(Corrects name of Philippine tax chief in paragraph 5)
MANILA Feb 25 Australia's OceanaGold Corp
has temporarily stopped the first shipment of
copper-gold concentrate from its Didipio mine in the northern
Philippines following confusion over its tax treatment, the firm
said on Monday.
The Didipio mine in Nueva Vizcaya province, now in the
commissioning stage, is the first project to operate in the
Philippines under the Financial and Technical Assistance
Agreement, or FTAA, structure.
Under an FTAA, a permit issued by the state agency Mines and
Geosciences Bureau to foreign investors owning 100 percent of a
local venture, the project with a 25-year term is allowed a
five-year tax holiday.
The Bureau of Internal Revenue (BIR) last week said miners
with FTAAs were not exempt from paying the 2 percent excise tax
even if their permits gave them a five-year period from the
start of commercial operations within which to recover
"Miners must pay the excise tax the moment they start
producing ores," BIR Commissioner Kim Henares told Reuters.
OceanaGold said it was in talks with Philippine authorities
on the interpretation of the tax exemptions linked to its FTAA.
"Due to these clarifications, some of the trucks used for
transporting concentrate are being held by local government
agencies and thus transport of copper-gold concentrate has been
temporarily suspended," the miner said in a statement.
The issue is about when OceanaGold should start paying the
excise tax, Nova Young, its investor relations officer,
"It's just the timing of when we have to pay it," she said
by telephone from Melbourne. "We don't think it's a serious
problem in terms of our operations. Our plant is still up and
Flip-flopping policies, particularly on mining tax issues,
are among the concerns of foreign investors in the country. The
development of an estimated $850 billion in Philippine mining
reserves has been held up by reviews of policy, including the
lack of consistency in national and local government rules.
OceanaGold has an offtake agreement with Geneva-based
commodity trader Trafigura for all the copper and
gold concentrate output of Didipio mine.
The offtake is for a minimum of five years. Didipio, with an
expected 16-year mine life and a large open-pit operation, is
estimated to produce an average 100,000 ounces of gold and
14,000 tonnes of copper each year.
OceanaGold has the right to seek a renewal for another term
not exceeding 25 years for the project.
(Reporting by Erik dela Cruz; Editing by Clarence Fernandez)