Mine Production Sharing Agreement by wvr18761

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									PROMOTING A RESPONSIBLE
AND SUSTAINABLE MINERALS
INDUSTRY
HORACIO C. RAMOS
Director
Mines and Geosciences Bureau
Department of Environment and Natural Resources
Republic of the Philippines


Mining Forum
Frankfurt, Germany
June 28, 2007
    Some Key Dates in Philippine Mining
1974:      Parity Rights expired; “Filipinization” of Philippine mining
           operations; 70’s considered as the “boom years”
1986/87:   People Power; Freedom          Constitution;   general    lack    of
           exploration activities.
1991:      Enactment of Local Government Code providing for local
           autonomy and wealth sharing from mining.
1995:      Passage by Congress of the Philippine Mining Act of 1995
           (RA7942); initial foreign investors interest; rise in environmental
           activism.
1996/97:   Marcopper incident; challenge to the Constitutionality of the
           Mining Act; enactment of the Indigenous Peoples Rights Act.
2003:      Start of Revitalization Program for the Philippine Minerals
           Industry; renewed investor interest.
2004/05:   Affirmation by the Philippine          Supreme    Court    of    the
           Constitutionality of the Mining Act.
2008:      Start of a new mining boom?
                   Mining Industry Indicators (2006)
                         GROSS PRODUCTION VALUE IN MINING BY TYPE
                                    (CY 2000 to 2004)

                   80
                               Large Scale Metallic Mining      PhP68.4 billion in 2006; up
                               Small Scale Gold Mining          by 36.25% from 2005
                   70
                               Non-metallic Mining
                               Gross Production
                   60


                   50
In Billion Pesos




                   40


                   30


                   20


                   10


                    0
                        2000     2001        2002        2003   2004        2005         20063
                                                         Year
Mining Industry Indicators (2006)
             Share of Mineral Exports to Total Philippine Exports
              25        Highest in early to mid-
                         70’s; 24.56% in 1973

              20
Percentage




              15
    (%)




              10                                      Gradual growth since
                                                      2003; 4.46% for 2006
               5
               0
               1970 1974 1978 1982 1986 1990 1994 1998 2002 2006
                                                                             4
                                               Year
                Mining Industry Indicators (2006)
                 Taxes, Fees and Royalties from Mining
                                                                Preliminary figure for
                                                                2006 is PhP4.9 billion
                6000
                5000
Million Pesos




                              1992: The excise tax for
                              metallic minerals was
                4000          reduced from 5% to 2%
                              of the gross value.
                3000
                2000
                1000
                   0
                       1997          1999           2001        2003          2005
                                                                                         5
                                                         Year
                 Mining Industry Indicators (2006)

     Employment in the Mining and Quarrying Sector
                 0.80
                                                       2006: 141,000 directly
                 0.70
Percentage (%)




                                                     employed or 0.43% of total
                                                            labor force
                 0.60
                 0.50
                 0.40
                 0.30
                 0.20
                 0.10
                 0.00
                    1970 1974 1978 1982 1986 1990 1994 1998 2002 2006

                                               Year
                Mining Industry Indicators (2006)
                      Mining's Contribution to GDP
                                               2006: PhP59.7 billion at
                                               current prices
                60,000
Million Pesos




                50,000
                40,000
                30,000
                20,000
                10,000
                   -
                      1970 1975 1980 1985 1990 1995 2000 2005
                                                                   7
                                       Year
     OPERATING MINES
1 Polymetallic Mine – Rapu rapu mine
2 Large – scale Mines:
     Lepanto’s Victoria Gold Mine
     Philex’s Padcal Copper Mine
4 Medium-scale Chromite Mines
      Masinloc Project of Benguet Corp.,
      Omasdang Project of Crau Minerals
      Homonhon Project of Heritage Res.
      Redondo Project of Krominco, Inc.
6 Medium-scale Nickel Mines
     Rio Tuba Nickel Mine
     Taganito Nickel Mine
     Cagdianao Nickel Mine
     Sigbanog Project, Hinatuan Mining
     Tagana-an Project, Hinatuan Mining
     Berong Nickel Project of TMM
5 Medium-scale Gold Mines
     Canatuan Project of TVI
     Acupan Gold Operations of Benguet
     Diwalwal Direct State Development Project
     Banahaw Gold Project, Philsaga Mining Corp.
     Masara Mine, Apex/Crew Minerals
15 Cement Plants and Quarries
 1 Nickel Processing Plant in Palawan
 1 Copper Smelter (PASAR) in Leyte 8
  2000+ Quarries and small scale mines
           Philippine Mineral Potential
METALLIC MINERAL                                 Zinc
  RESOURCES/
                                         Alum inum
 RESERVES 2005                                          Molybdenum
                                     Manganese

