PD No. 1001: Surigao Mineral Development

PD No. 1001 amends Republic Act No. 1828 by inserting a new provision between Section 2 and Section 3.
PD No. 1001 amends Republic Act No. 1828 by inserting new sections between Sections 6 and 7.
PD No. 1001 repeals Presidential Decree No. 958.
PD No. 1001 repeals or amends all laws, decrees, orders, proclamations, rules, and regulations inconsistent with it.

PD No. 1001 addresses the urgent need to maximize development, exploitation, and utilization of mineral deposits other than nickel, cobalt, and iron within the Surigao Mineral Reservation.
PD No. 1001 directs policy toward generating needed foreign exchange by responding to increased world demand for mineral resources amid an international economic recession and the energy crisis.
PD No. 1001 aims to make the administration and disposition of the Surigao Mineral Reservation more responsive to prevailing circumstances.
PD No. 1001 modifies and rationalizes government policies to give private enterprises more opportunity to take risks and provide adequate technical and financial resources for mineral development.

PD No. 1001 empowers the President of the Philippines, in the interest of the national economy, to authorize exploration, development, and exploitation of mineral deposits other than nickel, cobalt, and iron within the Surigao mineral reservation.
The President may authorize such operations either directly or through qualified contractor(s).
The operator contract must be selected after public bidding or negotiation.
The authorized contract requires approval of the President and must be executed by the Secretary of Natural Resources upon recommendation of the Director of Mines.
The contract term is twenty-five (25) years, renewable for another twenty-five (25) years.

Section 6-A establishes minimum terms and conditions applicable when the President decides the operations (or part of them) will be conducted as authorized by Section 2-A.
The operator must pay and guarantee payment to the government, out of gross annual receipts from all minerals, mineral and metal products, and by-products resulting from the operation, processing and disposition, a royalty of not less than five per centum (5%).
The operator must observe FOB points of export beginning with the end of the first year after the effective date of the contract, and must satisfy a production-start obligation.
The operator must put in operation the area or areas covered by the contract within two (2) years from the effective date of the contract.
Penalties may be applied for failure to effect production and/or reach certain levels of production within specific time periods as may be agreed upon.

The operator is exempt from all taxes, duties, fees and charges, both national and local, directly payable by it for covered work or activity, equipment, machinery, materials, instruments, supplies, accessories, structures, buildings, lands, improvements, and/or other properties directly connected with or needed and used exclusively in the operation.
The tax exemption applies for the period from the effective date of the contract up to and including the fifth year after commencement of actual production.
Exemptions do not extend to fees and charges imposed for work or services actually rendered to the operator.
Exemptions from taxes do not extend to taxes due from contractor’s personnel in their personal capacities.

The operator must furnish all management, technological and financial services necessary to carry out the operation.
The operator must file a bond to guarantee full and faithful compliance with all its obligations.
All information and data gathered by the operator must be furnished to the Bureau of Mines.
All books of accounts and records must be open to the Government for inspection.

The operator is entitled to repatriate duly recognized foreign capital investment plus interest.
The operator may remit to non-resident investors or stockholders abroad profits or dividends subject to regulations of the Central Bank of the Philippines.

The operator may enter into one or more contracts with the Government for any portion of the reservation, subject to existing and prior valid rights and with terms and conditions appropriate under the circumstances.
Within fifteen (15) years from the effectivity of the operating contract, the operator must select a final area or areas in compact block or blocks, irrespective of water separation of portion retained.
The final area selection must be sufficient to meet reasonable needs as to ore reserves, plant sites, and water resources to ensure commercial operation.
The operator’s aggregate land area for retained final areas must not exceed thirty thousand hectares (30,000 hectares).

The operator must give preference to Philippine Citizens in all types of employment within the country insofar as such citizens are qualified to perform the corresponding work with reasonable efficiency and without hazard to safety of the operation.
The operator must maintain an effective program of training and advancement.

Section 6-B provides that any royalty derived by the Government under sub-paragraph (1) of Section 6-A accrues equally to the Surigao Mineral Reservation Board and the Bureau of Mines.
Royalties must be allotted for undertaking special projects.
Royalties must also be allotted for the exploration and development of other mineralized government reservations through the Bureau of Mines, respectively.

PD No. 1001 repeals sub-paragraphs 7 and 8 of Section 6 of Republic Act No. 1828.
The repeal is effected by Section 3 of PD No. 1001.