Global demand for critical minerals has restored the Philippine extractive sector to a position of national strategic importance. Nickel for battery cathodes, copper for grid expansion, cobalt, chromite, and the rare earth elements required for electric motors and wind turbines have rendered consequential a sector that, for much of the post-1995 period, attracted neither sustained investment nor coherent regulatory attention. The Philippines holds approximately 13.4 million metric tons of nickel reserves and resources, ranks second globally (behind Indonesia) in mined nickel production, and exported approximately USD 7.37 billion in ores in 2024. Whether the country captures the downstream value of that endowment, or continues to export unprocessed ore for processing abroad, will depend in material part on the legal and regulatory regime presently under reconstitution.
That regime is undergoing substantial change. The principal statute remains the Philippine Mining Act of 1995, but it has been supplemented during 2025 by new fiscal legislation (Republic Act No. 12253), by amendments to the implementing rules governing the processing of mineral agreements (DENR Administrative Order No. 2025-17), and by a pending Executive Order on a Critical Minerals Policy Framework anticipated during the first quarter of 2026. This article sets out the structure of the regime as it presently stands and identifies the issues that investors, financiers, and counsel should monitor during the next regulatory cycle.
Any analysis of Philippine mining law commences with Article XII, Section 2 of the 1987 Constitution. The regalian doctrine vests ownership of all minerals in the State. The exploration, development, and utilisation of mineral resources are to be conducted under the full control and supervision of the State, which may undertake such activities directly or through one of four modes: co-production, joint venture, or production-sharing agreements with Filipino citizens or corporations at least sixty percent Filipino-owned; or financial or technical assistance agreements (FTAAs) with foreign-owned corporations, executed by the President and duly reported to Congress. The Supreme Court in *La Bugal-B'laan Tribal Association v. Ramos*, G.R. No. 127882 (1 December 2004), resolved the constitutional validity of the FTAA mechanism and clarified the permissible scope of foreign participation under Article XII, Section 2.
Two constitutional consequences follow for the critical minerals sector. First, the sixty-forty nationality requirement governs the mineral agreement regime, with the result that FTAAs remain the sole instrument through which foreign capital may directly hold large-scale mining rights. Second, because the State retains full control and supervision over the exploration, development, and utilisation of minerals, fiscal and regulatory interventions of substantial scope (royalties, windfall levies, export restrictions, and processing mandates) are supported by a more robust constitutional basis than would be available in jurisdictions that recognise private ownership of subsurface minerals.
RA 7942 and its implementing rules, promulgated under Department of Environment and Natural Resources (DENR) Administrative Order No. 2010-21, as amended, establish the tenurial regime. Five instruments warrant particular attention.
An EP constitutes the initial instrument of mineral rights acquisition. It is valid for two years, renewable for like periods, subject to a total term not exceeding six years, and conditioned on the approval of an Exploration Work Programme. The holder acquires a right of first option to proceed to development upon the approval of the Declaration of Mining Project Feasibility (DMPF).
MAs are reserved for Filipino citizens and Philippine corporations with at least sixty percent Filipino equity. An MA takes one of three forms (a Mineral Production Sharing Agreement, a Co-Production Agreement, or a Joint Venture Agreement), has a term of up to twenty-five years, and is renewable for a further period not exceeding twenty-five years. Following final relinquishment, the contract area is limited to 5,000 hectares for metallic minerals.
The FTAA is the sole mining instrument that permits direct foreign ownership of large-scale mining rights. It is signed and approved by the President, has a term of up to twenty-five years, and is renewable for a further period not exceeding twenty-five years.
The MPP is issued by the DENR Secretary, is available to foreign-owned corporations, and is valid for five years, renewable up to a total term of twenty-five years. The Mines and Geosciences Bureau (MGB) is reportedly reviewing proposals to extend this ceiling in order to accommodate the longer capital recovery profiles of processing facilities.
These administrative instruments govern, respectively, the transport of unprocessed ore and the extraction of quarry resources, with the latter issued by the provincial or city mining regulatory boards.
A project that has satisfied the requirements of RA 7942 remains subject to a range of statutes that counsel must address at the outset.
On 5 September 2025, President Marcos signed Republic Act No. 12253, the Enhanced Fiscal Regime for Large-Scale Metallic Mining Act. After nearly a decade of legislative deferral, the Philippines now has in place a rationalised fiscal regime for large-scale metallic mining. The law amends the National Internal Revenue Code of 1997 and supersedes the heterogeneous levies that had previously applied on a contract-by-contract basis.
