Policy, program, and purpose
- The State policy under Section 2 is to promote, develop, protect, and rationalize viable small-scale mining.
- The State policy is aimed at generating more employment opportunities and enabling an equitable sharing of the nation’s wealth and natural resources.
- The State policy requires due regard to existing rights as provided in the Act (Section 2).
- The Act creates a People’s Small-scale Mining Program to achieve an orderly, systematic, and rational scheme for small-scale development and utilization of mineral resources (Section 4).
- The Program is implemented by the Secretary of the Department of Environment and Natural Resources (the Department) in coordination with other concerned government agencies (Section 4).
Definitions that control the Act
- “Mineralized areas” are areas with naturally occurring mineral deposits of gold, silver, chromite, kaolin, silica, marble, gravel, clay, and like mineral resources (Section 3).
- “Small-scale mining” covers mining activities relying heavily on manual labor, using simple implements and methods, and not using explosives or heavy mining equipment (Section 3).
- “Small-scale miners” are Filipino citizens who individually or with other Filipino citizens form a cooperative duly licensed by the Department to engage, under a contract, in extraction or removal of minerals or ore-bearing materials (Section 3).
- “People’s Small-scale mining contract” is a co-production, joint venture, or mineral production sharing agreement between the State and a small-scale mining contractor for small-scale utilization of a plot of mineral land (Section 3).
- “Small-scale mining contractor” is an individual or cooperative of small-scale miners, registered with the Securities and Exchange Commission or other appropriate government agency, which enters into an agreement with the State for small-scale utilization of a plot of mineral land (Section 3).
- “Active mining area” refers to areas under actual exploration, development, exploitation, or commercial production determined by the Secretary after field investigation or verification, including contiguous and geologically related areas of the same claim owner and/or under contract with an operator, but not exceeding the maximum area allowed by law (Section 3).
- “Existing mining right” means a perfected and subsisting claim, lease, license, or permit covering a mineralized area prior to its declaration as a people’s small-scale mining area (Section 3).
- “Claimowner” is a holder of an existing mining right (Section 3).
- “Processor” is a person issued a license to engage in treatment of minerals or ore-bearing materials such as gravity concentration, leaching beneficiation, cyanidation, cutting, sizing, polishing, and other similar activities (Section 3).
- “License” is the privilege granted to pursue occupation as a small-scale miner or processor under the Act (Section 3).
- “Mining plan” is a two-year program of activities and methodologies for extraction and production of minerals or ore-bearing materials, including the financial plan and other resources (Section 3).
- “Director” is the regional executive director of the Department (Section 3).
- “Secretary” is the Secretary of the Department (Section 3).
People’s small-scale mining areas
- The Board is authorized to declare and set aside people’s small-scale mining areas on suitable onshore sites subject to review by the Secretary (Section 5).
- The Board must give priority to areas already occupied and actively mined by small-scale miners before August 1, 1987 (Section 5).
- Declared areas must not be considered active mining areas (Section 5).
- Declared areas must have minerals technically and commercially suitable for small-scale mining (Section 5).
- Declared areas must not be covered by existing forest rights or reservations and must not be declared tourist or marine reserves, parks and wildlife reservations, unless their status is withdrawn by competent authority (Section 5).
- Future people’s small-scale mining areas may be declared when suitable for small-scale mining (Section 6) including:
- Public lands not subject to any existing right;
- Public lands covered by existing mining rights which are not active mining areas; and
- Private lands, subject to certain rights and conditions, except private lands with substantial improvements or in bona fide and regular use as a yard, stockyard, garden, plant nursery, plantation, cemetery or burial site, and land within one hundred meters (100 m.) from such cemetery or burial site, water reservoir, or a separate parcel of land with an area of ten thousand square meters (10,000 sq. m.) or less (Section 6).
Ancestral lands and miner registration
- No ancestral land may be declared as a people’s small-scale mining area without prior consent of the cultural communities concerned (Section 7).
- If ancestral lands are declared, the members of the cultural communities in those areas must be given priority in the awarding of small-scale mining contracts (Section 7).
- All persons undertaking small-scale mining must register as miners with the Board and may organize into cooperatives to qualify for awarding of a people’s small-scale mining contract (Section 8).
Award, contract area, and easements
- A people’s small-scale mining contract may be awarded by the Board to small-scale miners who have voluntarily organized and are duly registered as an individual miner or cooperative (Section 9).
