Special Report: Mining boom
1 Mining boom on the way
2 Are you for or against the coming mining boom?
3 Mining Czar Reyes will enforce responsible mining
4 Industry will earn $2B this year, $10B p.a. in 2012
5 Community groups draft ‘the people’s mining plan’
6 Resistance to mining can derail the boom
7 Remembering the Rapu-Rapu Polymetallic Project fiasco
8 UK firms eye BPO, mining ventures
9 Remembering the Marcopper tragedy
10 Mining expert: Reinvesting in communities a must
11 It’s time Govt gave small miners a break
12 Mining seen to boom on new investments
1. Mining boom on the way
EDITORIAL
Sunday, June 24, 2007
President Arroyo and her economic team optimistically see the mining industry serving as a leading engine for Philippine economic growth. It will soon become the source of a lot of revenues that will allow the administration to make good on its promise to begin seriously bringing down the mass poverty level.
At the 7th Asia Pacific Mining Conference and Exhibition last June 7, the President noted that the conference’s theme “Sustaining the momentum for renewed growth’ for the Philippines and for the Asia Pacific,” captured her confidence that mining would soon emerge as a top player in the game of bringing about sustainable Philippine economic development.
The President pointed out that, among several other ways, the Philippines and other Asia Pacific countries with mining industries all benefit from the economic growth of China, India, Japan and South Korea for these are major consumers of minerals and mineral products. Our country should benefit even more, since we are the world’s fifth richest in mineral resources.
Most of the world’s greatest economies, those that have been calling the shots on this planet for centuries, owe their economic preeminence to their mining industry.
Benjamin Philip Romualdez, president of the Asean Federation of Mining Associations and the Chamber of Mines of the Philippines, reinforced the President’s optimism.
He said “the Philippines will be a major contributor to the expansion of mining in the Asia Pacific region” and that Philippine mineral exports at yearend 2007 will be US$2 billion.
He projects mining in this country to earn as much as US$10 billion per annum by 2012 or even by 2010.
The country’s Chamber of Mines expects a mining boom to start next year. Its members see investments in mining hitting US$1.55 billion in 2008 and US$ 2.76 billion in 2009. These are massive increases from the present level of investment in mining here: US$348 million by yearend 2007.
Sec. Angelo Reyes, as head of the Department of Environment and Natural Resources, is the country’s “mining czar.” He sees the Philippines becoming a world mining leader by 2010 if the metallic mines sustain the current rate of their output increases. Reyes sees mining exports to make up 8.6 percent of total exports by 2010.
Quality of life
President Arroyo wants mining executives and tycoons to remember that the industry must add instead of subtracting “from the quality of life of the people.” She wants them to be “good stewards of the environment and model employers.” She wants to make sure that mining companies do everything to meet the high safety and health standards the government has set.
An industry leader, Angel Veloso Jr., the president of the mining-related Philippine Associated Smelting and Refining Corporation (PASAR) says, “Mining is one of the best catalysts for development.”
PASAR used to be a government-owned and controlled corporation. All of it was sold to an American firm in 1999 as part of the government’s privatization efforts. It smelts or refines copper ores for export as semi-finished products. It services a goodly portion of the mining industry.
Veloso rightly reminds all the participants in the mining industry that it is an extremely sensitive one and is closed to many sectors of Philippine society.
“If we do it [the push to develop a world-class mining industry] wrong, the ecology and the people will be harmed, perhaps irreparably,” Veloso warns. The collateral damage on a wide sector of society will be terrible—“if we do it wrong.” He warns that it is greed that makes mining ventures “do it wrong.”
Because of fears that things will always go wrong in mining, some citizens are totally averse to it. They are against any form of mining industry whatsoever.
They are wrong!
Mining development plan
All serious businessmen and industrialists realize that a good part of their profits must be reinvested not only in the corporation but also in the social development of the immediate community and in environmental protection.
Philippine law provides that mining companies must establish post-operational land management plans for open pits, waste dumps and tailings dam. The companies must allocate 10 percent of their initial cost of a mine to environmental work, and set aside a sum equal to three to five percent of mining and milling operating costs for an environmental protection program.
The fine payable for spillage of waste material has been raised to the equivalent of two US dollars per metric ton.
Mining companies must allocate at least two percent of their earnings to the state in the form of excise taxes that can then be used for development.
Although the large local mining companies—and presumably the foreign ones that are investing billions of US dollars – have their own development plans to further their individual interests, there is really no detailed Philippine mining development plan that includes the most critical and trivial aspects of the industry, region by region.
Such a plan will ensure that after an area has been totally mined out, Mr. Veloso says, there will still be an economy left in place. This will safeguard the future of the people in the mining communities.
Developing the total plan is very hard work. Sec. Reyes and his assistants are tackling that now.
2. Are you for or against the coming mining boom?
Sunday, June 24, 2007
Government, investors, domestic and foreign mining corporations are working to make ours a rich “mining country.” Some Filipinos want to make mining policy more pro-people and pro-ecology. Others want mining to end completely . . .
PRESIDENT Arroyo and her “mining czar,” Secretary Angelo Reyes of the Department of Energy and Natural Resources, are working with domestic and foreign mining corporations, local as well as foreign investors and the various components of the mining sector to revitalize the minerals industry.
Until recently, the government policy on mining was mere tolerance. Today’s policy is to aggressively turn mining into an engine of growth to help the administration create more jobs, earn more revenues and thereby rescue millions from their poverty-stricken fate and drive the nation nearer to First-World status.
To obliterate the possibility of repeating the Marcopper and Rapu-Rapu tragedies, Reyes—operating under the Mining Act which the President authored when she was a senator—is making sure that investors, corporations and all mining industry players follow the rules of “responsible mining.”
But just what is responsible mining? Reyes gives the answer (See related story that begins on this page): “It is responsibility shared by the government and the mining industry with the active participation of stake-holders. This, toward the common objective of minimizing the industry’s negative environmental and social impacts and increasing its positive contribution.”
Business and industry view
The mining industry leaders are happy with the new determination of the government to collaborate with it in making the Philippines a successful “mining country.”
The Philippines is the world’s fifth richest country in mineral resources.
By the time the year ends, Philippine mineral exports will total US$2 billion. The country’s top mining industry leader, both for owning the largest mining firm and for being head of the country’s Chamber of Mines, Benjamin Philip Romualdez, sees the mining industry earning US$10 billion a year by 2012, or maybe even earlier, by 2010.
The Chamber of Mines sees a mining boom in 2008 and 2009. The following years would also be even richer years for mining because most of the country’s grand mining projects—supported by major foreign investments—will go on stream in 2010.
The Mining Act has opened important aspects of the mining industry to 100-percent foreign ownership. This, according to free-trade economists, is what will launch the Philippines as a global mining giant. (See related story on this page, “Industry will earn US$2B this year, US$10B by 2010-2012.)
Nationalist reformers
But there those who say they are not against mining as an industry. They want it to continue being a source of large export incomes and foreign investment. They just want the extant government policy to be reformed to include more protection of the environment, of the communities of human beings in the mining areas and of the national patrimony. (See related story on this page, “Community groups draft ‘the people’s mining plan.’).”
There is a possibility that government and mining industry activities would suddenly be stopped by the action of a group of lawyers who are seeing another way of getting the Supreme Court to declare a portion of the Mining Act unconstitutional.
The Court had earlier reversed its own decision about the unconstitutionality of Financial or Technical Assistance Agreements (FTAAs). Now the nationalist lawyers are moving to have Mineral Production Sharing Agreements (MPSAs) declared null and void and unconstitutional.
These critics of the current mining policy want to reform it. They do not want mining to stop. (See related story “Resistance to mining can derail the boom.”)
But there are others—mainly cultural and tribal communities as well as strict environmentalists—who want mining activities to stop completely.
Where do you stand? Are you for or against the mining boom?
In the following days, we will publish more articles that form part of this special report:
• Remembering the Marcopper tragedy
• Words of caution from an industry expert with PASAR
• Boosting small-scale mining
• The legal side of mining and other stories.
--Rene Q. Bas
3. Mining Czar Reyes will enforce responsible mining
Sunday, June 24, 2007
By Secretary Angelo T. Reyes
(Speech defining the government position on the industry at the 7th Asia Pacific Mining Conference and Exhibition, June 5, 2007, Makati Shangri-La Hotel)
The “hallmark of the [Philippine] government’s revitalization program [for the minerals] industry is not anchored purely on the potential economic gains, but in its commitment to the establishment of a responsible and sustainable local minerals industry.”
Many remain at a loss as to what responsible mining or sustainable mining really means? Googling the terms will give us almost six million results, giving the impression that there appears to be no universal understanding of what is responsible or sustainable mining. Definitions vary widely, focused along the lines of whether a governmental, mining company/industry, or other stake-holder point of view is adopted.
The divergence seems to arise from the nature of the industry itself and the questions it elicits, such as:
• How can mining be sustainable when its core business depends on the depletion of nonrenewable resources?
• Does mining really contribute to sustainable development?
• What constitutes responsible mining? Are there set global ground rules that mining companies should abide?