Mines situated outside mineral reservations are subject to a royalty of 1% to 5% of income from metallic mining, calibrated to operating profit margin, with a floor of 0.1% applicable to lower-margin operations. Mines within mineral reservations continue to pay a fixed royalty of 5% on gross output.
A five-tier levy of 1% to 10% is imposed on profits exceeding a 30% margin, designed to capture additional government share during periods of elevated commodity prices while preserving relief to operators during market downturns.
Each mining agreement is treated as a discrete taxable entity. The provision forecloses the prior practice under which operators offset profits from producing operations against losses from exploration projects, thereby understating taxable income at the corporate level.
The law embeds disclosure and reporting obligations aligned with the Philippine Extractive Industries Transparency Initiative (PH-EITI), reducing the administrative discretion that has historically compromised the reliability of mining revenue data.
The Department of Finance has estimated additional revenue of approximately PhP 6 billion per annum through 2029. The figure is modest in relation to the aggregate gross output of the sector, but the principal significance of RA 12253 lies less in incremental collections than in the substitution of a single, predictable, and margin-responsive regime for the fragmented treatment that preceded it. Regulatory predictability has long been in limited supply in Philippine mining, and RA 12253 furnishes it more substantially than any prior reform.
The Senate version of the bill, authored by then-Senate President Escudero, would have imposed a prohibition on the export of locally extracted raw minerals five years after enactment, in substantial imitation of the Indonesian model introduced in 2020. The bicameral conference committee dropped the provision in June 2025. The final text of RA 12253 accordingly contains no export prohibition.
The omission is of material significance. The Indonesian experience (mandatory downstream processing, accelerated smelter construction, domestic value capture) produced measurable outcomes: the value of nickel exports from that jurisdiction grew from approximately USD 3 billion to USD 30 billion within two years, substantially attributable to Chinese-funded processing capacity. Philippine policy opinion on replication is divided. The Chamber of Mines of the Philippines and the Philippine Nickel Industry Association opposed the proposed ban on the ground that the prevailing domestic power cost structure and infrastructure deficit render smelter development economically unworkable within a five-year horizon. The civil society coalition opposed the proposal on the opposite ground, arguing that the five-year window would incentivise accelerated extraction in advance of the effective date, with corresponding environmental and community consequences.
Each position has merit. The policy result, however, is a regime that has intensified the fiscal treatment of raw ore exports without introducing a corresponding mandate to shift value capture onshore. That unresolved tension will shape the next phase of industrial policy, and it constitutes the principal reason for the significance of the pending Critical Minerals Executive Order.
Executive Order No. 79 remains the principal executive issuance governing the sector. Its provisions of greatest operational consequence are as follows.
Executive Order No. 130 lifted the Section 4 moratorium imposed by EO 79 and resumed the grant of new mineral agreements, on the rationale that continued deferral of fiscal reform no longer justified the suspension of tenurial processes. The measure reopened a backlog of applications, although administrative processing has proceeded unevenly, and a significant number of agreements remain under review.
Issued on 26 May 2025, DAO 2025-17 amended DAO 2010-21 with respect to the processing of Exploration Permits, Mineral Agreements, and Financial or Technical Assistance Agreements. The amendments were favourably received by industry. Their principal effect is procedural, comprising the introduction of clearer timelines, the reduction of documentary ambiguity, and (according to statements by MGB officials) a pending proposal to authorise the DENR Secretary to conduct FTAA negotiations directly rather than through a negotiating panel. Together with the digitalisation of permit applications commenced in late 2024, the administrative trajectory is toward shorter permit cycles, with a publicly stated objective of approximately two-year processing.
The principal regulatory development anticipated during the first quarter of 2026 is the issuance of the draft Executive Order establishing a Critical Minerals Policy Framework. DENR Undersecretary Carlos Primo David has characterised the forthcoming issuance as a complement to RA 12253, intended to clarify and correct regulatory ambiguities in the 1995 Mining Act. The draft has reportedly been transmitted to the Office of the President, with stakeholder consultations and issuance contemplated within the first quarter of 2026.