                                          Iron

                                  Chrom ite
                                                                     Gold: 4.018 BMT
                      Nickel: 1.66 BMT                                 @ 1.08 gpt
                         @1.31% Ni




    MINERAL
   ENDOWMENT

 • 3rd for gold
 • 4th for copper
 • 5th for nickel
 • 6th for chromite
                                           Copper:
                                         6.76 BMT @                             9
                                           0.49%Cu
          Philippine Mineral Potential
NON-METALLIC MINERAL     Guano/RockPhosphate
RESOURCES/ RESERVES
                                                Marbleized
        2005
                                                Limestone
                                               12.04 B cu.m.



                                                  Magnesite
                                                                      Aggregates:
                                                                      3.36 B cu.m.
                                                  Perlite
                                                                         Shale:
             Limestone                                                  2.54 BMT
                                                Feldspar
             40.25 BMT                                                    Silica:
                                                     Clay               2.162 BMT
                                                            Sulphur
                                                            Gypsum
                                                        Asbestos
Construction and
                                                        Bentonite
cement raw materials
predominate                                          Zeolite
                                                     Talc
                                                                           10
                                                   Diatom aceous Earth
    Philippine Mineral Potential




                            PORPHYRY COPPER
              PHILIPPINES        BELTS




PORPHYRY COPPER
     BELTS



                                        11
       Philippine Mineral Potential
                Mineral Land Distribution
                  (As % of Total Philippine Land Area)



                                      Approximately 2% currently covered
30% or 9 Million Hectares                  by permits


               High-Potential

                                             70%
                                     Low-Medium Potential
                                       Potential Areas and
     1
                     2                      Deposits
                                  1.  Luzon Central Cordillera – Au,
             4
                                      Cu, Fe, Mn
 3                                2. Northern Sierra Madre – Cr, Ni,
                     5                Cu
                                  3. Zambales – Cr, Ni, Co, Pt, Cu, Au
                                  4. Vizcaya-Aurora – Cu, Au
         6                        5. Bicol – Au, Fe, Cu
                 7                6. Southern Tagalog – Cu, Au, Ni,
                                      Co
                              8   7. Central Visayas – Cu, Au, Mn
                                  8. Samar-Eastern Mindanao – Au,
                                      Cu, Fe, Cr, Ni, Co, Pt, Mn
                          9
12           10
                                  9. North Central Mindanao – Cr, Cu,
                                      Au
                                  10. Zamboanga Peninsula – Au, Cu,
                                      Cr, Fe
                                  11. Southern Mindanao – Cu, Au
                                  12. Palawan – Cr, Ni, Co, Pt, Au, Rare
                         11           Earth Elements
                                                  NEAR-COAST AND
 Magnetite
                                                OFFSHORE RESOURCES
                              Gold               Philippines offshore area including
Chromite                                          EEZ is 2.2 million Km2
  Magnetite                                      Potential offshore mineral
                                                  resources:
    Manganese
                                     Chromite
                                                •   Placer minerals including gold,
                                                    chromite, magnetite, silica
                  Magnetite                     •   Offshore Palawan also holds
                                                    resources of manganese
                                                •   Aggregate resources (sand &
                                                    gravel)
                Gold                            •   Decorative stones, manganese
                                                    nodules/encrustrations with
Chromite                                            associated copper, gold, zinc,
                                                    cobalt