The best recognition of mining’s role in sustainable development is in paragraph 46 of the World Summit on Sustainable Development’s plan of implementation, which states that “mining, minerals and metals are important to the economic and social development of many countries. Minerals are essential for modern living. . . .”
I note that some individuals define responsible mining as compliance with government regulations and sustainable mining as performance beyond government regulations.
Responsibility shared
Yet, no one government, group or company can define what responsible mining is or should be. Rather, it is a responsibility shared by the government and the mining industry with the active participation of stakeholders. This, toward the common objective of minimizing the industry’s negative environmental and social impacts and increasing its positive contribution.
In simple terms, the government sets the rules and the mining company implements them on the ground under the watchful eye of other stakeholders.
The Philippines has defined what responsible/sustainable mining should be for the local mining industry with the Philippine Mining Act of 1995 and its Implementing Rules and Regulations which have embedded:
• The principles of sustainable mining;
• Built-in protection for the indigenous peoples (IP);
• Sharing of the benefits of mining among the major stakeholders; and
• Strict environmental and social provisions.
By closing the loop with respect to environmental management and the integration of the concept of planning for mine closure/integrated mine closure planning, abandoned mines or problems associated with inactive mines will be a thing of the past. To date, an estimated P20 billion has been committed by mining companies for environmental protection and management programs and activities to be implemented over the life of their mines.
By providing for social development and management programs, sustainable mining communities can be developed and sustained long after the closure of the mine. To date, almost P500 million have been committed by mining companies for the implementation of livelihood, educational and health programs benefiting around 400 barangays.
In doing so, we are just being consistent with our pronounced objective that “mining projects that cannot absorb the environmental and social costs of modern mining shall not be allowed to proceed.”
It is a simple reflection of reality—the full internalization of the costs of mining by the mining operator following the owner pays principle where the operator is responsible for the completion of rehabilitation unless relieved of liability.
The taxation issue
There is, however, one aspect that continues to elude us—the issue of taxation or government share from the benefits of mining; of what is the optimal taxation level that the government must impose. It is no secret that the government has been criticized by some society sectors for the “sell-out of the national patrimony.”
What we need is a rationalized scheme where the government, as the owner of minerals, gets its fair share from the development of its mineral resources and the mining company, as the investor/operator, will similarly receive its fair return for investments.
But first and foremost, the government needs the taxes to fuel its economic development. We should not also lose sight of the relationship between tax payment and social acceptability of mining projects. Without taxes accruing to the communities, we will lose allies in our campaign to promote the mining industry. The communities are our staunchest allies and without the benefits from mining projects, they will find lesser reasons to provide support to us.
Our efforts to stimulate the mining industry got the much needed boost in 2003 with the shift of government policy on mining from tolerance to promotion. This eventually gave rise to the revitalization of the Philippine minerals industry anchored on responsible mining for sustainable development.
One of the central focuses of the revitalization plan is the promotion of the priority mining and exploration projects that can yield at least US$6.5 billion in foreign direct investments up to 2010.
We are starting to reap the rewards of our efforts with the gross production value in 2006 that almost doubles that of 2002; the exports contribution of 4.5 percent, more than double of the 2005 figure; and almost US$700 million in investments in the last two and a half years.
The industry’s performance is consistent with the overall expansion of the Philippine economy, which posted a stunning growth rate of 6.9 percent for the first quarter, exceeding projections of government economists. And with the Philippine Stock Exchange and the Philippine peso at historic highs, the Philippine economy is indeed headed for greater heights.
Mining country status
Yet, we need to sustain the momentum if we are to aspire for the status of a mining country by 2011.
The journey, however, is never easy. The competition for foreign investments is tough and criticisms against mining, heavy. And, being competitive means incessantly providing for good governance and stable policies.
In a few months, the DENR is coming up with a number of major policy reforms to boost the revitalization program. These will be focused on:
1. Facilitating the grant of mining tenements through: (a) the simplification of procedures by reducing the time for posting mining applications, and streamlining the requirements on the National Commission on Indigenous Peoples (NCIP) clearance and endorsements from local government units; and (b) the delegation of the approval of new exploration permits to the regional directors of the MGB and their renewal to the MGB national director, leaving only the last renewal for the purpose of declaring mining feasibility, to the DENR secretary.
2. Making available mining areas through: (a) the transfer to the Philippine Mining Development Corp., previously the Natural Resources Mining Development Corp., of 65 nonperforming mining tenements that were canceled. This has freed up over 68,000 hectares of mineral land that can be opened to serious investors for possible development; (b) digitization and full computerization of mining tenement maps and information to allow easy access to such information, both for investment and decision-making purposes; and (c) the approval of mining tenements. I just signed 11 new Mineral Production Sharing Agreements (MPSAs) and Exploration Permits with several more forthcoming.
We exhort that mining tenement holders accelerate development of their mining areas, and not sit on them. We shall also continue cleansing our record of nonperforming mining tenements to optimize the utilization of our mineral resources.
3. Providing security of mining tenements. The Minerals Development Council, a 12-member Cabinet level body whose main objective is to provide a coordinating venue and mechanism to harmonize existing policies, facilitate investments and address specific issues and concerns and of which I am the chair, will be fully mobilized to act on problems and issues delaying mining projects. Of particular concern shall be the undue and unlawful interference brought about by some groups including local government units and non-government organizations and the respect of the rights of mining tenement holders. We are very conscious that stable mining tenements are crucial to the growth of the industry.
We are committed to sustaining the growth momentum of our minerals industry, for sustained national economic growth, for a better quality of life for the Filipino people.
4. Industry will earn $2B this year, $10B p.a. in 2012
Sunday, June 24, 2007
By Nora O. Gamolo Editor, The Manila Times-Barangay News
Mining is a high-capital venture that needs the unqualified support of its host government to get its projects off the ground.
Although it still has some complaints about government support, the Philippine mining sector is determined to help make this “a mining country” and usher in a mining boom. Industry executives are optimistic that it mining will generate earnings of at least $10 billion by 2012—or even as early as 2010. This figure dwarfs earlier forecasts, buoyed up by the recent influx of big-ticket projects.
Speaking to reporters at the start of the 7th Asia Pacific Mining Conference held recently at the Makati Shangri-La, the country’s top mining industrialist, Benjamin Philip Romualdez of Benguet, who is president of the Asean Federation of Mining Associations (AFMA) and the Chamber of Mines of the Philippines, said the initial target of $400-million to $500-million new investments for the industry must be revised.
“It will go higher,” he said as he estimated 2007 investments alone to total $700 million as BHP Billiton expressed interest in infusing $1 billion, while Japanese firm Sumitomo Metal Mining Co. Ltd. signified interest in spending $1 billion for a nickel and cobalt smelter project in Mindanao.
Sumitomo said they are currently in the process of completing the expansion of its Coral Bay nickel mining and processing project in Palawan. The expansion project, worth $300 million, is expected to double the project’s capacity by 2009.
Romualdez said “the Philippines will be a major contributor to the expansion of mining in the Asia-Pacific region.”
He projected that mineral exports of the country may hit $2 billion by the end of this year. Likewise, he projects the industry’s dollar earnings would reach as high as $10 billion by 2012 or even sooner, by 2010.
The Chamber of Mines expects a mining boom in 2008 and 2009 with investments forecast at $1.55 billion in 2008, and $2.76 billion in 2009, compared with a projected $348 million this year. The year 2010 is significant in that it will be the period when most of the 24 priority minerals development projects will be on stream.
Romualdez told the media that the robust mining industry in the Philippines is a result of the good partnership between the private sector and the government. “We are all working together toward the revitalization of the mining industry,” he said. He cited Asean countries like Indonesia, Philippines, Vietnam and Cambodia as best poised to serve the need for minerals of the fast-paced growth emerging economies and even the traditional establish users of minerals—Japan and Western Europe. Asean’s mining countries will provide a significant resource block in East Asia.
However, he conceded that there will be a lot of challenges ahead, specifically from non-government organizations that oppose mining in general. Just the same, Romualdez said that the mining sector is willing to work with “reasonable, moderate conservatives” but that the sector cannot please everyone.
The Philippines should immediately tap opportunities in the next two to three years to solidify potential investments in the mining sector, Romualdez added. In an interview with another paper, Romualdez pointed out that the Philippines currently has a short window of opportunity to overtake its closest rival, Indonesia, in terms of attracting mining investments and actual mineral production and export. Indonesia is currently in turmoil in terms of the legal structure for its mining sector.
The Philippines, on the other hand, has finally resolved legal impediments for the mining sector and is now ready to accept more investors in the sector, Romualdez said. He added that this policy direction is well set and the only way the Philippines could reverse this momentum is to change its current mining policies.
Romualdez said Indonesia currently earns about $7 billion from its mineral exports while the Philippines only earns $2 billion. Because of its current legal infirmities, Romualdez said, the Philippines should try to attract mining investments that could allow the country to overtake Indonesia.
Romualdez also noted that the Philippines also faces collective competition from the Indo-Chinese countries of Cambodia, Laos and Vietnam, plus Myanmar, in attracting potential mining investments. But he maintained the Philippines is currently the best country for mining investments because of its current policies.
