With the Philippine mining industry holding vast potential, investors are drawn to its rich mineral resources. However, many struggle with navigating the country’s mining process and regulatory requirements. This article offers an overview of the key elements of the Philippine mining regulatory framework.
Legal landscape
Senior Partner
DivinaLaw
Under the Philippine Constitution, all mineral deposits within the country are owned by the state, which has full control and supervision for the exploration, development and utilisation of its resources. However, the state may allow the private sector to explore and develop these resources, provided they meet specific conditions. As a result, the Philippine mining industry is subject to strict regulation.
The Philippine regulatory framework is primarily based on the Philippine Mining Act of 1995 (Republic Act No.7942). Complementary regulations, such as the People’s Small-Scale Mining Act of 1991 (RA No.7076), Executive Order No.79 (2012), Presidential Decree No.1586 (1978), and the Toxic Substance and Hazardous and Nuclear Waste Control Act (RA No.6969), address small-scale mining and responsible extraction practices.
Local government units (LGUs) play a crucial role in the permit process alongside national agencies. The Local Government Code (RA No.7160) granted LGUs the authority to regulate mining operations within their jurisdictions. While the national government issues most permits, LGUs may enforce local regulations so mining activities provide local benefits and comply with environmental and social standards.
Mining permits
Partner
DivinaLaw
Within this legal framework, the government may authorise the private sector to conduct mining operations depending on the scale, purpose and location of the activity. These permits include:
(1) Exploration permit. The Mines and Geosciences Bureau (MGB) issues the exploration permit to allow exploration of a designated area for mineral deposits. This permit may be granted to foreign corporations and has a validity period of two years, which may be renewed for another two years but not to exceed six years.
(2) Mineral agreement. The Secretary of the Department of Energy and Natural Resources (DENR) may grant the exclusive right to extract mineral resources in a designated area through a mineral agreement for 25 years, with an option for renewal. Mineral agreements are reserved for Filipino citizens or Philippine corporations with at least 60% Philippine equity. A mineral agreement may either be a: (a) Mineral production sharing agreement; (b) Co-production agreement; or (c) Joint venture agreement.
(3) Financial or Technical Assistance Agreement (FTAA). Foreign companies wishing to engage in mining in the Philippines must secure an FTAA. Signed and approved by the president, this agreement allows the large-scale exploration, development and utilisation of minerals for 25 years, renewable for a similar period.
(4) Ore transport permit. The MGB issues the ore transport permit to allow the transport of non-processed mineral ores or minerals. The absence of a permit shall be considered prima facie evidence of illegal mining and shall be sufficient cause for the government to confiscate the ores or minerals being transported, along with the tools and equipment utilised, and the vehicle containing them.
(5) Minerals processing permit. The DENR secretary may issue this permit to allow the processing of minerals. This may be granted to a foreign-owned corporation and shall be valid for five years, renewable for like periods but not to exceed a total term of 25 years.
(6) Quarry resources. The provincial or city mining regulatory board may issue a permit to extract and remove quarry materials such as sand, gravel, guano and gemstone resources.
Mining the future
The outlook for the Philippine mining industry remains strong, buoyed by global demand for key minerals such as nickel – used in hybrid and electric vehicle batteries – and gold, whose prices continue to climb amid global economic uncertainty.
This positive momentum is reinforced by the government’s active efforts to support and streamline mining operations. Recent reforms include the digitalisation of permit applications, and proposed reforms allowing the DENR secretary to conduct negotiations for FTAAs instead of a negotiating panel, and the extension of the validity period for exploration permits to six years. These developments signal a more responsive and investment-friendly regulatory environment for the mining sector.
Enrique V Dela Cruz Jr is a senior partner and Ciselie Marie T Gamo-Sisayan is a partner at DivinaLaw in Metro Manila
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