                                Chromite
                                  Philippine Mineral Potential
                                Global Exploration Expenditures (Source: MEG)
                              7.5                 Global     exploration      expenditures
                                                  bottomed in 2002 at US$1.9 billion but
                                Exploration Expenditures (1997 - 2006):
                                7
Expenditures in Billion US$




                              6.5                 with better metal prices, improving
                                                  investment conditions and “awakening’
                                6
                              5.5 ≈ US$200 million
                                                  of junior companies as risen to the
                                                  current high of US$7.5 billion
                                5
                              4.5
                                Recent Discoveries:
                                4
                              3.5
                                • Far Southeast Copper Orebody
                                3
                              2.5
                                • Tampakan Copper-Gold Orebody
                                2
                              1.5
                                1
                                •
                              0.5 Boyongan Gold Orebody
                                0
                                  1993 1995  1997     1999       2001        2003      2005
                                                              Year
          Philippine Mineral Potential
 NICKEL
• The Philippine nickel resource is the biggest in Southeast Asia
• Improved technology makes low-grade lateritic ore viable

CHROMITE
• Improving chromite prices could revive Philippine chromite mines in
  Zambales, Palawan, Samar, Dinagat and Zamboanga.
IRON
• The increasing demand for iron is reviving exploration for the commodity
  in the Philippines
• The spatial relationship of carbonate rocks with younger intrusives in the
  Philippines offers the possibility of finding new skarn deposits
LEAD and ZINC
• Ophiolitic and Early Tertiary arc terranes in the Philippines holds much
  promise for deposits similar to those of Lafayette in Rapu-Rapu island.
PHILIPPINE NATIONAL
   MINING POLICY
   FOUNDATIONS
A. Philippine Mining Act and RIRR


– Enshrined     the    principles    of
  sustainable mining and concept of
  planning           for           mine
  closure/integrated    mine    closure
  planning;
– Strong focus on life of mine
  environmental        and       social
  responsibilities
Major Types of Mining Tenements

– Exploration Permit (EP)
– Mineral Agreement (MA)
      Mineral     Production  Sharing
       Agreement (MPSA)
      Joint Venture Agreement
      Co-Production Agreement
– Financial or Technical Assistance
  Agreement (FTAA)
– Mineral Processing Permit (MPP)
•   PRE-EXPLORATION                        Prepare    Social       Implement Annual SDMP
    Certificate of Satisfactory            Development and
    Environmental Management               Management
    and Community Relations                Program (SDMP)                                     Implement     Final
    Record (CEMCRR)                                                                           Mine Rehabilitation
                                           Prepare    Safety       Implement Annual SHP
                                           and        Health                                  & Decommissioning
                                           Program (SHP)                                      Plan (FMR/DP)
    •   Environmental Work Program
                                                                                              •Decommissioning
        (EnWP)
                                                                                              •Rehabilitation
    •   Safety and Health Program
        (integrated with the EnWP)                                                            •Social
                                            Environmental          Implement Annual EPEP
    •   Host      Community     Devt.       Protection     and                                •Maintenance       and
        (voluntary)                                                Establish the Contingent   Monitoring
                                            Enhancement
                                                                   Liability            and
                                            Program (EPEP)
        •   Preparation of Environmental                           Rehabilitation     Fund    POST CLOSURE
                                            with Final Mine
            Impact Statement (EIS) as                              (CLRF)                     - Implement Site
                                            Rehabilitation and
            basis for an Environmental      Decommissioning                                   Management
            Compliance Certificate (ECC)    Plan (FMR/DP)                                     Plan (SMP)
                                                                 SHES Monitoring and Audit




S
T
A           Exploration/Feasibility          Development
                                                                    Operating Period
                                                                                                        Mine
G                    Period
                                           and Construction
                                                                                                    Closure
                                                 Period
E
Other Relevant Laws Affecting Mining