- Only one (1) people’s small-scale mining contract may be awarded at any one time to a small-scale mining contractor (Section 9).
- The contractor must start mining operations within one (1) year from the date of award (Section 9).
- Priority in awarding goes to small-scale miners residing in the province or city where the small-scale mining area is located (Section 9).
- Applications are subject to a reasonable fee paid to the Department of Environment and Natural Resources regional office having jurisdiction over the area (Section 9).
- The Board determines the reasonable size and shape of the contract area following the meridional block system under Presidential Decree No. 463, as amended (Section 10).
- The contract area must not exceed twenty hectares (20 has.) per contractor (Section 10).
- The depth or length of the tunnel or adit must not exceed that recommended by the Director, considering circumstances including:
- Size of cooperative membership and capitalization;
- Size of mineralized area;
- Quantity of mineral deposits;
- Safety of miners;
- Environmental impact and other considerations; and
- Other related circumstances (Section 10).
- After declaration of a people’s small-scale mining area, the Director, in consultation with the operator and affected parties (claimowner, landowner, or lessor), determines the right of small-scale miners to existing facilities such as mining and logging roads, private roads, port and communication facilities, and processing plants necessary for effective implementation, subject to payment of reasonable fees to the relevant operator/claimowner/landowner/lessor (Section 11).
Contract rights, restrictions, and duties
- A people’s small-scale mining contract entitles the small-scale mining contractor to the right to mine, extract, and dispose of mineral ores for commercial purposes (Section 12).
- A people’s small-scale mining contract may not be subcontracted, assigned, or transferred in any form (Section 12).
- A contract has a term of two (2) years, renewable subject to verification by the Board for like periods as long as the contractor complies with the Act (Section 13).
- The contract confers the right to mine within the contract area only, as regulated by the Act (Section 13).
- The holder of a small-scale mining contract must:
- Undertake mining only according to a mining plan duly approved by the Board (Section 13);
- Abide by the Mines and Geosciences Bureau and the Small-scale Mining Safety Rules and Regulations (Section 13);
- Comply with obligations to the holder of an existing mining right (Section 13);
- Pay all taxes, royalties, or government production share as now or later provided by law (Section 13);
- Comply with environmental protection and conservation rules, particularly those on tree-cutting, mineral-processing, and pollution control (Section 13);
- File under oath at the end of each month a detailed production and financial report to the Board (Section 13); and
- Assume responsibility for the safety of persons working in the mines (Section 13).
Rights of claimowners and private landowners
- Where a people’s small-scale mining area is covered by an existing mining right, the claimowner and small-scale miners are encouraged to enter into a voluntary and acceptable contractual agreement regarding utilization of mineral values from the area under claim (Section 14).
- If disagreement arises, the claimowner has these rights and privileges (Section 14):
- Exemption from annual work obligations and payment of occupation fees, rental, and real property taxes;
- Subject to Board approval, free access to the contract area to conduct metallurgical tests, explorations, and other activities so long as they do not unduly interfere with small-scale miners’ operations; and
- Royalty equivalent to one and one half percent (1 1/2%) of the gross value of the metallic mineral output or one percent (1%) of the gross value of the nonmetallic mineral output.
- Claimowner rights and privileges apply only if the claimowner is not delinquent in annual work obligations and other requirements for the last two (2) years prior to the Act’s effectivity (Section 14).
- The private landowner or lawful possessor must be notified of any plan or petition to declare the land as a people’s small-scale mining area (Section 15).
- The private landowner may oppose the plan or petition in an appropriate proceeding and hearing before the Board (Section 15).
- If private land is declared as a people’s small-scale mining area, the owner and contractors are encouraged to enter into a voluntary and acceptable contractual agreement for utilization of mineral values (Section 15).
- The owner is entitled in all cases to payment of actual damages suffered due to declaration (Section 15).
- Royalties paid to the owner must not exceed one percent (1%) of the gross value of minerals recovered as royalty (Section 15).
Mill tailings and gold sales rules
- The small-scale mining contractor owns all mill tailings produced from the contract area (Section 16).
- The contractor may sell tailings or process them in any custom mill in the area (Section 16).
- If the contractor sells mill tailings, the claimowner has a preemptive right to purchase the mill tailings at the prevailing market price (Section 16).
- All gold produced by small-scale miners in any mineral area must be sold to the Central Bank or its duly authorized representatives (Section 17).
- The Central Bank must buy gold at prices competitive with those prevailing in the world market, regardless of volume or weight (Section 17).
