R.A. NO.

7942 – The Philippine

Mining Act of 1995
Effectivity Date: March 3, 1995
The Philippine Mining Act of 1995
• The Philippine Mining Act of 1995 is the main
policy/ legislation which governs all mining
operations in the country and includes various
measures to protect the environment and
defines areas in which mining can be allowed.
 Persons Affected
• Government
• Corporations in the Mining Industry
• Indigenous Peoples and other Communities
• Future Generations
 Scope and Coverage
• Its primary objective is to regulate the exploration,
development, utilization, and conservation of all
mineral resources in both public and private lands.
• Local Government Empowerment
• Opening of Ancestral Lands for Mining Operations
• Royalty Payments for Indigenous Cultural
Communities
• Areas Open to Mining Operations
• Areas Closed to Mining Applications
 Local Government Empowerment
• LGUs have a share of forty percent (40%) of the gross collection derived by the
National Government from mining taxes, royalties and other such taxes, fees or
charges from mining operations in addition to the occupational fees (30% to the
Province and 70% to the Municipalities concerned);
• The LGUs shall be responsible for the issuance of permits for small-scale mining
and quarrying operations, through the Provincial/City Mining Regulatory Boards
(PMRBs/CMRBs);
• Actively participate in the process by which the communities shall reach an
informed decision on the social acceptability of a mining project as a requirement for
securing an Environmental Compliance Certificate (ECC);
• Ensure that relevant laws on public notices, consultations and public participation
are complied with;
• To participate in the monitoring of mining activities as a member of the Multipartite
Monitoring Team, as well as in the Mine Rehabilitation Fund Committee;
• To act as mediator between the Indigenous Cultural Communities (ICCs) and the
mining contractor as may be requested/necessary;
• To be the recipients of social infrastructures and community development projects
for the utilization and benefit of the host and neighboring communities; and
• To coordinate with and assist the DENR and the MGB in the implementation of the
Mining Act and the IRR
Scope and Coverage
Ancestral Lands for Mining Operations
• No mineral agreements, FTAA and mining permits shall be granted
in ancestral lands/domains except with prior informed consent in:
a) CADC/CLC areas; and
b) areas verified by the DENR Regional Office and/or appropriate
offices as actually occupied by Indigenous Cultural Communities
under a claim of time immemorial possession;
• Under Section 16 of the Mining Act, “No ancestral land shall be
opened for mining operations without the prior and informed
consent of the indigenous cultural community concerned.”
• In the event of an agreement with an indigenous cultural
community, royalty payments are also agreed upon by the parties.
The said royalty shall form part of a trust fund for the
socioeconomic well being of the indigenous cultural community.

Scope and Coverage

 Areas Closed to Mining Applications
• Areas covered by valid and existing mining rights and applications;
Old growth or virgin forests, mossy forests, national parks,
provincial/municipal forests, tree parks, greenbelts, game
refuge, bird sanctuaries and areas proclaimed as marine
reserve/marine parks and sanctuaries and areas proclaimed as
marine reserve/marine parks and tourist zones as defined by
law and identified initial components of the NIPAS, and such
areas as expressly prohibited thereunder, as well as under
DENR Administrative Order No. 25, s. 1992, and other laws;
• Areas which the Secretary may exclude based, inter alia, or proper
assessment of their environmental impacts and implications on
sustainable land uses, such as built-up areas and critical watershed
with appropriate barangay/municipal/provincial Sanggunian
ordinances specifying therein the location and specific boundaries
of the concerned area; and
• Areas expressly prohibited by law

Scope and Coverage

 Areas Open to Mining Operations
• Military and other government reservations, upon prior written
consent by the government agency having jurisdiction over such
areas;
• Areas near or under public or private buildings, cemeteries, and
archaeological and historic sites, bridges, highways, waterways,
railroads, reservoirs, dams and other infrastructure projects, public
or private works, including plantations or valuable crops, upon
written consent of the concerned government agency or private
entity, subject to technical evaluation and validation by the MGB;
• Areas covered by FTAA applications, which shall be opened, for
quarry resources upon written consent of the FTAA
applicants/contractors. However, mining applications for sand and
gravel shall require no such consent;
• DENR Project areas upon prior consent from the concerned agency.

Scope and Coverage

 Government Agency
• Department of Environment and Natural
Resources (Sec. 8)
• Mines and Geosciences Bureau (MGB) (Sec. 9)
• Mines Adjudication Board (MAB) (Sec. 79)

Privileges Issued
 DENR Secretary
• Responsible for the conservation, management,
development, and proper use of the State's
mineral resources including those in reservations,
watershed areas, and lands of the public domain.
• Have the authority to enter into mineral
agreements on behalf of the Government upon
the recommendation of the Director, promulgate
such rules and regulations as may be necessary to
implement the intent and provisions of this Act.