– Indigenous Peoples Rights Act of 1997
– Local Government Code of 1991
– National Integrated Protected Areas
  System
– Environmental     Laws,    Rules    and
  Regulations
– Small Scale Mining Laws
      B. Executive Order No. 270
         The National Policy Agenda on
       Revitalizing Mining in the Philippines

– Based on the policy declaration
  of H.E. President Arroyo in
  2003;
– Product     of    a   10-month
  consultation process among
  the 3 key stakeholders;
– Called for the development of
  the Mineral Action Plan, the
  current industry roadmap; and
– Led to the Creation of the
  Mineral Development Council .
            Objectives of EO No. 270
Fair and equitable
sharing of benefits
among          the
company,                                         Recognition of the
government and the                               rights           and
                                      SOCIAL
mining communities                               participation of the
                                                 communities      and
                       ECONOMIC                  indigenous peoples
                                                 in            mining
                                                 operations


Adequate
                      ENVIRONMENT
protection of the                   GOVERNANCE
environment, not
only before and
during      mining
operations     but                               Competitive
even long after                                  investment     climate
mining has ceased                                and          adequate
                                                 protection    of   the
                                                 rights and privileges
                                                 of mining investors
23 Mining Development Projects
                 (Original – 2004)

               11 Copper Projects
  Tampakan Copper Project        Amacan Copper Project
  Far Southeast Copper Project   Rapu-Rapu Polymetallic
  Boyongan Copper Project        Didipio Cu-Au Project
  Carmen Copper Project          Kingking Cu-Au Project
  Batong Buhay Copper Project    Padcal Expansion Project
  San Antonio Copper Project

                6 Gold Projects
          Itogon Gold Project        Diwalwal Gold Project
          Masbate Gold Project       Siana Gold Project
          Teresa Gold Project        Canatuan Au-Cu Project

                    5 Nickel Projects
            Mindoro Nickel Project    ACT Nickel Project
            Palawan HPAL Project      Pujada Nickel Project
            Nonoc Nickel Project

                         1 Cement Project
                          Akle Cement, Project
    41 Exploration Projects
                        (Original-2004)
            12 Copper/Copper-Gold Projects
Ampucao Proj.(Benguet)      Sogod Proj. (S. Leyte)        Colet Proj.(Negros Occ.
Paco Proj.(Surigao Norte)   Tagpura Proj. (Compostela)    Claveria Proj.(Cagayan)
Tabuk Proj. (Kalinga)       Hixbar Proj. (Rapu-Rapu Is)   Papaya Proj.(N. Vizcaya
Gambang Proj.(Benguet)      Manat Proj. (Compostela)      Conner Proj. (Apayao)

                       24 Gold Projects
                Kingking Proj. (Davao Or.) Pantuyan Proj. (Leyte)
                Panag Proj. (Compostela)     Batoto Proj.(Compostela)
                Del Gallego Proj. (Quezon) Mabuhay Proj. (Surigao Norte)
                Negros Proj. (Negros Or.)    Kematu Proj. (South Cotabato)
                Alicia Proj. (Zamboanga Sur) Archangel Proj. (Batangas)
                Kalaya-an Proj. (Surigao N.) Hinonangan Proj. (S. Leyte)
                Pana-on Proj. (Leyte)        Labo Proj. (Camarines Norte)
                Tongonan Proj. (Leyte)       Nalesbitan Proj.(Camarines Norte
                Surigao Proj. (Surigao N.)   Cordon Proj. (Isabela)
                Pao Proj. (Nueva Vizcaya)    Pantingan Proj. (Bataan)
                Road 5 M Proj. (Davao Or.) Agata Proj. (Agusan del Norte)
                Camp 3 Proj. (Benguet)       TMC Proj. (Antique-Iloilo)

                        3 Nickel (-PGE) Projects
                                     Acoje Proj. (Zambales)
                                     Sta. Cruz Proj. (Zambales)
                                     Berong Proj. (Palawan)

