Enhancing Transparency in Philippines' Mining Sector

1. The Philippines Experiences in improving transparency and management in mining sector Hotel Borobudur, Jakarta, Indonesia April 17, 2013

2. MINERAL RESOURCES • Metallic • Gold • Copper • Nickel • Iron • Chromite • Non-Metallic • Sand & gravel • Limestone • Marble • Clay Department of Environment and Natural Resources Republic of the Philippines

3. VALUE OF SELECTED PHILIPPINE MINERAL RESOURCES October 18,2012 estimate ◄

4. approved Mining Tenements (As of february 2013) Department of Environment and Natural Resources Republic of the Philippines

5. 36 Operating Metallic Mines and 2 Processing Plants • 3 Copper Mines (w/ Au & Ag) • 1 Copper Mine (w/ Au, Ag & Zn) • 6 Gold Mines • 3 Chromite Mines • 1 Iron Mine • 1 Magnetite Mine • 21 Nickel Mines • 1 Nickel Processing Plant • 1 Copper Processing Plant • 2000+ sand and gravel, and other non-metallic small-scale operations Department of Environment and Natural Resources Republic of the Philippines

6. 55 Operating Non-Metallic Mines

7. Industry Performance-GLOBAL RANKING- Department of Environment and Natural Resources Republic of the Philippines

8. CHALLENGES Politics Lack of Benefits MINING INDUSTRY Propaganda (Advocacy Groups) Current Violations & Malpractices Legacy Mines (historical track records) Lack of Information STRONG ANTI MINING SENTIMENTS

9. Results of Anti-Mining SentimentS Department of Environment and Natural Resources Republic of the Philippines • LGUs issuing ordinances and resolutions against mining; • Congress passing resolutions and considering House Bills declaring mining free provinces and cities; • Government increasing regulatory requirements; and • Concerned groups/organizations/citizens filing complaints and cases.

10. MINING STUDY GROUP • Created per instruction of the President • Tasked to finalize the mining industry policies • Composed of the DENR Secretary, Presidential Assistants on Climate Change and on Environmental Protection, and Vice-Chair of the Climate Change Commission Department of Environment and Natural Resources Republic of the Philippines

11. Major Concerns identified thru series of consultations • Government • Maximizing revenues; enforcement of laws; regulation • Mining Industry • Protection of investments; stable policy • CSO/NGOs/Church/Community • Destruction of the environment; human rights • IPs • Right to ancestral lands; benefits from mining; validity and transparency of the process undertaken • LGUs • Local autonomy (for those who want mining); protection of the environment (for those against); profit sharing and speedy disbursement

12. EXECUTIVE ORDER NO. 79 • Institutionalizing and implementing reforms in the Philippine mining sector, providing policies and guidelines to ensure environmental protection and responsible mining in the utilization of mineral resources • Signed on 06 July 2012 Department of Environment and Natural Resources Republic of the Philippines

13. Guiding Principles • Ensure responsible mining’s contribution to the country’s sustainable development • Adopt international best practices to promote good governance and integrity in the sector • Ensure the protection of the environment by adopting technically and scientifically sound and generally accepted methods as well as indigenous best practices • Ensure consistency of national laws and local issuances, and harmonize laws, policies, and regulation • Ensure a fair, adequate, and equitably shared economic benefit for the country and the people • Deliver efficient and effective management of the mining sector, both large and small scale

14. EO PROVISIONS TO ENSURE RESPONSIBLE MINING • Areas Closed to Mining Applications • Full Enforcement of Environmental Standards • Review of the Performance of Existing Mining Operations and Cleansing of Non-Moving Mining Rights Holders • Opening of Areas for Mining Through Competitive Public Bidding • Value-Adding Activities and the Development of Downstream Industries for the Mineral Sector

15. EO PROVISIONS TO ENSURE RESPONSIBLE MINING • Constituting the Climate Change Adaptation and Mitigation and Economic Development Cabinet Clusters as the Mining Industry Coordinating Council (MICC) • Creating a One-Stop Shop for All Mining Applications and Procedures • Measures to Improve Small-Scale Mining Activities

16. EO PROVISIONS TO ENSURE RESPONSIBLE MINING • Creation of a Centralized Database for the Mining Industry • Integrated Map System to Include Mining Related Maps • Improving Transparency in the industry by Joining the Extractive Industries Transparency Initiative

17. PRESIDENT AQUINO’s SOCIAL CONTRACT with the Filipino people Reduce poverty! Promote “daangmatuwid!” (anti- corruption)

18. 3.5 billion people live in countries rich in oil, gas and • minerals • With good governance, the exploitation of these • resources can generate large revenues to foster • economic growth and reduce poverty • When governance is weak, such resource revenues • may result in poverty, corruption and conflict • The Extractive Industries Transparency Initiative (EITI) aims to strengthen governance by improving transparency and accountability in the extractives sector.