Besides existing policies, Romualdez stressed the need for the Philippine government to ensure that local governments adhere or follow the same policies to ensure that the individual mining companies don’t get irked into leaving.
On the part of the mining firms, Romualdez advised them to observe “best practices” to allay the fears of local, ethnic and indigenous communities.
Perhaps to allay some business concerns and prove that the government is moving heaven and earth to get mining projects started, the Department of Environment and Natural Resources (DENR) has lately approved additional 11 mineral agreements and exploration permits, a move designed to prop up more activities in the mining industry. From these projects alone, some P224.7 million in investments are expected to stream into the country in the next two years.
Expectedly, DENR Secretary Angelo Reyes made the announcement before global mining leaders in the Philippines for the Asia Pacific Mining Conference and Exhibition 2007 in early June. The conference was organized by the Asean Federation of Mining Associations and the Chamber of Mines of the Philippines to showcase the mining industries of the various Asia-Pacific countries, including the Philippines.
The Philippines is serious in its effort to build up a competitive mining industry, and to prove this, Secretary Reyes also announced three more crucial policy reforms that would facilitate the grant of mining contracts, as suggested by the industry.
Topping these reforms is the simplification of procedures in the grant of mining permits, particularly by reducing the time for posting of mining application, and streamlining the requirements on National Commission on Indigenous Peoples (NCIP) clearance and endorsements from local government units.
Thus, even Filipino mining contractors were adversely affected.
Also declared as void and unconstitutional is the proviso in the definition of a “qualified person,” which qualifies foreign-owned corporations in the grant of an FTAA, Exploration Permits and/or Mineral Processing Permits (Section 3). This disqualification right in the definition of who is and who is not qualified sealed the fate of foreign corporations.
The decision struck down the subject FTAA for being similar to service contracts, which, though permitted under the 1973 Constitution, were subsequently denounced for being antithetical to the principle of sovereignty over our natural resources, because they allowed foreign control over the exploitation of our natural resources, to the prejudice of the Filipino nation.
The decision quoted several legal scholars and authors who had criticized service contracts for vesting in the foreign contractor exclusive management and control of the enterprise, including operation of the field in the event petroleum was discovered; control of production, expansion and development; nearly unfettered control over the disposition and sale of the products discovered/extracted; effective ownership of the natural resource at the point of extraction; and beneficial ownership of our economic resources. According to the decision, the 1987 Constitution (Section 2 of Article 12) effectively banned such service contracts.
Government’s motion for reconsideration
The Philippine government immediately filed a motion for reconsideration alleging that the Supreme Court’s decision is a setback to Mrs. Arroyo’s very recent executive order declaring that it is national policy to revitalize mining in the Philippines. The government pointed out that the Court’s decision endangered mineral development projects such as the Hydrometallurgical Processing Plant Project of Coral Bay Nickel Corp.; Rapu-rapu Polymetallic Project of Lafayette Philippines, Inc.; Masbate Gold Project of Filminera Resources Corp.; Boyongan Copper-Gold Project of Philex Gold Philippines, Inc. and Anglo-American Exploration Philippines, Inc.; Didipio Copper-Gold Project of Climax-Arimco Mining Corp.; Tampakan Copper Project of Sagittarius Mines, Inc.; and the copper smelting project of the privatized Philippine Associated Smelting and Refining Corp. All the above projects are within the FTAA and/or Mineral Processing Permit schemes.
The government also alleged that the Court’s decision endangered existing and proposed energy and cement projects.
Further, the decision has consistently referred to the service contract scheme, applied to the FTAA, as unconstitutional. The service contracts for energy projects are similar to the FTAA.
As to the cement projects, many cement manufacturers have either secured or are applying for mineral processing permits. The Mining Act and its IRR are supposed to address the recent entry of big foreign cement corporations in the local cement industry.
The government also alleged that it sends a negative signal to the international investment community, to the disadvantage of the country in terms of competitiveness and sovereign risk. It would also adversely affect the country’s growth rate and export targets due to a slowdown in investments, not only in the minerals industry, but also in other industries where foreign capital is substantial, the government told the High Court.
December 2004: SC reverses itself
In December 2004 the Court granted the motion for reconsideration of the petitioners which included the DENR, on grounds that the exploration, development and utilization (EDU) of mineral resources must always be subject to the full control and supervision of the State. Given the inadequacy of Filipino capital and technology in large-scale EDU activities, the State may secure the help of foreign companies in all relevant matters—especially financial and technical assistance—provided that, at all times, the State maintains its right of full control. The foreign assistor or contractor assumes all financial, technical and entrepreneurial risks in the EDU activities; hence, it may be given reasonable management, operational, marketing, audit and other prerogatives to protect its investments and to enable the business to succeed.
Full control of mining companies is exercised by the State through the President who is the official constitutionally mandated to “enter into agreements with foreign owned corporations.” Congress may review the action of the President once it is notified of “every contract entered into in accordance with this [constitutional] provision within 30 days from its execution.” Hence, the President and Congress “must be given sufficient discretion and reasonable leeway to enable them to attract foreign investments and expertise, as well as to secure for our people and our posterity the blessings of prosperity and peace,” said the Court.
“On the basis of this control standard, this Court upholds the constitutionality of the Philippine Mining Law, its Implementing Rules and Regulations—insofar as they relate to financial and technical agreements—as well as the subject Financial and Technical Assistance Agreement [FTAA].”
The new legal attack on the Mining Law is no longer about the FTAA. It is now about the MPSA. Will the new attack gain favor with the Supreme Court of Chief Justice Reynato Puno?
If it does, the whole program to make the Philippines a “mining country” with earnings of US$10 billion per annum by 2012, or even sooner, on 2010, would collapse.
In other countries—mainly in South America and Africa of the past decades—whenever grand plans involving business and industry were derailed by dissenters, governments fell or military coup plotters took over with the blessing of the international business community.
5. Community groups draft ‘the people’s mining plan’
Sunday, June 24, 2007
By M.E. Corazon J. Jazmines TMT-Barangay News
EVEN with the advanced mining technology and experience of developed countries adequate protection of the environment and mining community has not been ensured. This reality provides the backdrop in the formation of the Defend Patrimony! Alliance in February 2005.
Defend Patrimony! Alliance is a broad network of mining-affected communities, people’s organizations and support groups united against the globalization of the mining industry, plunder and destruction in the country.
Defend Patrimony! Alliance has its beginnings in the First People’s Conference on Mining held in Baguio City on May 9, 2002, which resolved “to develop a mining industry within the framework of nationalist industrialization.” It also called for the scrapping of Republic Act 7942 or the Philippine Mining Act of 1995, which liberalizes the mining industry in the Philippines.
The pro-foreign, anti-environment, antinational development and anti-people nature of the Philippine government’s mining policy, made it imperative that an alternative mining policy based on the principles of social justice, respect for people’s rights and welfare, environmental conservation, defense of our national sovereignty and patrimony and national industrialization be formulated.
Thus, the People’s Mining Policy (PMP) was drafted to be an alternative policy framework to the Philippine Mining Act of 1995. The drafting of the PMP was initiated by the Kalikasan-People’s Network for the Environment (K-PNE), a network of people’s organizations (POs), non-government organizations (NGOs) and environmental advocates. K-PNE aims to address environmental issues in such a way that primacy is given to the people, especially the grassroots people who constitute the overwhelming majority of the population. All environmental causes shall thus have the people’s interest at their core.
The K-PNE and the Defend Patrimony! Alliance worked hand-in-hand in developing and enriching the PMP draft. The draft was later presented and deliberated upon in different conferences (national, regional and sectoral) such as the Church People’s Conference on Mining, National Grassroots Conference on Mining, Cor-dillera Day 2005, Far South Mindanao Regional Conference on Environment and Development Aggression, Southern Mindanao Regional Conference on Mining. In deliberating on the PMP draft, the collective participation of different concerned sectors made sure that it would safeguard their interests. On June 10-13, 2005, the Second People’s Conference in Anti-polo City which was attended by mining affected communities, environmental advocates and representatives of peoples’ and sectoral organizations nationwide, adopted the People’s Mining Policy.
The basic premise of the People’s Mining Policy is that the government gives a premium to the fundamental interests of the nation, its people and environment over foreign or selfish interests. It should be a government that has a clear vision of ensuring social justice and a sound environment, respects human rights and welfare, safeguards national patrimony and independence and tirelessly pursues genuine national development. Actively advancing the PMP also means actively working for the kind of government on which it is premised.
Framework and basic principles
*Framework and Basic Principles of Pro-people and Pro-Environment Mining Policy as drafted by Kalikasan-Philippine Network for the Environment, DEFEND PATRIMONY! Alliance
We are not against mining. We are for the wise development and judicious use of our mineral resources, as a requisite to developing a strong, self-reliant and progressive economy founded on a healthy balance between agriculture and industrialization to break the cycle of underdevelopment.
* Mining is important in nation building. The mineral industry plays an essential role in establishing a progressive, independent and self-reliant economy.
Mining has been part of the historical development of societies. In the experience of industrialized nations, a prosperous mining industry is needed to supply the minerals needed by industries and support the production and flow of basic goods and services. The Philippines has a reliable base of minerals vital to industrialization. Genuine development can be achieved by wisely utilizing mineral resources and developing the mining industry as an aspect of an alternative program for economic development, in order to secure the livelihood of the people, satisfy their basic needs, ensure sustainable economic growth, and thereby become independent from foreign domination and control.
