A coalition of civic society groups is pushing for the Philippines to introduce a heftier tax on mining transition minerals.
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The Philippines is one of the biggest nickel ore suppliers to China, and also produces copper, gold and other minerals used for wind and solar technology, energy storage, and electric vehicles.
Countries like the United States, Japan, Canada, Australia and the European union have also been inking trade agreements with the Philippines to ensure their access to critical minerals, as global demand is expected to grow six times the present to reach net zero by 2050.
“Since we are under global pressure to mine our minerals, we must first increase taxes on mining businesses if the country is to benefit from the sector,” Cielo Magno, president of nonprofit Bantay Kita, said in a webinar on Tuesday.
The tax rate proposed by the mining fiscal reform bill in the Senate in September is too low, said Magno, associate professor in the school of economics at the University of the Philippines and an outspoken critic of the mining industry.
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The overall fiscal effect of mining tax policies that the government is pushing is actually a decrease in tax revenue from the mining sector… This shows that our politicians are very disconnected from what is happening in climate and mining conversations.
Cielo Magno, president, Bantay Kita
The bill aims to adopt a royalty rate of four per cent of the gross output for large-scale metallic mining operations within mineral reservations, while small-scale mining operations shall be subject to a royalty rate equivalent to one per cent of gross minerals output.
The measure also seeks to subject mining income to a windfall profits tax of at most 10 per cent.
These rates, along with payments and fees over the life of the mine, will be equivalent to about 20 to 25 per cent of the effective tax rate, or the income that an individual or a corporation pays in taxes, she said.
However, Magno noted how minerals-rich Latin American nations Chile and Peru have been following a tax regime with figures that are almost double the planned rate in the Philippine government’s bill.
Cielo Magno, president of nonprofit Bantay Kita, speaking in a webinar held on 8 October, discussing mining in the Philippines. Image: CEED
Chile’s tax rate will reach up to nearly 47 per cent for companies that produce over 80,000 tonnes of fine copper a year, considered high by the industry, while a tax rate of more than 50 per cent is being studied for Peru’s ongoing tax reform.
“The overall fiscal effect of mining tax policies that the government is pushing is actually a decrease in tax revenue from the mining sector…This shows that our politicians are very disconnected from what is happening in climate and mining conversations,” she said.
There must also be a ban or at least a means to discourage export of the country’s raw minerals so that miners can process metals at home instead, she added, similar to what Indonesia is doing with its downstreaming policy.
Indonesia, the world’s largest and fastest-growing producer of nickel, prohibited export of nickel ore in 2020, forcing its mining sector to build out processing capacity. The huge flows of ore to China’s stainless steel mills have been replaced by shipments of nickel pig iron and ferronickel.
In 2023, the Southeast Asian nation raised export taxes on copper, iron, zinc and lead concentrates to drive domestic processing to derive more value from its mineral resources. It also banned exports of raw minerals in June last year.
Philippines lacks access to its own minerals
The Philippines can produce more than enough copper and nickel to supply the country’s needs to fully transition to clean energy by 2050, said Joshua Miguel Lopez, senior policy analyst of thinktank Center for Energy, Ecology, and Development (CEED).
The Philippines will need 1,376 kilotonnes of copper and 29.5 kilotonnes of nickel to fully transition to renewable energy generation, based on a 2023 study of Berlin-based thinktank Climate Analytics.
That amount of copper could be produced in under five years, and in less than two months for nickel, at the production rate when the mining moratorium was in place, according to CEED’s calculations.
However, since they are mostly exported to resource-dependent countries, Filipinos lack access to their own minerals, Lopez said in the same webinar.
Raw ores or concentrates are not usually processed in the Philippines, as there are only two nickel processing plants in the country. The local sector sells the minerals to buyers at a low price to then resold overseas at a higher rate as a finished product like EV batteries and stainless steel used for renewable technology.
A bulk of the demand for nickel is for electric vehicles, not renewable energy generation, according to a 2024 IEA report. Image: CEED
But a bulk of the demand for nickel is for electric vehicles, not renewable energy generation, which is “not rooted in the requirements of national and community development, but is driven by global demand and profit,” said Aaron Pedrosa, secretary-general of Sanlakas, a party-list organisation representing workers from agriculture, transport, mining in the Philippines.
Pedrosa cited how mining-affected communities will be more vulnerable to climate risks as their water, food, and local ecologies are disrupted by mining operations. This year alone, a massive landslide hit a gold-mining community in Davao de Oro, which left 93 dead in February, while homes were destroyed in a town in Surigao del Norte three months after.
“The Philippines is a particularly climate-vulnerable country, so it is in our interest not to allow corporations to make money out of our misery,” Pedrosa added.