On the basis of public statements and the observable direction of policy during 2025, the forthcoming framework is expected to address the following matters:
The forthcoming framework will not revisit the export ban question, which has been disposed of legislatively by the bicameral conference committee's action in June 2025. The executive instrument is nevertheless the principal vehicle through which the administration may, without recourse to further legislation, encourage additional domestic value capture by means of fiscal incentives, the strategic declaration of Mineral Reservations, and the measured exercise of the State's constitutional power of supervision.
A notable deficiency of the present regime is the absence of a statutorily defined list of critical minerals. The United States (through the United States Geological Survey), the European Union, Japan, and Australia each maintain periodically updated critical minerals lists supported by published criteria such as supply risk, economic importance, and substitutability. Philippine practice has, by contrast, relied on administrative enumeration through DENR issuances, executive pronouncements, the preferential treatment accorded to gold under RA 11256, and various declarations of Mineral Reservations.
The working list, as reflected in recent government communications, includes the following:
The forthcoming Executive Order is expected to codify a list supported by formal criteria. Upon codification, the list will carry consequential legal effects: it will inform the priorities applicable to declarations of Mineral Reservations, determine eligibility for processing and fiscal incentives administered under the Board of Investments and CREATE MORE frameworks, and condition the conduct of FPIC and local community negotiations in which designation as "critical" carries material weight.
Mining projects engage several fiscal and investment frameworks that are frequently given insufficient attention in analyses confined to mining-specific legislation.
Several conclusions may be drawn for practitioners, investors, and counsel.
For the greater part of the post-1995 period, the determinative question was whether a project could secure and retain its mineral agreement. With RA 12253 in force and DAO 2025-17 having rationalised the procedural framework, the principal questions have become matters of fiscal structuring (royalty tier management and the effects of ring-fencing on project-level arrangements), downstream positioning (the election between development of processing capacity and contracted offtake), and community acceptability (FPIC and LGU alignment).
The Philippine position, at least until Congress reopens the question, is to tax and regulate raw ore exports rather than prohibit them. That approach preserves optionality for operators with existing long-term offtake arrangements (predominantly with Chinese and Japanese counterparties), but it correspondingly places on the executive the burden of rendering domestic processing economically viable through incentives, infrastructure investment, and the measured use of Mineral Reservation policy. Investors positioning for the Philippine downstream should not await the reinstatement of an export prohibition; the operative indicator will be the incentive design under CREATE MORE and the forthcoming Critical Minerals Executive Order.
Upon codification of a formal list, an included mineral will acquire a series of ancillary legal consequences: priority treatment in declarations of Mineral Reservations, eligibility for strategic-tier fiscal incentives, and heightened scrutiny in community acceptability processes. Counsel advising on project structuring should monitor the drafting of the Executive Order and should ensure that clients participate in the consultation process.
The political economy of Philippine mining is such that a project may hold all required permits in good standing and nevertheless fail to secure community acceptance. Recent civil society reports concerning Caraga nickel operations, the intermittent provincial moratoria and open-pit bans (notably in Mindoro), and the periodic interventions of the Supreme Court confirm that community acceptability is an active and material constraint that remains given insufficient weight in a significant proportion of financing memoranda.
An investor whose analytical framework was established in 2018 encounters a materially different regime today, and will encounter a further distinct regime upon the issuance of the Critical Minerals Executive Order. The appropriate posture is to assume continued regulatory development over any horizon relevant to a mining investment decision, and to structure transactions for optionality accordingly.
For the first time in a generation, the Philippines is assembling a coherent legal and regulatory regime for the governance of its mineral endowment, in place of the succession of reactive measures that has characterised earlier practice. RA 12253 supplies the fiscal framework. DAO 2025-17 addresses the procedural dimension. The forthcoming Critical Minerals Executive Order will supply the element of industrial policy. Whether the country can convert its nickel, copper, and rare earth endowment into onshore value capture will depend on the coherence of these instruments, on the durability of the executive's commitment to downstream incentives, and on the political economy of community acceptability.
The tasks presented by the next regulatory cycle are concrete: to assess projects against the new royalty tiers and windfall thresholds; to structure contract areas with ring-fencing in contemplation; to engage the FPIC and local government processes with greater seriousness and at an earlier stage than the prior regime required; and to position transactions in anticipation of the Critical Minerals Executive Order rather than to await its issuance. The regime will reward those who plan for the trajectory of reform, and will penalise those who presume its conclusion.
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