First Metro Investment bares some pros and cons of mining EO 79

Published July 30, 2012 5:25pm

The new executive order (EO) on mining the Palace issued early this month will have a “benign” impact on large-scale miners but will be “adverse” to small-scale operators, First Metro Investment Corp. said Monday.

EO 79’s ban on issuing mineral production sharing agreement (MPSA) “won’t have any effect” on most listed companies who have already secured – prior to the EO – the said contract on revenue sharing with government, according to First Metro Investment’s fortnightly “The Bellweather” on market action and outlook.

Small-scale operators will be “hurt the most” since they will need to secure a “Minahang Bayan” certification with local government units within three months.

“Investors keen on mining could bid for existing MPSAs, 500 of which are reportedly inactive in the country and which the government under the new mining act intends to bid out,” the investment bank of Metrobank Group noted in its report.

“Inappropriate”

But for Mines and Geosciences bureau director Leo Jasareno, the report was “inappropriate” in calling the EO “benign” to large scale and “adverse” to small scale miners.

Jasareno confirmed that large-scale miners may still use their existing MPSA for their operations. But under the new EO, they will have to renew expired MPSA through public bidding instead of the usual application forms.

“When you say ‘benign,’ you are insulated or out of reach by the EO 79. That’s incorrect,” Jasareno told GMA News Online in a phone interview.

The bureau director added that existing holders of MPSA will have to go through the reviews of mining operations under the EO.

As for small scale operators, Jasareno questioned the use of “adverse” to illustrate the effect on what he deemed as “illegal and pollutive mining.”

“The word 'adverse' is inappropriate because, would you term it adverse if small scale mining is characterized by illegal mining and pollutive mining?” Jasareno asked.

Existing MPSAs

It cited Philex Mining Corp., which has existing MPSAs for its Silangan and Kalayaan projects, as well as Oriental Peninsula Resources Inc., which is set to acquire an existing MPSA that covers a project larger than its 2,170-hectare nickel mine in Palawan.

Dizon Copper-Silver Mines Inc., however, will not be affected by the MPSA ban because its current tailings dam project is a “clean-up” and not a mining operation.

In the case of EO 79’s Section 7, which requires defunct mines to be owned by government, Dizon Mines will not be affected by the provision on government acquisition, according to First Metro Investment.

The Dizon Mines tailings dam project won’t revert back to government property as it was “not abandoned nor a defunct mine past its mine life,” according to First Metro Investment citing a 2006 Supreme Court ruling. — Marc Jayson Cayabyab/VS/DVM, GMA News

Tags: mining, eo79,