To achieve genuine development, the mineral industry must be nationalized. Genuine national industrialization is premised on the (a) accumulation and reinvestment of capital within the country against profit repatriation by corporations, (b) control over the utilization of available natural resources, (c) harnessing of benefits from modern technology for the country’s own technological advancement, founded on the strong aspects of local knowledge systems, (d) job generation and human resource upgrading.
The country’s mineral resources, including mineral energy (oil, natural gas, coal), should be Filipino owned. The development and utilization of our mineral resources must be limited to Filipinos, their associations or corporations.
The state must provide support and protection to Filipino corporations to further their development and increase their participation in the industry. To harness the large capital requirement for mining, the state must use local sources in the form of rechanneled government budget allocation for foreign debt payments and military expenditures, government subsidy, and the granting of incentives and financial aids to local private-sector investors.
In exceptional cases, foreign corporations may be allowed to invest in the mineral industry. Based on the strategic economic plan, a comprehensive national industrialization program and the country’s capability and capacity, the government must identify the investment areas where foreigners can help and invest.
Foreign investments in mining must be rigorously screened and strictly regulated. The participation of foreign companies in the critical stages of minerals extraction and processing should be in accordance with a defined program for technology transfer and equity share that does not exceed 40 percent of the full capital requirements.
Capital accumulation and reinvestment within the country must be encouraged over profit repatriation by foreign companies. Foreign mining corporations that have a bad record in the Philippines must not be allowed to invest in the country.
The current liberalization program in the mining industry must immediately be stopped. Steps must be undertaken to reverse the current export-oriented and import dependent characteristics of the mining industry. The mining industry, guided by the framework of national industrialization, must be built for the production of raw materials such as base metals, basic chemicals and petrochemicals needed by the basic heavy and medium industries to produce as much consumer, intermediate and capital goods, as may be economically and practically possible, given the country’s stock of mineral and non-mineral industrial raw materials as well as human resources.
Genuine agrarian reform
Mineral production and development should help in modernizing agriculture within the framework of genuine agrarian reform.
The underdevelopment of the Philippines is rooted in its backward, agrarian and pre-industrial economy, as a legacy of 380 years of a colonial and feudal past followed by 50 years of a neocolonial experience. Genuine agrarian reform and a comprehensive program of rural development are fundamental in solving the age-old problem of landlessness and rural poverty. Through genuine agrarian reform, the purchasing power of the rural poor will be boosted up, so as to provide a strong market for industries. In turn, industry can play a leading role in advancing the productive capacities of agriculture.
A national mining industry must therefore promote rural industrialization to support the pursuit of agrarian reform in the whole country. The development of the mining industry should enhance the capacity to produce food and achieve food security and self-sufficiency in the country. Minerals to be supplied to the different industries should ensure the production of farm machineries, tools and infrastructure materials needed by the agriculture sector for increased efficiency in farming as well as reduced strain on human labor, especially the burden on women and children.
In furtherance of genuine agrarian reform, prime agricultural lands and areas specified for food production must not be classified as mineral lands. Mining must be prohibited in these areas. Off-site effects of mining must not have disadvantageous effects on downstream areas.
People’s well being
Mining development shall be programmed in accordance with the availability of resources, without sacrificing the capability and well being of the people.
The level of mineral extraction and production should be based on the level of industrialization we wish to achieve, the needs of the agriculture sector, and the need for the production of consumer goods. This is also in consideration of the level of technology development we have, the availability of mineral reserves, acceptability by the people and impact to the environment. Immediately, we will conduct a nationwide study that will systematically determine the status of our mineral industry, the country’s mineral wealth and our actual needs for mineral products.
Mining operations at all times should be done only after the conduct of democratic consultation and with the consent of the people in mining-affected communities and other stakeholders.
The right of Moros, Lumads, Igorots and other indigenous peoples (IP) to self-determination and to ancestral domain must be recognized and their collective property rights must be guaranteed.
In line with this, the state and mining corporations should always uphold the rights and ensure the full participation of IPs in making decisions related to mining developments and operations in their ancestral domain and communities. Their customary laws and traditions must always be recognized and considered. They must be asked to participate in determining just and appropriate social compensation whenever mining operation has been agreed upon.
The right of the people to protect, harness and utilize their natural resources and environment for their livelihood and development should be guaranteed. Alternative and sustainable livelihoods to the mining-affected communities should be provided.
Job security, living wage, working benefits, and favorable and safe working conditions for mine workers must always be ensured in state and privately owned mining corporations. Their right to organize and form their own associations, to collective bargaining and to strike should be upheld. The state will strictly prohibit forced and child labor in the industry.
In line with developing the mining industry within the framework of national industrialization, small-scale mining operations will be supported and regulated by the state. The state will encourage the formation of cooperatives among small-scale miners and provide financial and technical support to develop the labor-intensive and upgrade the backward technologies into a more efficient and less environmentally destructive mining process.
Whenever small-scale mining are stopped, alternative and sustainable livelihood shall be provided to the small-scale miners.
Militarization should never be used to ensure the entry and protection of mining operations.
Role of R&D
Role of Research and Development (R&D) in advancing the mining industry
Research and development must focus on harnessing a mineral industry that is more economically efficient and less environmentally destructive. Advanced technologies from other countries that are proven to be appropriate locally must be adopted in the industry.
The direction of technology development in a nationalized mining industry must have a solid foundation in the basic and applied sciences, characterized by emphasis on operation, design and innovation as we learn from the most appropriate foreign technology, and supportive of indigenous technology. Hence, the utilization and upgrading of scale-mining production shall be encouraged and supported, while upholding environmental sustainability, people’s rights and welfare, and social justice.
All mining operations must be strictly regulated with the objective of ensuring the domestic processing of mineral ores up to the secondary and tertiary stages of industrial production. Developing our own basic and medium industries will ensure that we can sustain and sufficiently produce our needs for capital and consumer goods. This means that the negative impact of mining to the environment will be reduced and better controlled.
Recycling programs and substitution in the use of minerals must be incorporated in the overall plan of mining development. Development of new materials for mineral substitution, reduction of mine waste and pollution, and mining rehabilitation techniques must be among the focuses of R&D.
Indigenous technologies that are relevant and appropriate, particularly with respect to the domestic processing of minerals must also be promoted, with a view to their harnessing, expanding use and upgrading.
Ecologically sound mining practices shall be promoted while mining technologies such as open-pit mining and submarine mine tailing disposal methods that are banned abroad and/or proven inappropriate in a country like the Philippines, must all be banned.
Environmental protection
Mining operation and development must, at all times, guarantee environmental protection and safety.
Mining will be done after it is evaluated to be the best option or use for an area. At all stages of mining, environmental protection and development shall be guaranteed. Only with sufficient provisions for environmental protection and recovery shall mining be undertaken.
Ecological considerations in mining development shall be given due emphasis and attention in order to counter or eliminate destructive effects that certain mining industrial processes might have on the people’s health and the environment. Environmental standards shall be set to ensure the protection and efficient utilization of the country’s mineral resource base. Monitoring mechanisms with strong participation from the local communities will be instituted. Areas affected by mining shall be rehabilitated.
Mining in environmentally critical areas such as small island ecosystems, primary forests and watersheds shall be banned. Dumping of mine waste and tailings to rivers, lakes and sea must be prohibited. Violators must be strictly punished and made to pay heavy compensation to the state and affected people.
Cordilleran community leaders protest against mining
Cordillera indigenous leaders from the Cordillera Peoples Alliance (CPA) and the Save Apayao Peoples Organization (SAPO) joined environmental advocates and other community leaders in calling for a pro-people mining policy and denouncing the entry of foreign mining companies to the country during the 7th Asia Pacific Mining Conference and Exhibit in Manila on June 5. Sponsored by the Asean Federation of Mining Associations (AFMA) and the Philippine Chamber of Mines, the conference aimed at attracting more foreign mining companies to invest in the Asia-Pacific region.
“Mining policies such as the Mining Act of 1995 and President Arroyo’s rabid promotion of mining liberalization is a complete sell-out of the people’s patrimony to foreign capitalists, while leaving behind irreparable environmental, social and cultural damages for the people to suffer. The entry of Anglo American and other giant mining companies such as the BHP Billiton, the world’s largest mining company, in the Cordillera will bring about further destruction to the people’s resources,” said Santos Mero, CPA deputy secretary-general and regional spokesman for the Defend Patrimony Alliance.
Anglo American, the world’s fourth-largest mining company based in the United Kingdom, has at least four projects in the Philippines that are included in the Arroyo administration’s 24 Priority Mining Projects, three of which are located in the Cordillera region. These are the Conner Copper Gold Project in Apayao and Kalinga province through its local subsidiary, Cordillera Exploration, Inc. (CEXI), the Padcal Copper Extension Project in Tuba, Benguet, in partnership with Philex Mining Corp., and the Far Southeast Project in Mankayan, Benguet, in partnership with Lepanto Consolidated Mining Corp.