                     1 Bauxite Project
                            Samar Bauxite Project, (Samar)

                     1 Sulfur Project
                       Pamplona, Negros Oriental
              Economic Potential


•   US $ 6.5 B   - Foreign direct investments
•   US $ 3.4 B   - Annual sales/foreign exchange
•   US $ 61.4 M - Annual excise tax on minerals
•   US $ 432 M - Annual corporate income tax
•   200,000      - Additional direct and indirect
                  employment
UPDATES ON THE
PRIORITY MINING
   PROJECTS
Mining Projects For Development

               9 Copper Projects
  Tampakan Copper Project        Amacan Copper Project
  Far Southeast Copper Project   Didipio Cu-Au Project
  Boyongan Copper Project        Kingking Cu-Au Project
  Carmen Copper Project          Colet Copper Project
  Batong Buhay Copper Project


                6 Gold Projects
          Itogon Gold Project    Diwalwal Gold Project
          Masbate Gold Project   Siana Gold Project
          Masara Gold Project    Canatuan Expansion Proj

                    5 Nickel Projects
            Mindoro Nickel Project ACT Nickel Project
            Palawan HPP Expansion Hallmark Nickel Project
            Nonoc Nickel Project


                  1 Cement Project
                   Akle Cement, Project
     STATUS            PROJECT        2006 2007    2008    2009      2010     2011        REMARKS
OPERATING /      Palawan HPP                                                         Operating/Expansion
EXPANSION        Rapu-Rapu Cu-Au-Zn                                                  Operating
                 Canatuan Ag-Au                                                      Operating/Expansion
                 Teresa Gold                                                         Operating
                 Sto. Tomas II Cu                                                    Operating
                 Berong Nickel                                                       Operating
CONSTRUCTION &   ACT Nickel                       Q4- 2007                           For test shipment
DEVELOPMENT      Didipio Cu-Au                          Q2 -. 2008                   Pre-development
FEASIBILITY /    Masbate Gold                           Q2 -. 2008                   Final feasibility
FINANCING        Carmen Copper                            Q4 - 2008                  Rehabilitation
                 King King Cu-Au                               By 2009               Financing
                 Far Southeast Cu                              By 2009               TechReview/financing
                 Itogon Gold                                   By 2009         Mine rehab/financing
                 Tampakan Copper                               By 2009         Final Feasibility
                 Colet Copper                                  By 2009         Final Feasibility
                 Siana Gold                                    By 2009         Pre-Feasibility
                 Nonoc Nickel                                          By 2010 Under negotiation
                 Akle Cement                                           By 2010 Plant site preparation
EXPLORATION      Boyongan Copper                               By 2009         Drilling
                 Mindoro Nickel                                        By 2010 Social Prep’n/Drilling
                 Hallmark Nickel                                   By 2011     Drilling
FOR BIDDING      Diwalwal Gold                                 By 2009              Tech review/Bidding
                 Amacan Copper                                              By 2010 Tech review/Bidding
                 BatongBuhay Cu-Au                                          By 2010 Tech review/Bidding
THE MINING INDUSTRY
      TO 2011
                        REPORTED AND PROJECTED INVESTMENTS
                                     (2004-2010)
                3,000
                                                                  2,762
                2,500
(US$ Million)
Investments




                2,000
                                                          1,559           1,602
                1,500
                                 Reported
                1,000
                                  447              348
                 500
                          139               108
                  -
                          2004   2005       2006   2007   2008    2009    2010
                                                                            31
                                                   Year
                    REPORTED AND PROJECTED NEW JOBS
                               (2004-2010)
           16,000
                                                                14,047
           14,000
                                                       11,854
           12,000
New Jobs




           10,000
            8,000
                            Reported
            6,000                                                        4,800
            4,000            3,041             3,250
                    2,000              1,540
            2,000
              -
                    2004     2005      2006    2007    2008     2009     2010
                                                                             32
                                               Year
                                  ACTUAL AND PROJECTED COPPER, GOLD AND SILVER SALES
                                   VOLUME FROM EXISTING AND NEW PROJECTS (2007-2011)

                           ACTUAL AND PROJECTED VOLUME OF SALES OF                                                              ACTUAL AND PROJECTED VOLUME OF SALES OF GOLD
                                       COPPER (2004-2011)                                                                                    AND SILVER (2004-2011)

