The Act governs all mining operations and related rights in the Philippines, specifically exploration, development, and utilisation of natural resources conservation through a partnership of the government and private sector. To this end, it provides for a permit system, which grants three kinds of resource mining rights: (1) exploration permit; (2) mineral production and sharing agreement; and (3) financial or technical assistance agreement. Each kind of permit is limited to a maximum contract area, depending on whether it is offshore or onshore and on whether the applicant is an individual or corporation. Only Filipino citizens or corporations with at least 60% Filipino ownership may be granted a permit. However, foreign-owned corporations may be granted a permit for large-scale exploration, development, and utilisation of specific minerals (gold, copper, nickel, chromite, lead, zinc, and other minerals).
An Excise Tax on Mineral Products, Mine Wastes and Tailings Fees, and Occupation Fees are imposed on permit holders. Expenditures also need to be made to: (1) assist in the development of and promotion of the general welfare of mining communities; and (2) the development of science and mining technology. On the other hand, fiscal and non-fiscal incentives are given to permittees, such as Income Tax Holiday (referring to the Omnibus Investments Code of 1987 or EO 226), Income Tax-Carry Forward of Losses, and Income Tax-Accelerated Depreciation.
Every mining project except for the exploration period requires an environmental clearance certificate (ECC) based on an environmental impact assessment under the Philippine Environmental Impact Assessment System and the Local Government Code. After the project is finished, all permittees are required to rehabilitate the area. It creates a “mine rehabilitation fund” deposited as a trust fund for this purpose.
On native title and land rights, indigenous groups have priority rights in harvesting, extracting, developing, and exploiting natural resources within their ancestral domains. Free and prior informed consent is needed from concerned communities before mining operations are opened. In this case, at least 1% of gross output must be paid as royalties into a trust fund for the indigenous groups.