“Anglo American has notorious human rights and environmental records in its operations in South Africa and North America. It was named by the Canada Commission for Environmental Cooperation as one of the main lead polluters throughout North America and it has paid South Africans the world’s lowest wages. We do not want this to happen in the Cordillera,” Mero added.
Alarmed over the intensifying mining in the Philippines and its consequential damage to the people and their resources, protesters during the Asia Pacific Mining Conference asserted their resistance to “foreign plunder of the people’s resources” and for “justice to all victims of environmental plunder.”
According to Mero, “large scale mining in the Cordillera and elsewhere in the country has resulted in massive destruction of the people’s resources and outright violation of human rights and indigenous peoples’ rights. When people oppose these mining operations that are fully backed by the Arroyo administration, they are threatened, intimidated or even killed.”
Mero cited the case of Tina Moyaen, SAPO chairman and an active antimining advocate, who has received death threats at the height of her organization’s strong opposition to Anglo American’s mining exploration project in Conner, Apayao. “SAPO has persistently opposed Anglo American’s exploration activities. Through the leadership of Tina, the Free, Prior and Informed Consent [FPIC], which was the basis of the approval of the company’s permit to explore was questioned along with the conduct of the agencies and local government officials that have facilitated the acquisition of the FPIC certificate.”
“We call on the newly elected officials of local governments in the Cordillera to listen to the voice of the people and not stick to their personal pro-mining positions. The government should also put a moratorium on mining in the Cordillera until such time that an alternative pro-people mining policy is upheld,” Mero added.
Mero and Moyaen recently attended Anglo American’s annual general meeting in London on April 17 to register indigenous peoples’ opposition to the company’s mining projects in the Cordillera. They demanded from the company a pull-out of Anglo American’s projects in the Cordillera, recognition of indigenous peoples’ rights, support to genuine FPIC, and promotion of people-centered sustainable development.
6. Resistance to mining can derail the boom
Sunday, June 24, 2007
By Nora O. Gamolo Editor, The Manila Times-Barangay News
Mining has become a major constitutional issue in the Philippines, with many sectors contending that with the government program to entice foreign investors to cash in on the country’s mining resources, the Philippine government is engaged in a “systematic sell-out of Philippine sovereignty.”
Now, antimining liberalization activists are all set to question again the constitutionality of the Mining Act which grants tremendous incentives to mining companies, following the “environmental debacle” of Rapu-Rapu Mining Corp. which dumped mine tailings in October 2005 on the waters surrounding the island where the mining site is located.
The Rapu-Rapu Fact-finding Commission formed by the DENR after the spillage discovered that the company has not paid the excise taxes it owes the government under the Mining Act, and has even under declared its earnings from the project.
With the Rapu-Rapu experience, environmental advocates now say that the Filipinos will be left with only the pollution of mining companies, without any gain from the exploration, development and utilization of the country’s mining resources.
“We have started moves to question again the constitutionality of the Mining Law. We have contacted fellow advocates to ask them to co-sign the suit, and we have already signified our intent to the Department of Environment and Natural Resources,” said Frances Quimpo, executive director of the Center for Environmental Concerns (CEC), a non-government organization established in 1989.
The CEC, through its lawyers Howard Calleja and Ma. Margarita D. G. Mallari, has written DENR Secretary Angelo Reyes to ask the DENR to revoke all mineral production sharing agreements (MPSAs) issued under the Mining Act and stop the enforcement of the law concerning the issuance of all MPSA because “its continued enforcement violates the fundamental law of the land which guarantees the State real contributions to economic growth and general welfare of the people.”
The lawyers said that minerals are sensitive to over-exploitation since they are non-renewable, and that the 2-percent guaranteed share of the government in the exploration, development and utilization of the mineral industry is “grossly disadvantageous to the State.”
As of January 31, 2006, the DENR has issued 228 MPSAs, some already in the commercial operation stage.
In its second decision promulgated on December 1, 2004, on the constitutionality suit on the Mining Act, the Supreme Court declared that all FTAAs are valid insofar as they are subject to the review of the State, through the President.
MPSAs unconstitutional?
Strictly speaking, the environmentalists who intend to file another constitutionality suit are not questioning the FTAAs this time, but the MPSAs issued under the Mining Act.
One of the findings of the Rapu-rapu Commission was that the mining project was not giving the national and local government any gain from the project based on the 2-percent excise taxes that the law has guaranteed. “This is grossly disadvantageous to the Filipino people,” said Quimpo, quoting their volunteer lawyers.
Authored by then-Sen. Gloria Macapagal-Arroyo, no less, Republic Act 7942 or the Philippine Mining Act enacted in March 1995, was designed to establish a legal framework for the mining sector, endeavoring to streamline the law to ensure that the Philippines can compete effectively for foreign investments in the mining sector. Within its first year of operation, the Act was succeeding since the number of foreign mining companies operating in the country increased from four in end-1994 to more than 20 in end-1996. Applications for high-capital financial or technical agreements (FTAAs) were filed with the Mines and Geosciences Bureau (MGB) for 70 areas.
Under the new mining act, the old leasehold system was replaced with a service contract scheme whereby the Philippine government can grant a qualified contractor the exclusive right to conduct exploration and to develop and operate a mine in the contract area for 25 years, renewable for another 25 years.
For large-scale exploration and development under the new Mining Act, the government can enter into an FTAA with a 100-precent fully-owned foreign corporation. Until the passage of the new mining law, foreign companies were restricted to a 40-percent maximum ownership interest in mineral properties. Thus, most were reluctant to invest their time and money without having the decision-making authority guaranteed by the Mining Act. FTAAs were to be negotiated with the Department of Environment and Natural Resources (DENR), and mining proposals were to be filed with its MGB. The DENR was the primary government agency responsible for the conservation, management, development and proper use of the country’s natural resources, including its mineral deposits.
By end-December 1996, the Philippine government issued new environmental rules by revising the Implementing Rules and Regulations (IRR) of the Philippine Mining Act. The DENR announced that the revisions were designed to strengthen mining laws with respect to environmental protection and to address the concerns of indigenous communities who had been charging that many mining projects have caused their undue displacement from their communities and farms.
The revised IRR also provides that mining companies must establish post-operational land management plans for open pits, waste dumps and tailings dam. The companies must allocate 10 percent of their initial cost of a mine to environmental work, and set aside a sum equal to three to five percent of mining and milling operating costs for an environmental protection program. The fine payable for spillage of waste material was also raised to the equivalent of two US dollars per metric ton.
Sectors unhappy with the Mining Act brought a petition for prohibition and mandamus before the Court challenging the constitutionality of the Mining Act of 1995; its Implementing Rules and Regulations (DENR Administrative Order No. [DAO] 96-40); and the FTAA dated March 30, 1995, executed by the government with Western Mining Corp. (Philippines), Inc. (WMCP).
The case was a celebrated one since it challenged the very foundation of government’s policy in the administration and management of the country’s mineral lands and resources. The mining sector looked at the then petition as one of the major impediments to the growth of the Philippine minerals industry.
The petitioners included representatives of indigenous cultural communities led by the La Bugal-B’laan Tribal Association, Inc.; some of the framers of the 1987 Constitution that included former senator Wigberto E. Tañada, Ponciano Bennagen and Jaime Tadeo; civil libertarians and legal luminaries like law professor Marvic Leonen, himself a member of an indigenous cultural community.
The respondents in the suit were then-Environment and Natural Resources Secretary Victor O. Ramos; Director Horacio Ramos of the DENR’s Mines and Geosciences Bureau (MGB-DENR); then-Executive Secretary Ruben Torres; and mining company Western Mining Corp. (Philippines) Inc.
The petition is mainly for the nullification of the Philippine Mining Act of 1995 and the Financial or Technical Assistance Agreement (FTAA) entered into by and between the Philippine Government and WMC (Philippines), Inc., in 1995, for being unconstitutional.
The suit is also backed up by respected nongovernment organizations with high standing in the development community like Green Forum Philippines; Green Forum Western Visayas; Environmental Legal Assistance Center; Kaisahan Tungo sa Kaunlaran ng Kana-yunan at Repormang Pansaka-han; Partnership for Agrarian Reform and Rural Development Services, Inc.; Philippine Partnership for the Development of Human Resources in the rural areas; Women’s Legal Bureau: Center for Alternative Development Initiatives; Upland Development Institute; Kinai-yahan Foundation; Sentro ng Alternatibong Lingap Pan-ligal; and Legal Rights and Natural Resources Center.
January 2004: SC finds for the petitioners
The first time the suit was filed, the Supreme Court granted the petition, declaring on January 27, 2004, that certain provisions of RA 7942, DAO 96-40, as well as of the entire FTAA executed between the government and WMCP are unconstitutional. The Court held that FTAAs are service contracts prohibited by the 1987 Constitution. Hence, all provisions concerning the Financial or Technical Assistance Agreement (FTAA) and other permits that can be granted to foreign-owned corporations such as the exploration permits, and mineral processing permits are null and void.
Unconstitutional and void, said the Court, all provisions of the Philippine Mining Act of 1995 which allow the direct participation of foreign-owned corporations in mineral resources exploration, development and utilization in the country.
