We operate the Didipio Mine under a Financial or Technical Assistance Agreement (FTAA), with the Philippine Government and is operated in accordance with all applicable Philippine laws, rules, regulations and requirements. In addition, OceanaGold’s operations are conducted in accordance with our corporate policies.
The FTAA was signed in 1994 and gives the Company the right and responsibility to explore, develop and operate in the Didipio area.
In June 2019, the FTAA became renewable for a second 25-year term under the same terms and conditions. The FTAA does not award the company ownership of any mineral resources, rather, under this arrangement the Company is essentially a contractor of the Republic of the Philippines and the mine is a national asset.
In March 2018, we commenced the renewal process with the responsible regulatory agencies – the Department of Environment and Natural Resources (DENR) and Mines and Geosciences Bureau (MGB). There are currently five existing FTAAs in the Philippines and the Didipio Mine is the first to go through the renewal process.
In early June 2019, both departments endorsed the renewal to the Office of the President, based on the company’s full compliance with the FTAA terms and conditions. After their initial review, the Office of the President requested further clarification on how the company would accommodate the Indigenous People’s Rights Act of 1997, which we have agreed to if requested.
In June 2019, recognising the Office of the President required additional time to review the renewal application, the MGB issued a formal letter confirming OceanaGold’s right to continue to operate while the renewal is finalised. The FTAA renewal is currently with the Office of the President and there is no timeframe by which the Office of the President must finalise the renewal.
In early July 2019, the Governor of Nueva Vizcaya directed Local Government Units to restrain any operations of OceanaGold at the Didipio Mine. The Governor does not recognise the authority of MGB to authorise the continuing operations at the Didipio Mine. This order has prevented the delivery of mining supplies to the mine and transportation of the processed minerals for shipment.
Upon receiving notice of the Governor’s closure order, and the closure of road checkpoints to company supply vehicles, we voluntarily ceased all trucking in and out of the mine to prevent any potential for escalation.
We maintain the authority over the Didipio Mine rests with the Philippines National Government, not the Provincial Government, making the restraint of supplies and mineral delivery by the Local Government Unit under the order of the Provincial Governor unlawful.
Since receipt of the Governor’s Order, we have repeatedly requested engagement with the Provincial Government to resolve their current position and will always be open to engagement.
The terms of the FTAA
Under the terms of the FTAA, Didipio’s net revenue (as defined in the FTAA) is shared with the Philippine Government. The Government’s share, which includes all taxes and royalties paid, is 60% and OceanaGold is entitled to 40%. The FTAA includes a defined five-year recovery period during which time OceanaGold is allowed to recoup the capital investment made to develop and construct the mine. During the recovery period and on an ongoing basis, OceanaGold pays taxes, royalties and other fees.
In addition to the Government’s share, OceanaGold invests in the Philippines, directly and indirectly supporting jobs and economic activity. For example, since commencing operations in 2013 until the end of 2018, the Didipio Mine has invested over PHP 39.5 billion (US$790 million). This includes development expenditure for its host and neighbouring communities, community investment projects, payments to national or local suppliers and contractors, government taxes and employee wages. Of this expenditure, 96 per cent (PHP 38.3 billion) was paid to employees, government and businesses through salaries, taxes and procurement while PHP 1.2 billion was spent for community development.
Additional data about our payments and contributions is available in the 2018 Sustainability Report.