Gov’t Agency
 Authorities and Responsibilities of
MGB
• Management and administration of mineral lands and resources, including the
granting of mining permits and mineral agreements;
• Enforcement and monitoring of Environmental Work Programs (EWP) and
Environmental Protection and Enhancement Program (EPEP);
• Establishment and operationalization of the Contingent Liability and Rehabilitation
Fund (CLRF), as well as the mandatory Final Mine Rehabilitation and
Decommissioning Plan;
• Cancel mining applications and mining rights violating the provisions of the Mining
Act, its implementing rules and regulations, and/or the terms and conditions of a
mining permit/contract/agreement;
• For the Regional Directors to impose Cease-and-Desist Orders (CDO);
• To deputize the PNP, LGUs, NGOs and other responsible entities to police mining
activities;
• To assist the Environmental Management Bureau (EMB)/DENR Regional Offices in
processing/evaluation/conduct of EIA in mining projects;
• To manage and administer Mineral Reservation area (Note: Mineral Reservations,
under the New Act, include offshore marine areas.)

Gov’t Agency
Privileges and Limitations under the
Law
MINING PERMITS GRANTED TO QUALIFIED PERSONS
– Exploration Permit
– Mineral Agreement (Sec. 26)
• Mineral Production Sharing Agreement (MPSA)
• Co-Production Agreement (CA)
• Joint Venture Agreement (JVA)
– Financial or Technical Assistance Agreements (FTAA)
– Sand and Gravel Permits (Sec. 46)
– Quarry Resources Permits
– Small-Scale Mining Permits
– Mineral Processing Permit
– Ore Transport Permit
– Other requirements
– Other benefits granted by law
 Exploration Permit
These permits are issued to qualified individuals or local and
foreign corporations granting them to undertake purely
mineral exploration activities.

• the maximum area that mining companies may apply for or

hold is as follows:
• onshore, in any one province – 200 blocks or approximately
16,200 hectares;
• onshore, in the entire Philippines – 400 blocks or
approximately 32,400 hectares; or
• offshore, in the entire Philippines, beyond 500 metres from
the mean low tide level – for corporations, 1,000 blocks or
approximately 81,000 hectares.

Privileges Issued
 Features of Mineral Agreement
Granted to individuals or local corporations giving them the right to explore, develop
and utilize the minerals within the contract area. There are three modes of Mineral
Agreements namely: (MPSA, CA and JVA)
• Term of 25 years, renewable for another term of 25 years;
• Exploration Period of two (2) years renewable for like terms but not to exceed a
total term of six (6) years for nonmetallic minerals or eight (8) years for metallic
minerals;
• Maximum allowable areas of 810 hectares in any one province or 1,620 hectares in
the entire country for an individual, or 8,100 hectares in any one province or
16,200 in the entire country for a corporation, association, cooperative or
partnership.
• Provides for mandatory relinquishment such that the maximum final area shall not
exceed 5,000 hectares for metallic minerals or 2,000 hectares for non-metallic
mines;
• Subject to Environmental Work Program (EWP) during the exploration period, and
to Environmental Compliance Certificate (ECC) and Environmental Protection and
Enhancement Program (EPEP) during the development and operation period;
• Approval by the DENR Secretary

Privileges Issued
 Mineral Production Sharing
Agreement (MPSA)
an agreement wherein the Government grants to the contractor the
exclusive right to conduct mining operations within, but not title over, the
contract area and shares in the production whether in kind or in value as the
owner of the minerals therein.

The Contractor shall provide the necessary financing technology,

management and personnel
• The maximum area for an MPSA, however, is:
– onshore, in any one province – 5,000 hectares for metallic minerals and 2,000
hectares for non-metallic minerals per final mining area;
– onshore, in the entire Philippines – 5,000 hectares per final mining area; or
– offshore, in the entire Philippines, beyond 500m from mean low tide level –
500 blocks or approximately 40,500 hectares, and for the Exclusive Economic
Zone, a larger area to be determined by the DENR Secretary upon the
recommendation of the MGB Director

Privileges Issued
 Co-Production Agreement (CA)

• Co-Production Agreement (CA) - an

agreement between the Government and the
Contractor wherein the Government shall
provide inputs to the mining operations other
than the mineral resources;

Privileges Issued
 Joint Venture Agreement (JVA)
• Joint Venture Agreement (JVA) - an agreement
where the Government and the Contractor
organize a joint venture company with both
parties having equity shares.
• Aside from earnings in equity, the
Government shall be entitled to a share in the
gross output.