In addition, it also declared as unconstitutional and void all provisions of the Mining Act relating to the Financial or Technical Assistance Agreement (FTAA) (Sections 33 to 41 and 81). This means that foreign-owned corporations are no longer eligible for any mining contracts in the country. A foreign-owned corporation is a duly registered corporation in which less than 50 percent of the capital is owned by Filipino citizens.
Declared as void and unconstitutional are the Mining Act’s provisions pertaining to the rights and obligations of an Exploration Permit holder (Sec. 23) The provisions pertaining to the grant of an Exploration Permit were not assailed, but without Section 23, the Mining Act will be silent on what rights are being granted to, as well as the obligations of the permittee. This renders the grant of Exploration Permits untenable.
It also declared as void and unconstitutional the provision that allows the issuance of a mineral processing permit to foreign-owned corporations (Sec. 56) With this, mineral processing is now confined exclusively to Filipinos/Filipino juridical entities.
The Court also declared as void and unconstitutional the provision that grants incentives as provided for in Executive Order 226, the Omnibus Investments Code of 1987 (Sec. 90) Incidentally, this provision includes the grant of incentives to Mineral Agreements, including the mineral production sharing agreements (MPSAs).
To be continued
7. Remembering the Rapu-Rapu Polymetallic Project fiasco
Sunday, June 24, 2007
By Julie V. Tolentino TMT-Barangay News
“The exploitation of a country’s mineral resources can only be justified if it does not irreparably damage the environment and if it benefits the community and the nation as a whole. This is beyond all argument.–(From the DENR’s Summary Report on Rapu-Rapu)
The US$42-million (P2.2. billion) Rapu-Rapu Polymetal-lic Mining Project is intended to produce gold, silver, copper and zinc. Its operation will last six to seven years, from 2005 to 2011/2012.
The project site is situated on the southeastern tip of Rapu-Rapu Island, within the coastal barangay units of Malobago, Pagcolbon and Binosawan.
The Environmental Compliance Certificate (ECC) issued to the project covers 180 hectares or 3.2 percent of the island’s 5,589 hectares land area. Of the 180 hectares, 18 hectares (0.3 percent of Rapu-Rapu’s total land area) is dedicated to the open mine pit, and another 40 hectares (0.7 percent of total land area) for the milling plant.
The remaining 122 hectares (2.2 percent of the island’s total land area) is devoted to temporary quarters for personnel and various auxiliary facilities and environmental protection projects such as reforestation.
According to Rapu-rapu.infomi-ne.com, the property covers 4,636 hectares, which is most of the island, and is owned and operated by Lafayette Mining Limited, plus the Ungay-Malobago claim of 408 hectares and the former Hixbar claim of 1,931 hectares. The eastern two thirds of the island are within the project area.
From the 1930s to 1960s, the Hixbar deposit was mined for copper and pyrite. The Ungay-Malobago deposit has been explored, and the Ungay ore body is currently being mined. The initial mine life is estimated to amount to at least eight years of open cut mining, processing one metric ton per annum (mtpa) of ore. The mine is expected to yield about 50,000 ounces of gold annually, 600,000 ounces of silver, 10,000 metric tons of copper concentrate and 14,000 metric tons of zinc concentrate a year. There is also potential to develop the Hixbar deposit, 2.5 kilometers to the west of the current mine.
Barangay units and ownership
The project directly affects barangay units within the one-kilometer radius like the barangay units of Pagcolbon, Malobago and Bino-sawan. The barangay units within one to five kilometers such as the barangay units of Sta. Barbara, Linao and Tinopan will also be affected. The project site is about 12 kilometers from the town of Prieto Diaz in Sorsogon, and 45 kilometers from Legazpi City in Albay.
Rapu-Rapu Mining, Inc. (RRMI) and the Rapu-Rapu Processing, Inc. (RRPI) operate the project. RRMI is involved in ore extraction activities, while RRPI conducts the ore processing and milling activities. The mother company Lafayette Philippines, Inc. (LPI) provides financial, managerial and technical services to both companies.
Rapu-Rapu Holdings Inc. (RRHI) owns 60 percent of RRMI, 60 percent of which is owned by F&N Holdings, Inc., and 40 percent by Lafayette Philippines, Inc. RRPI is a subsidiary of Lafayette Philippines Inc., which is totally foreign-owned—74 percent by Australians and 26 percent by Malaysians. Both the Australian and Malaysian companies are owned by Lafayette.
The October 11, 2005 incident
On October 11, 2005, about 20 tons of tailings that overflowed from the processing plant were discharged, contaminating the Alma and Pagcolbon creeks with cyanide and probably other heavy metals. This was caused by malfunctioning of pumps, lack of knife blades as safety valves, an event pond that was found to be 40-percent filled and therefore had very much reduced impoundment capacity, and silt fences and cement bunds that were damaged or have not yet been constructed. Poor organizational set-up, delayed reaction and indecisiveness of company officials and lack of emergency response procedures exacerbated the situation.
Heavy rainfall on October 31 filled up the tailings dam, which is supposed to be designed and constructed to be able to handle projected heavy rainfalls. To ensure the integrity and safety of the dam, the company had to construct an emergency drain canal and release contaminated wastewater into the Hollowstone and Ungay creeks. Just like the first incident, about two cement bag-sizes of fish and other marine life were found dead in the coastal waters near the river mouths. It was evident that the dam and other support structures were not yet built according to DENR-approved plans and schedules. The dam height has not yet attained to its desired level. Storm drains to divert rainwater from the dams were insufficient. The dam also lacked spillways and drain canals to properly discharge water.
To reduce the level of water in the dam and ensure the safety and integrity of the dam, an emergency canal had to be constructed to release water from the dam. This caused the discharge of apparently contaminated wastewater and most probably, also some fine tailings materials.
The Summary findings of the DENR, which is largely based on the Rapu-Rapu Fact Finding Commission’s investigation resulted in five main points: the two tailing spills were preventable, Lafayette was guilty of lapses of an operational/technical and management nature, the Lafayette project does not appear to measure up to the standards of responsible mining and the sharing of benefits from the mineral exploitation of Rapu-Rapu island has clearly been grossly unfavorable to the Philippine government.
The finding resulted in top management change—12 out of 19 Australian expatriates have been replaced with Filipinos. Lafayette has owned up to its mistakes and has agreed to undertake the necessary corrective measures. The issue of revoking the PEZA certificate was brought out.
The Rapu-Rapu incident is an example of how corruption and gross negligence occur in the mining industry, where existing laws could be navigated and environmental concerns have become lip service. It showed that profit is the main objective, above the well being of the people and the environment.
8. UK firms eye BPO, mining ventures
Tuesday, June 26, 2007
By Likha C. Cuevas-Miel, Reporter
COMPANIES from the United Kingdom are looking at possible business opportunities in the Philippines, according to the British Chamber of Commerce, adding the emerging market is “very much back on the investment map.”
“In the last 9 months there has been very significant change. The British companies and British investment corporations and NGOs (nongovernment organizations) are very interested in this market, particularly the IT (information technology), the call center area. The mining sector is (also) booming,” Leslie Stokes, British Chamber chairman, said on the sidelines of the Isla Lipana and Co. anniversary rites.
The executive said a CEO of a Scottish development organization will come to the Philippines for his first trip to Asia, an indication of strong interest the country is generating abroad.
“That is a real plus. Let me tell you that doesn’t normally happen because they [usually pick] Thailand—which is questionable now—or Vietnam,” Stokes said.
Besides the improvement on the fiscal front, what draws foreign money to the country right now is the potential of the resource sector now that metal prices have shot up in the international market.
According to Stokes, mining these minerals were not viable 5 years ago because the prices were not high enough to justify the cost of exploring and mining. “You are sitting on the pit of most of the world’s reserves, [which] are now viable [to be mined],” he said.
Meanwhile, the linguistic capability of Filipinos continue to be the top drawer for business process outsourcing (BPO) investors even if doing business in the country has become expensive.
“Competency has never been an issue. I’ve been in Asia for 35 years—all over Asia—but the competency level here is high but never been maximized. You can communicate much easier than Thais. You have so many advantages—your ties with the US, the literacy in English, high educational standards and all of those things have not been maximized,” Stokes said.
However, the Philippines has to watch out for Vietnam because it is the next destination of foreign investors if “they can’t get things done here” as lack of infrastructure and government red tape are major deterrents for foreign businesses.
“Vietnam now is probably your biggest threat, much more than Indonesia, in lots of other areas like services and tourism. They’ve also got lovely islands, beautiful beaches so they could go through tourism just like what Thailand did, which they had been so successful. So that could leave you hanging if you don’t do your infrastructure,” the British businessman said.
9. Marcopper tragedy revisited
Tuesday, June 26, 2007
SPECIAL REPORT : Mining boom
By Lisa Ito
More than a decade has passed since a tunnel in Marcopper Mining Corp.’s Tapian Pit collapsed on March 24, 1996, spilling 1.6 million cubic meters of mine tailings and causing the biologic death of the Boac River, the biggest and longest waterway on Marinduque island, Philippines.
Yet, according to environmental advocates and local residents, environmental justice, rehabilitation, and compensation for the disaster remain elusive for the residents of Marinduque.