                                                                                                                            3,500,000
                        900,000




                                                                                            VOLUME OF SALES (TROY OUNCES)
                        800,000                                                                                             3,000,000
VOLUME OF SALES (DMT)




                        700,000
                                                                                                                                                      Gold
                                                                                                                            2,500,000
                                                                                                                                                      Silver
                        600,000
                                                                                                                            2,000,000
                        500,000                                                                                                                Actual
                        400,000                                                                                             1,500,000

                        300,000                                                                                             1,000,000

                        200,000
                                         Actual                                                                              500,000
                        100,000
                                                                                                                                  -
                            -
                                  2004    2005    2006   2007   2008   2009   2010   2011                                               2004   2005     2006   2007   2008   2009   2010   2011

                                                           YEAR                                                                                                   YEAR
                                                                                                                                                                                      33
                                  ACTUAL AND PROJECTED CHROMITE, ZINC AND NICKEL SALES
                                    VOLUME FROM EXISTING AND NEW PROJECTS (2007-2011)

                            ACTUAL AND PROJECTED VOLUME OF SALES                                                        ACTUAL AND PROJECTED VOLUME OF SALES
                             OF CHROMITE, ZINC AND NICKEL (2004-2011)
                                                                                                                               OF NICKEL ORE (2004-2011)

                        160,000                                                                                       4,000,000

                        140,000                                                                                       3,500,000




                                                                                              VOLUME OF SALES (DMT)
VOLUME OF SALES (DMT)




                        120,000                                                                                       3,000,000


                        100,000                 Chromite                                                              2,500,000
                                                Zinc
                                                Nickel                                                                2,000,000
                         80,000

                                                                                                                      1,500,000
                         60,000
                                                                                                                      1,000,000
                         40,000
                                                                                                                       500,000
                         20,000
                                                                                                                            -
                            -                                                                                                     2004 2005 2006 2007 2008 2009 2010 2011
                                  2004   2005    2006      2007   2008   2009   2010   2011
                                                                                                                                                   YEAR
                                                             YEAR                                                                                                 34
                                     Actual and Projected Mineral Sales Value From
                                        Existing and New Projects (2007 - 2011)
                               6,000
Gross Sales (in US$ Million)




                                                   New Developm ent Projects
                               5,000

                                                   Existing Operating Mines
                               4,000

                               3,000
                                          Actual
                               2,000

                               1,000

                                 -
                                        2004   2005     2006    2007    2008   2009   2010   2011

                                                                   Year
            Policy Reforms

– Revisiting of the 24 Priority Mining Projects to
  include new projects that have potentials of
  contributing to the goals of the program.

– Review of the Mineral Action Plan to track down
  accomplishments and to review and identify
  gaps/concerns that need attention.

– Preparation of an Industrialization Plan for the
  development of upstream and downstream
  industries.
               Policy Reforms
– Full activation of the Minerals Development Council
  (MDC); establishment of regional MDCs;

– Conduct of legal study by MDC on the mining
  moratoriums;

– Touching base with civil society groups (e.g. Bishops-
  Businessmen’s Conference) for stakeholder dialogues.

– Further amendments to DAO 96-40 (e.g. Increase in
  SDMP Allocation and Simplification of Procedures) and
  FTAA Fiscal Regime.

– Addressing investor’s concern on exploration/mining
  area availability and non-performing mining tenements.
         Concluding Statement
Combined with positive developments in the local
scene and the so-called period of prosperity for
the global minerals industry that resulted in
increased exploration spending and higher
demands and prices for metals, the Philippines is
both bullish and cautious.

Bullish about prospects for an industry take off
next year and cautious of the challenges that
comes with increasing mining activities.

But in the bottom-line, the Philippines believes
that, for as long as done responsibly, mining can
be pro-people and pro-environment in creating
wealth and improving the quality of life of the
Filipinos consistent with the principles of...
www.MGB.gov.ph
 Mines and Geosciences Bureau

								
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