Privileges Issued
 Financial or Technical Assistance
Agreements
• a mining contract for large-scale exploration, development and utilization of
minerals which allows up to 100% foreign equity participation/ownership. The
terms and conditions under an FTAA are as follows:
Features of FTAA
• Term of 25 years, extendable for like periods;

• Minimum capitalization, $4Million, or its peso equivalent;

• Minimum investment for infrastructure and development of $50Million;

• Minimum ground expenditures: For Years 1 & 2 $2/ha/yr; Years 3 & 4 - $8/ha/yr;
Year 5 - $19/ha/yr; Year 6 $23/ha/yr
• Allowed only for metallic minerals such as gold, copper, nickel, chromite, lead, zinc
and other metals;

Privileges Issued
 Features Financial or Technical
Assistance Agreements
• Maximum allowable area: Aggregate total of 81,000 in the entire
country;
• Mandatory area relinquishments : 25% on the first 2-yrs; 10% per
year thereafter;
• Maximum final area: 5,000 hectares for each mining area;
• Maximum periods: Exploration Period – 4 years; Pre-Feasibility
Study Period – 2 yrs; Feasibility Study Period – 2 years;
• Subject to Environmental Work Program (EWP) during the
exploration/pre-feasibility study/feasibility study period, and to
Environmental Compliance Certificate (ECC) and Environmental
Protection and Enhancement Program (EPEP) during the
development and operation period;
• Approval by the President, upon recommendation of the
Negotiating Panel composed of the DENR Secretary, the MGB
Director, and representatives
 Sand and Gravel Permits
• Issued for the extraction, removal and
disposition of sand and gravel and other loose
or unconsolidated materials.
• Permits with areas not exceeding 5 hectares are
issued by the Provincial Governor/City Mayor
while those exceeding 5 hectares but not more
than 20 hectares are issued by the MGB Regional
Director.
• A Sand and Gravel Permit has a term of 5 years
and renewable for like terms.
Privileges Issued
 Small-Scale Mining Permits
• In consonance with the Local Government
Code and RA No. 7076, small-scale mining
permits are approved and issued by the City
Mayor/Provincial Governor, upon
recommendation of the Provincial/City Mining
Regulatory Board.

Privileges Issued
 Quarry Resources Permits
• document granted to a qualified person for the
extraction and utilization of quarry resources on
public or private lands
• In accordance with the Local Government Code of
1991, mining permits with areas not more than 5
hectares have been devolved to the Provincial
Governor or the City Mayor for approval upon
recommendation of the Provincial/City Mining
Regulatory Board.
• These include the Quarry Permit, Guano Permit,
Gratuitous Permit and Gemstone Gathering Permit.

Privileges Issued
 Ore Transport Permit
• Ore means a naturally occurring substance or
material from which a mineral or element can
be mined and/or processed for profit.
• no minerals, mineral products and by-
products shall be transported unless
accompanied by an Ore Transport Permit.
• The OTP is issued by the MGB Regional
Director concerned.

Privileges Issued
 Other Requirements
• Under Local Government Code, an individual or entity must
secure a business permit from the relevant local
government unit prior to the commencement of mining
operation.

• Further, MPSA and FTAA contractors or grantees are

required to obtain an Environmental compliance certificate
(ECC), a permit to operate air pollution control equipment,
a wastewater discharge permit, a permit to operate
electrical and mechanical installation, a licence to use and
purchase cyanide, a permit to purchase and use explosives,
a tree-cutting permit and water permit and such other
relevant permits as may be required by specific laws
relevant to the nature of the mining project.

Privileges Issued
Environmental compliance certificate
• refers to the document issued by the
government agency concerned certifying that
the project under consideration will not bring
about an unacceptable environmental impact
and that the proponent has complied with the
requirements of the environmental impact
statement system.

Other requirement
 Mineral Processing Permit
• a permit granting the right to process
minerals.
• It is issued by the DENR Secretary with a term
of 5 years and renewable for like terms.

Privileges Issued
 Other benefits granted by law

TAXES AND INCENTIVES

• Mining contractors of MPSA and FTAA can avail of fiscal and non-fiscal
incentives granted under the Omnibus Investment Code of 1987, as
amended. In addition to these incentives, the following are also granted
by the Mining Act.

• Incentives for pollution control devises;

• Incentives for income tax carry forward of losses;
• Incentives for income tax accelerated depreciation on fixed assets;
• Investment guarantees, such as investment repatriation, earnings
remittance, freedom from expropriation, and requisition of investment, and
confidentiality of information.

