the program will cover only the bottom 20% of the population, requiring about P17 billion. In 2026, it will expand to the bottom 35%, costing P30 billion,” he said.

“By 2027, it could reach the bottom 50%, with the full P51 billion requirement,” he added, saying that authorities should look at optimizing the system and integrating it with other food aid programs by 2028. — Kenneth Christiane L. Basilio