Mining companies Marcopper and Placer Dome Inc. are being held liable by local residents for the disaster. They continue to evade the protracted court battle and have not even settled their unpaid property taxes to the local government up to now, non-government organization Marinduque Council for Environmental Concerns (MACEC) said.
Legal case drags on
Eleven years have passed after the Boac River disaster, yet the court battle to hold the mining firm liable remains in its first stages, Myke R. Magalang, MACEC executive secretary, said.
Residents have filed criminal cases in the Philippines and abroad to determine the liabilities of Marcopper Mining Corp. and Placer Dome Inc. (bought by Barrick Gold in 2006) over the disasters their 30-year mining operations have caused the people and environment in Marinduque.
These include criminal cases filed separately by the Department of Environment and Natural Resources against John Eric Loney, an Australian who was the president and chief executive officer (CEO) of Marcopper; Steven Paul Reid, also an Australian national and resident manager of the Marcopper Tapian Office; and Pedro Hernandez, a Filipino who served as senior manager for maintenance.
They have been charged with violation of the Philippine Water Code, the Antipollution Law, the Philippine Mining Act of 1995 and the Revised Penal Code.
On February 10, 2006, the Philippine Supreme Court’s (SC) Third Division gave the green light for the criminal prosecution of Marcopper’s executives. In a 17-page decision, Justice Antonio Carpio rejected the appeal filed by Loney, Reid and Hernandez seeking to quash the complaints filed against them by the Department of Justice (DOJ).
Despite the SC decision, the prosecution has plodded at a snail’s pace, Magalang said.
The only progress in the case was on November 22, 2006, when the Provincial Prosecutor filed a manifestation and motion to set cases for hearing and only after MACEC presented a downloaded computer file of the SC decision, he added.
Magalang assailed “the extreme inefficiency of the justice system because it is unimaginable why until now the prosecution, and even the Municipal Trial Court of Boac, were not officially furnished with copies of the Supreme Court Decision.”
Trixie Concepcion, spokesperson of the nationwide Defend Patrimony alliance, also decried the delay in the prosecution.
“It’s a grave insult to the already disillusioned and disheartened people of Marinduque who are continuously suffering from the long-term effects of heavy metal poisoning from the mine spill. The DOJ should finally direct the panel of prosecutors to prioritize this case of the Filipino people against the foreign nationals and officers of the multinational mining company which plundered our national patrimony,” Concepcion said.
Magalang also called on the SC to “officially transmit copy of its February 2006 decision for the Municipal Trial Court of Boac to expedite the hearing of the cases.”
Unpaid property taxes
In addition to the protracted court case, Magalang of MACEC also disclosed that Marcopper Mining Corp. and Placer Dome, Inc. have yet to pay a total of more than P1 billion (P1,048,624,496.80) worth of real-property taxes to the province of Marinduque and the municipalities of Boac, Mogpog, Santa Cruz and Torrijos as of the second quarter of 2006.
According to the records of the Provincial Treasurer of Marinduque officially obtained by MACEC, Marcopper has standing tax debts of more than a billion pesos (P1,013,101,529.51) in the municipality of Santa Cruz for the period 1980 to second quarter 2006. Further, it owes more than P11 million (P11,164,686.80) to the town of Torrijos for the period 1983 up to second quarter of 1996; more than P1 million (P1,194,977.89) to the town of Mogpog for the period 1999 to second quarter 2006; and, more than P23 million (P23,163,602.60) to the town of Boac for the period 1985 to second quarter 2006.
“This is an extremely insensitive for a company which amassed billions of dollars in profit and claims to be a good corporate citizen of the country but is neglecting its primary duty to pay legitimate taxes to the government,” Magalang said.
Magalang urged the national government to “strongly pursue and compel these erring companies to settle their unpaid property taxes to the local government.”
According to Magalang, Marcopper’s debt remains unpaid even after the provincial government of Marinduque sought the intervention of DENR’s Legal Department on May 3, 2006.
Concepcion of Defend Patrimony criticized the national government for “its laxity in compelling Marcopper to settle its outstanding taxes” in Marinduque.
“The money could have been used by Marinduque for the medical needs of the victims of the mining disasters, providing the basic infrastructure and books for the various schools in the province, provision of alternative livelihood opportunities for the displaced mine workers, and other projects and programs for the sustainable development of the province,” Concepcion said.
“This only indicates irresponsibility on the part of the national government and the mining company involved. Such irresponsibility remains to be corrected by current policies and laws, as the mine tailings spill by Lafayette Mining in Albay in October 2005 shows,” Concepcion said.
Despite the delays in the administration and pursuit of environmental and economic justice, Concepcion stressed, Marinduque and its sustained struggle for justice should be emulated by other mining-affected provinces which are struggling against the intensified incursions of foreign mining giants.
10 Mining expert: Reinvesting in communities a must
SPECIAL REPORT: MINING BOOM
By Nora O. Gamolo, Editor
The Manila Times-Barangay News
“Mining is one of the best catalysts for development,” said Angel N. Veloso Jr., president of mining-related Philippine Associated Smelting and Refining Corp. (Pasar). Pasar used to be a government-owned and -controlled corporation, but was sold 100 percent to an American firm in 1999 as part of the government’s privatization efforts.
It smelts or refines copper ores for export as semi-finished products.
Veloso warns that the industry is very socially sensitive.
“If we do it wrong, you affect the ecology, the health, livelihood and the well-being, in general, of people. So much collateral damage can be brought upon ourselves if we do it wrong,” Veloso said, who added that greed can lead to doing things wrong.
“A lot of reinvestment must be made by mining companies to support the social development of communities and to protect the environmental—if mining is to become socially sensitive,” he said, expressing enlightened contemporary views of mining industry players on matters that were not even discussed in the past.
Philippine law provides that mining companies must establish postoperational land management plans for open pits, waste dumps and tailings dams. The companies must allocate 10 percent of their initial costs for a mine project to environmental work. They must set aside a sum equal to 3 percent to 5 percent of mining and milling operating costs for their environmental protection program. The fine payable for spillage of waste material has been raised to the equivalent of two US dollars per metric ton.
Aside from this, mining companies must allocate at least 2 percent of its earnings to the state in the form of excise taxes that can then be used for development.
Veloso is frightened by the absence of a mining development program in the country. Veloso has been involved in the mining industry since he earned a degree in economics in 1975. He was a metals trading specialist in the Philippine International Trading Corp. until he joined multinational corporations involved in metals trading and mining.
“Investors have to ensure that even after an area is totally mined out, there would still be an economy left in the place,” said Veloso. This can be ensured by encouraging the growth of other industries and other economic activities in the locality. The cleanup of mining sites should be thoroughly done, if these socioeconomic activities are to flourish.
Veloso said that in Malaysia, a mining site near Kuala Lumpur was even rehabilitated and turned into a resort after the mining company stopped operating. Appropriately enough, it is called The Mines.
A coalmine in Australia was rehabilitated and turned into pastureland for a new cattle farm.
“Mining companies should integrate in their development plans provisions on what to do with the mining sites after the mines stop operating. They should be able to factor in the cost of this redevelopment with their mining plan, rather than leave this problem to the State and the people,” said Veloso.
Profits from the mining operations should ensure the rehabilitation and renewal of the mining communities. Feasibility studies should integrate rehabilitation cost.
Ghost towns were all the Cordilleras had in areas where mining companies had stopped their operations. The closure of the mines also left many residents unemployed, forcing entire families to relocate. Those who have remained complain of mine tailings and the pollution of their waters. These must not happen again, Veloso said.
“Mining companies should be welcomed and assisted, but they should be told that the environment must be protected and preserved,” said Veloso.
11 It’s time Govt gave small miners a break
Special report: Mining boom.
Thursday, June 28, 2007
By Nora O. Gamolo , Editor, The Manila Times- Barangay News
The country’s small-scale mining sector provides direct and indirect employment and means of livelihood to nearly 300,000 people.
It generates or supports thousands of formal and informal small enterprises and businesses where they thrive, usually in ancillary support industries or support services.
Many subsistence miners are involved in gold mining in the metals sector, and in sand and gravel extraction in the nonmetallic sector. Individual or family mining businesses are in aggregates used in construction, and in industrial minerals (feldspar, silica, limestone).
Now, the small mining sector is the basis of the advocacy of a segment of antimining liberalization advocates that wants government to set up more controls on foreign mining investments, while encouraging the participation of small-money Filipinos in the industry.
“Small-scale mining is wasteful since there is lesser recovery of the desired metals. In fact, the waste products of the small miners are even sold to the big-time processors,” said Ricaredo Saturay, a geologist who teaches at the University of the Philippines National Institute of Geological Sciences.
“The small miners cannot afford the technology needed to make their production more efficient and environmentally-friendly since it is expensive. Only large companies could afford these technologies,” added Saturay.
“It is saddening that small miners are always blamed for the pollution in the industry since they use technologies that are less environmentally friendly,” he lamented.
Many small miners are only involved in gold production, since producing other minerals uses more expensive technologies. In extracting gold from the ore, small-scale miners use cyanide and mercury, which are highly toxic to miners, their communities and the over-all environment.