• For FTAA contractors, an additional incentive, in the form of a tax holiday

on national taxes
 How mining rights are protected
• During the term of the permits and mineral
agreements, the holder or grantee has the right to
conduct the activities allowed therein without
interference as long as it complies with the terms and
conditions of the permit or mineral agreement.
• EP holders are given the right of first refusal to develop
and utilize minerals in their exploration area
• Failure to put the area into operation within the period
provided in the EP shall result in automatic loss of the
priority right, and the government can open the areas
for bids.
OTHER IMPORTANT FEATURES OF THE
MINING ACT OF 1995
 Preserving Sovereignty
The major provisions intended to preserve sovereignty include:

1) stipulating that government grants to the contractor only the right to

conduct mining operations within, but not title over, the contract area
and shares in the production whether in kind or in value as the owner of
the minerals therein, under the Mineral Production Sharing Agreement
(MPSA);

1) allowing 100 percent foreign equity ownership under the Financial or

Technical Assistance Agreements (FTAA) for large scale exploration,
development and utilization of minerals subject to a mining contract
with a leasing agreement applicable for 25 years with strict conditions
on minimum capitalization, infrastructure investment, social and
community development, free and prior informed consent from
indigenous peoples and cultural communities and adherence to
environmental and safety regulations.
Restrictions on the surface or mining rights that may be acquired by foreign
parties

• Only qualified persons are allowed to hold and be granted permits and
mineral agreements.
• The Mining Act and its IRR defines ‘qualified person’ as:

[…] any Filipino citizen of legal age and with capacity to contract; or a
corporation, partnership, association or cooperative organised or authorized
for the purpose of engaging in mining, with technical and financial capability
to undertake mineral resources development and duly registered in
accordance with law, at least sixty percent (60 per cent) of the capital of
which is owned by Filipino citizens: Provided, that a legally organized foreign-
owned corporation shall be deemed a Qualified Person for purposes of
granting an Exploration Permit, FTAA or Mineral Processing Permit only
ENVIRONMENTAL AND SOCIAL
CONSIDERATIONS
Environmental, health and safety
regulations
– Holders of permits and grantees of mineral
agreements are required to strictly comply with all
the rules and regulations relating to mine safety
and health standards embodied under DENR
Administrative Order No. 2000-98.
– The MGB regional director concerned must
conduct a safety inspection of all installations in
mining operations and monitor the safety and
health programme of a contractor or permit
holder.
 Environmental compliance
• Mining contractors, prior to the development
stage of the MPSA or FTAA are required to
obtain an ECC and go through an
environmental impact assessment (‘EIA’).
OPERATIONS, PROCESSING AND SALE
OF MINERALS
 Import of equipment and machinery
• While the Mining Act and its IRR do not
prohibit the importation of equipment and
machinery to be used in mining, a contractor
or permit holder is required to give preference
to products, services and technologies
produced and offered in the Philippines of
comparable quality; specifically, contractors
and permit holders are required to purchase
Philippine household equipment, furniture
and food.
 Sale, import and export of extracted
or processed minerals
• For minerals extracted pursuant to an MPSA or FTAA, the Mining
Act and its IRR allow the sale of the minerals locally and their
exportation, provided that the minerals and by-products produced
are sold at the highest market price and lowest commercially
achievable commissions and related fees under market conditions,
and to negotiate for sales terms and conditions compatible with
world market conditions. T
• Marketing contracts and sales agreements with foreign or local
buyers involving commercial disposition of minerals and by-
products shall be subject for approval by the DENR Secretary upon
recommendation of the MGB Director.
• The approved marketing contracts and sales agreements shall be
registered with the MGB, and must remain confidential. The
Philippine mining laws do not have a provision regarding the
importation of minerals
Foreign investments in mining companies
are entitled to the following protection:
• freedom from expropriation except for public use or in
the interest of national welfare or defence and upon
payment of just compensation;
• freedom from requisition of investment except in the
event of war or national emergency and only for the
duration thereof, provided that any just compensation
paid may be remitted in the currency in which the
investment was originally made and at the exchange
rate prevailing at the time of remittance; and
• information that is agreed as confidential by the
government and the contractor shall be treated as such
during the term of the project.
 What makes the present law better…
The Mining Act of 1995 and its Revised Implementing Rules and Regulations, DAO 96-40, as amended ensures that
environmental conditions are sustained over the life of the mine. The minimum environmental requirements are the
implementation of the following:

• Environmental Work Program (EnWP) – addresses any potential disturbance during the exploration stage.

• Environmental Compliance Certificate (ECC) – should be secured prior to the development and construction of
the mine.

• Environmental Protection and Enhancement Program (EPEP) – the document that details the methods and
procedures the company will use in attaining its environmental protection and management objectives over the
life-of-the-mine.

• Annual Environmental Protection and Enhancement Program (AEPEP) – based on the approved EPEP to
implement progressive rehabilitation measures.

• Final Mine Rehabilitation/Decommissioning Plan ( FMR/DP) – submitted together with the EPEP before the start
of mining operation, ensures that all disturbed areas will be restored, as near, as possible to its original state or to
a pre-agreed productive end-use.

• In addition, the mining/exploration permit applicant is required to secure a Certificate of Satisfactory

Environmental Management and Community Relations Record.