19. What is EITI? • A global standard ensuring transparency of revenues from natural resources…

20. What is EITI? • … reforms via a multi-stakeholder coalition

21. EITI Criteria • Regular publication of all extractives payments by companies and all extractives revenues received by government in a publicly accessible, and comprehensible manner • Payments and revenues are the subject of a credible, independent audit under international audit standards • Payments and revenues are reconciled by a credible, independent administrator, including opinion on discrepancies • Approach extended to all firms, including GOCCs • CSOs actively engaged as a participant in the design, monitoring & evaluation of process, & contributes to public debate • A public, financially sustainable work plan for the above is developed by the host government, including measurable targets, a timetable and an assessment of capacity constraints

22. EITI BENEFITS • Governments benefit from following an internationally recognised transparency standard that demonstrates commitment to reform and anti-corruption, leading to improvements to the tax collection process and enhanced trust and stability in a volatile sector.

23. EITI BENEFITS • Companies benefit from a level playing field in which all companies are required to disclose the same information. • They also benefit from an improved and more stable investment climate in which they can better engage with citizens and civil society.

24. EITI BENEFITS • Citizens and civil society benefit from receiving reliable information about the sector and a multi-stakeholder platform where they can better hold the government and companies to account.

25. Updates & Actions Taken • Visits by EITI Int’l Secretariat, Revenue Watch Inst. & Indonesian Parliamentary Center to express support for PH implementation of EITI. • Exploratory meetings held with Bantay Kita on 27 July & 3 Aug; exploratory meeting with Chamber of Mines of the Philippines on August 14. • Agreement reached to set up an Interim MSG with Bantay Kita and COMP representing civil society & business sectors.

26. The EITI Compliance Process EITI SIGN-UP EITI CANDIDATE (1.5 years) EITI COMPLIANT • Requirements: • Issue public statement • Commit to work w/ stakeholders • Appoint EITI lead official • Form MSG • Craft EITI Work Plan Preparation of EITI Report (8 Requirements) Retaining Compliance: Maintain adherence to all requirements… Disclosure & Dissemination (5 Requirements) Review & Validation (2 Requirements) else… Suspension

27. EITI Candidacy Checklist • The government is required to issue an unequivocal public statement of its intention to implement EITI • EO 79, Section 14. Improving Transparency in the Industry by Joining the Extractive Industries Transparency Initiative

28. EITI Candidacy Checklist The government is required to appoint a senior individual to lead on the implementation of EITI • Secretary Elisea Gozun was identified in the first MICC meeting last July 25, 2012, to lead the process of complying the EITI

29. Designation of the Lead Senior Official of PH-EITI

30. EITI Candidacy Checklist  The government is required to commit to work with civil society and companies on the implementation of EITI • met with Bantay Kita , the Chamber of Mines and other large scale mining companies that are not members of the Chamber & reps of the Petroleum Assn of the Phil • Regional CSO consultative Workshops held • The EITI Rulebook states that “Civil society and companies must be substantially engaged in the design, implementation, monitoring and evaluation of the EITI process, contributing to public debate.”

31. EITI Candidacy Checklist  The government is required to establish a multi-stakeholder group (MSG) to oversee the implementation of EITI • The interim Multi-Stakeholder group was convened on August 21, 2012, composed of 9 members. * Final members of the MSG selected by CSOs on Jan 17, industry reps from Chamber of Mines of the Phil, Petroleum Association of the Phil, and large scale miners that are not members of the Chamber; govt reps. inlcude OP, DENR, DOF, DOE & ULAP.