Technology employed include traditional pick-and-shovel concerns to mechanized and sophisticated operations which use the same methods as large mining companies, as in the case of gold processing and extraction. Underground mining (stoping) methods are also commonly practiced in the gold mines.
Gold-processing techniques include the more sophisticated gold-recovery methods involving cyanide digestion followed by precipitation with zinc dust or with activated carbon. The general method of gold recovery is by gold panning, a gravity-concentration process using pans and sluice boxes. An amalgamation process using mercury which adheres to the gold and is evaporated using direct heat is also used, particularly in gold-rush areas.
Saturay explained that since there are more small-scale miners in the Philippines, they have probably produced more value now that many mining companies have closed shop. In fact, they even sell to the Bangko Sentral, although the quota set for them is high. The black market readily buys their gold, with their buyers being mainly jewelry makers and similar establishments.
While small, the small-scale mining sector is known to have contributed 40-50 percent of the country’s total gold production from 1990 to 1999. This percentage is believed to have been a major factor in recent closures of large gold-mining operations.
Many small-scale miners are native to the places where they mine, like in the Cordilleras, Diwalwal in Southern Mindanao, and Aroroy in Masbate, where gold mines can be found. Unlike banks and other businesses, they readily spread their capital around in the places where they operate. This explains the proliferation of other industries where small mining operations are.
The government has to help the small miners if we are to optimize the gains from the small mining operations, said Saturay. Existing legislation limits the level of investment for small-scale mining operations to P10 million (about $200,000). Still, since they are at the bottom end of the sector, small miners may have very limited or no monetary investment at all apart from their own labor.
To date, the government has enacted specific small-scale mining laws and regulations, including a separate set of safety rules. It has established a small-scale mining unit within the Mines and Geoscience Bureau to support and regulate the sector. It has also decentralized the issuing and control of small-scale mining permits and licenses to local government units.
These measures are not enough, said Saturay, who suggested that the government recognize the formal and informal claims made by the small miners on some of the mining sites of the country. Some small-scale miners, such as those in the Cordilleras, Mount Diwalwal and Aroroy, Masbate, have expressed fears that their mining sites will be counted among those being offered to foreign investors.
“The government has to support cooperatives of small miners. They need technical assistance, for instance, in making their tunnels. They need a lot of assistance, rather than condemnation so they would be less environmentally destructive and more productive,” said Saturay.
12. Mining seen to boom on new investments
Friday, January 26, 2007
BY Angelo S. Samonte, Reporter
The Chamber of Mines of the Philippines eyes some $500 million new money in the industry this year in addition to previous investments made by existing mining companies.
Philip Romualdez, the president of the Chamber of Mines, said the money flowing into major mining projects in the country is still part of the commitments earlier made by mining companies.
The $500-million investment for this year includes the $100-million funding the Atlas Consolidated Mining and Development Corp. obtained from a financier for its project in the Philippines.
Another $100 million will be infused by Oceana Gold Ltd of New Zealand and Climax-Arimco Mining Corp. of Australia, which merged recently. The investment will be used for the development of the Didipio project in Nueva Viscaya.
Coral Bay Nickel Corp., on the other hand, will also invest another $100 million for the expansion of its operation in Rio Tuba in Palawan. The money is part the company’s $210 million allocation for the project in the next two and a half years.
Other expected investments for this year also include the $62 million by Indophil Resources NL. The company is also allocating $15 million for the conduct of feasibility studies.
Romualdez said the remaining $200 million will come from smaller investments by other companies. Some of these projects include the deal by Xstrata Copper for copper mining projects. Xstrata is also pursuing a nickel-mining project, he said.
The move of Xstrata is a significant development as confidence and interest are mounting in the industry. Xstrata was encouraged after the pre-feasibility commissioned by Indophil on its Tampakan property. The company has acquired 62.5 percent of the Tampakan copper-gold deposit in South Cotabato from Indophil Resources NL.
Moreover, the Tampakan deposit is one of the largest undeveloped copper deposit in southeast Asia and the western Pacific, which contains about 11.6 million metric tons of copper and 14.6 million ounces of gold at 0.3 percent Cu cut-off. The project will require a budget of $2 billion to operate commercially.
Romualdez said the prospects of these additional investments come at an opportune time because the prices of metal prices in the world market remain high.
“These companies are confident that mining activities in the country will remain profitable owing to good prices of metals at this time,” he said.
Romualdez also challenged the government to do its part in starting new projects to commence operations.
“The Chamber has already done its part and it has successfully brought the top mining companies in the world to the Philippines. The challenge is how to move forward,” he said.
However, Romualdez said he is optimistic that investors will remain confident in the Philippines despite the political noise because of the changes and the willingness of the government to hold on a better mining policy.
“There are good signs: mining permits moves, bureaucratic processing has changed, and the government assured us support. The government has shifted towards a better direction that’s why the flow of investment will continue,” he said.
Relatedly, the Department of Environment and Natural Resources sees growth in mining industry, Secretary Angelo Reyes said Thursday. “The takeoff of the mining industry this year has become apparent with the presence of the world’s biggest players, and their investments indicate the increased confidence of the global mining investors in the country, and if we’re able to sustain it, we can all expect a mining boom starting next year,” Reyes said.
Last week, Reyes announced he had approved the exploration permit of Manila Mining Corp., which is finalizing a joint venture with Anglo-American Philippines Exploration, Inc. for the exploration of the Bayugo Copper Gold Project in Anislagan, placer in Surigao del Norte.
Anglo-American has committed itself to spend an initial $100 million for exploration works in the next two years. While the Bayugo copper-gold prospect has a similar nature and occurrence with the well-known adjacent Boyungan Copper-Gold Porphyry Deposit that Anglo is exploring under a JV with Philex Mining Corp.
Other new major players include Chemical Vapor Metal Refinery Co. (CVMR), Phelps Dodge, BHP-Billiton.
Reyes said that CVMR plans to invest in nickel processing and refinery project, while Phelps Dodge expressed its interest to bid for the development of the Batong Buhay Copper-Gold Project in Kalinga Apayao.
Meanwhile, the Masbate Gold Project of Filminera Resources Corp. has submitted its feasibility study to the DENR and is expected to start construction work within the first quarter this year at a cost of $100 million.
Reyes said that the government is revitalizing the mineral industry to serve as a catalyst for economic growth in the country. The revitalizing program is projected to raise about $6.5 billion in investments in the medium term, and generate 200, 000 jobs.
With Katrina Mennen A. Valdez
Saturday, April 21, 2007
DAVAO CITY: The Mines and Geosciences Bureau (MGB)-Davao said mining operators in Mindanao have been giving in to the extortion demands of the communist New People’s Army (NPA).
Edilberto Arreza, MGB regional director, confirmed Monday the revelation of Edgar Martinez, president of the Mindanao Association of Mining Companies, that the NPAs were extorting money from them.
Arreza quoted Martinez as saying, “We have no other choice but give to the armed groups or else we can’t operate.”
Arreza said eight mining companies had permits to explore the region’s mineral deposits.
He said the APEX Mining was the only company that was operating full-blast in Barangay Theresa, Masara, Maco, Compostela Valley.
All these companies were victims of extortion, he said.
“The NPAs are very powerful because they lord it over the mountains,” he said.
He said the military could not provide enough protection to mining investors, because of lack of manpower.
“The armed solution waged by the government cannot solve, but aggravate the problem,” Arreza said.
--PNA
NPA rebels attack mining company
Thursday, March 22, 2007
CAMP RAFAEL C. RODRIGUEZ, Butuan City: At least 60 heavily armed New People’s Army (NPA) rebels swooped down on a mining company in Sitio Mendezona, Barangay Raja Cabungsuan, Lingig, Surigao del Sur, late Tuesday afternoon. The rebels disarmed seven company guards of their high-powered firearms without firing a single shot, sketchy reports reaching the command and operation center of the Northeastern Mindanao Police Regional Office 13 (PRO 13) here said on Wednesday.
In his report to Chief Supt. Antonio D. Nanas, regional director of Northeastern Mindanao PRO 13, Senior Supt. Alex Ga, provincial police director in Surigao del Sur, said the raiders also carted away seven handheld radios and a laptop.
The rebels entered the mining camp at 5:35 p.m. and completely surprised the company guards, who were reportedly preparing for dinner when the incident happened.
Field reports also stated that the intruders reportedly destroyed the mining company’s radio base station before fleeing to nearby forested and mountainous area of Mendezona.
The workers of the mining firm, including the company guards, were reportedly unharmed.
Top management of the mining company did not issue any statement regarding the incident.
The command and operation center of PRO 13 ordered the deployment of regional and provincial mobile force to track down the fleeing NPA guerrillas.
Meanwhile, Maj. Gen. Jose T. Barbieto, area command chief of the Army’s Northeastern and Northern Mindanao Fourth Infantry (Diamond) Division, on Wednesday ordered Col. Jose B. Viscarra, commanding officer of the Army’s 401st Infantry (Unite and Fight) Brigade, to look into a reported raid of a mining firm in Lingig town.
Barbieto also directed field unit commanders to pursue without letup the fleeing NPA rebels in Lingig.
--PNA
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