Agusan mining firm claims LGUs collection of P120-M extraction fees too much, illegal

by Ben Serrano

December 4, 2010


            BUTUAN CITY (PNA) - Beleaguered mining firm San Roque Metals Inc (SRMI) which operates some 579 hectares of nickel mines in the coastal town of Tubay, Agusan del Norte said local government units of Tubay and the province’ claim that they owe the provincial government some P120-M representing extraction fees, surcharges and penalties was too much and illegal.


            San Roque Metals Inc. Board of Director Edgar Erice told newsmen at press conference here Friday afternoon that there is no such thing as extraction fees for large scale mining operators like them saying that under Mining Act of 1995 the total government share in a Mineral Production Sharing Agreement or MPSA is Excise Tax on Mineral Products not extraction fees.


            “Their continuing clamor for us to pay such huge amount has no legal basis because it is not provided by law as provided by the Mining Act or R.A. 7942 which governed all LGUs in the country hosting mining companies” Erice who is a lawyer by profession, former Caloocan Congressman and now Caloocan City Vice Mayor.


             Erice added that since SRMI already pay Excise Tax to the national government as provided by law, it would be double taxation if SRMI pay again to the local government.


            “It seems that we only exist and tire ourselves all the while for mining only to pay all these caprices of government taxes and fees and nothing for our hundreds of workers who toiled much for SRMI”. Erice said.


            Erice claimed that collection of extraction fees is for small-scale while large scale mining or holders of MPSA had to pay national government through Excise Tax.


            Erice added that while LGUs are empowered by the Local Government Code to adjust rates of taxes, it also has its limits saying that tax adjustments can only be done once in every five years but only ten percent of the tax rates as fixed by National Internal Revenue Code and local government code.


            The Agusan del Norte Provincial Government in October 11, 2004 passed an ordinance otherwise known as Provincial Ordinance 195-2006 stating that mineral products extracted from the province like Manganese, Chromite, Bauxite, Iron ore and other metallic minerals shall be charged extraction or mining fee of P12.00 per metric ton.


            Less than two years later on March 27, 2006, the province enacted another ordinance increasing mining fees to P25.00.


            Again on October 8, 2007, Provincial Ordinance 223-2007 was enacted to amend 2006 ordinance which added provisions that extraction fees of P25.00 per metric ton will be collected from large-scale mining for metallic minerals.


            Erice said such ordinance was made basis of the LGU to demand collection from SRMI amounting to P119, 943, 607.49 or nearly P120-M as extraction fees.


            “Authors of the 2006 and 2007 ordinances failed to take into account as provided by the Local Government Code the limit to adjust tax rates to only once in every five years but in no case shall tax adjustments will not exceed ten percent of the rates fixed by the code”, Erice added.


            Erice further adds that while Mining Act of 1995 provide cost for Social Development Projects for host and affected communities from one percent of the direct mining and milling costs, SRMI spend for corporate social responsibility more than what is required by law. 

            Erice maintained that even the mineral ore market price is an on and off basis, SRMI continued to generate or provide jobs to nearly 500 workers or people and spend more than ten percent of its income for environmental protections, work enhancement and community building projects worth millions of pesos. (PNA/Ben Serrano)