32. ACTIONS TAKEN • Mobilized support for CSO outreach: - October 18-19 Training of Trainors - Regional Consultations: * Baguio Nov 26-27 * NCR Nov 29-30 * Davao Dec 3-4 * Pagadian Dec 6-7 * Cebu Dec 10-11

33. Updates & Actions Taken • Technical Working Group (TWG) established and actively working • Meetings held on: - August 10 - August 17 - November 6 - December 5

34. The EITI TWG • Sec. Gozun • EITI Lead Official + TWG chair • DENR (MGB) • general mining data, regulation & linkages • DoF (BIR, BoC, BLGF) • mining revenues (nat’l – BIR & BoC; local – BLGF) • DILG • small mining revenues & regulation by LGUs • DoE • oil industry regulation, revenues & other data • NEDA • MICC Secretariat • internal communication • DBM (RIU, SPIB, BMB-G) • LGU rev shares (BMB-G) • regulation organizations & systems review (SPIB) • Governance Cluster Secretariat (RIU)

35. * Interim MSG convened (9 members): - September 6 - September 24 - October 5 - December 18 * Final MSG met on January 29

36. PH-EITI MultiStakeholder Group (15 members) • 5 from Government: Sec. Gozun, Dept of Finance (DOF), Dept of Environment and Natural Resources (DENR), Dept of Energy (DoE) , Union of Loal Authorities of the Philippines (ULAP) • 5 from Industry: 3 fromChamber of Mines of the Philippines, 1 from large scale mining companies that are not members of the Chamber 1 from the oil and gas sector • 5 from Civil Society: convened by Bantay Kita CSO networks, IP networks, academe, Peoples Organizations, etc.

37. EITI Implementation Structure Cabinet Cluster on Good Governance and Anti-Corruption Mining Industry Coordination Council (Jt. Econ & Climate Clusters) Implementation of EITI; Policy Consultation & Feedback Mechanism EITI Philippines (Multi-Stakeholder Group) EITI TWG

38. ACTIONS TAKEN Decided on initial scope: - large scale metallic mining - oil & gas Drafted the TOR & sought comments Drafted the Work Plan & sought comments

39. EITI Candidacy Checklist The multi-stakeholder group, in consultation with key EITI stake-holders, should agree and publish a fully costed work plan, containing measurable targets, and a timetable for implementation and incorporating an assessment of capacity constraints. • Governance Secretariat & EITI TWG & Interim MSG drafted an initial work plan, for discussion and fleshing-out • The EITI Secretariat has kindly provided us sample work plans by Timor Leste and the Solomon Islands • The work plan should be updated on an annual basis

40. PH-EITI Work Plan Work Plan Objectives: Establish Commitment and Support to Implement EITI Form MSG, Develop and Publish Its Terms of Reference and the EITI Work Plan Institutionalize PH-EITI Prepare to Implement and Monitor PH-EITI Audit/Reconcile and Report on Revenue Flows between Philippine Government and Extractive Industries Communicate, Build Knowledge, and Engage Citizens in the PH-EITI Program

41. OUTREACH – Stakeholders • Mobilized support for CSO outreach: - October 18-19 Training of Trainors - Regional Consultations: * Baguio Nov 26-27 * NCR Nov 29-30 * Davao Dec 3-4 * Pagadian Dec 6-7 * Cebu Dec 10-11

42. OUTREACH – CSOs National CSO Congress January 17, 2013 • Selected the CSO permanent and alternate representatives to the MSG

43. PH-EITI Work Plan Key Milestones • Q1 2013: Fulfill requirements for EITI Candidacy, including MSG, Work Plan & PH-EITI Launch; Set-up PH-EITI Unit, conduct studies on materiality, capacity assessment & set-up PH-EITI website • Q2 2013: Finalize reporting policies, mechanisms & templates, hire independent validator & procure publishing requirements • H2 2013: Design and production of the 2011-2012 PH-EITI Report, w/ continuous consultation • H1 2014: Independent validation

44. Outreach • Business Sector: - Chamber of Mines of the Philippines - non-members of the Chamber - oil & gas companies

45. Outreach • Indigenous Peoples & National Commission on Indigenous Peoples – Feb 20

46. Outreach • Academe – Feb 21 co- convened with the Ateneo School of Government

47. Outreach • Different religious groups- Feb 26

48. Outreach - Government

49. Recent Milestones • Public launching of PH-EITI April 4, 2013 • Submission of the PH - EITI Application to the EITI International Secretariat April 5, 2013

50. Presidential Statement on EITI