- The Central Bank must establish as many buying stations in gold-rush areas as needed to fully service small-scale miners’ requirements (Section 17).
Custom mills, licenses, and laboratories
- Establishment and operation of safe and efficient custom mills for processing minerals or ore-bearing materials is limited to mineral processing zones designated by the local government unit, upon recommendation of the Board (Section 18).
- Where the private sector cannot establish custom mills, the Government must construct custom mills upon recommendation of the Board based on the project’s viability (Section 18).
- The Board must issue licenses for operation of custom mills and other processing plants subject to pollution control and safety standards (Section 18).
- The Department must establish assay laboratories to crosscheck the integrity of custom mills and provide metallurgical and laboratory services to miners (Section 18).
- Custom mills must act as withholding agents for the Government’s royalties, production share, or other taxes due (Section 18).
Government revenue sharing and fund
- Government revenue from the mining program is subject to the sharing provided in the Local Government Code (Section 19).
- The Act creates a People’s Small-scale Mining Protection Fund (Section 20).
- The fund equals fifteen percent (15%) of the national government’s share of the internal revenue tax or production share due the Government (Section 20).
- The fund is used primarily for:
- Information dissemination and training of small-scale miners on safety, health, and environmental protection; and
- Establishment of mine rescue and recovery teams, including procurement of rescue equipment necessary in emergencies such as landslides, tunnel collapse, or the like (Section 20).
- The fund is also made available to address needs of small-scale miners brought about by accidents and/or fortuitous events (Section 20).
Enforcement, rescission, fines, and reversion
- Noncompliance with contract terms and conditions, violation of rules issued by the Secretary under the Act, and abandonment of the mining site are grounds for:
- Cancellation of contracts, and
- Ejectment from the people’s small-scale mining area (Section 21).
- The Secretary may impose administrative fines of not less than PHP 20,000.00 and not more than PHP 100,000.00 against the violator (Section 21).
- Nonpayment of the imposed fine makes the contractor ineligible for other small-scale mining contracts (Section 21).
- The Secretary must withdraw the status of a people’s small-scale mining area upon recommendation of the Director when it can no longer feasibly operate on a small-scale mining basis or when safety, health, and environmental conditions require reversion to the State for proper disposition (Section 22).
Continuity for miners and regulatory boards
- Small-scale miners in actual operation on or before August 1, 1987, as determined by the Board, must not be dispossessed, ejected, or removed from the areas, provided they comply with the Act (Section 23).
- The Act creates a Provincial/City Mining Regulatory Board under the direct supervision and control of the Secretary (Section 24).
- The Board implements the Department’s program and exercises powers including:
- Declaring and segregating existing gold-rush areas for small-scale mining;
- Reserving future gold and other mining areas for small-scale mining;
- Awarding contracts to small-scale miners;
- Formulating and implementing rules and regulations related to small-scale mining;
- Settling disputes, conflicts, or litigations over conflicting claims within a people’s small-scale mining area (including a small-mining area); and
- Performing other functions necessary to achieve the Act’s goals (Section 24).
- The Board consists of:
- A Department of Environment and Natural Resources representative as Chairman;
- The representative of the governor or city mayor (as applicable);
- One (1) small scale mining representative;
- One (1) big-scale mining representative; and
- A representative from a non-government organization from an environmental group (Section 25).
- Private sector representatives are nominated by their organizations and appointed by the Department regional director, and the Department provides staff support to the Board (Section 25).
- The Secretary exercises direct supervision and control over the program and small-scale miners’ activities within the people’s small-scale mining area through the Secretary’s representative (Section 26).
- The Secretary must promulgate rules and regulations within ninety (90) days from the effectivity of the Act to effectively implement its provisions, prioritizing rules that ensure the least disruption in small-scale miners’ operations (Section 26).
Criminal penalties
- Violations of the Act or rules and regulations issued under it are punishable by imprisonment of not less than six (6) months nor more than six (6) years (Section 27).
- Conviction includes confiscation and seizure of equipment, tools, and instruments (Section 27).
Repeal, separability, and effectivity
- All laws, decrees, letters of instruction, executive orders, rules and regulations, and other issuances, or parts thereof, that conflict or are inconsistent with the Act are repealed or modified accordingly (Section 28).
- Any section or provision declared unconstitutional does not affect the other sections or provisions of the Act (Section 29).
- Effectivity is fifteen (15) days after publication in the Official Gazette or in a national newspaper of general circulation (Section 30).