ANALYSIS

Under Probe: The Lepanto Workers’ Demand for Just Wages and Benefits

“Tunggal dumawat tayo ti nayon a sweldo, ibaga da a bassit ti mapaspastrek a ganansiya ken maluglugi da pay” (Whenever we ask for just wage increases, the company tells us that it is not earning, that business is not good). Striking mine workers have all the more reason to demand for a wage increase and an improvement in benefits. The company, after all, has been raking in billions of pesos in retained earnings. What they are asking for only accounts for less than five percent of such earnings.

BY ABIGAIL T. BENGWAYAN
Northern Dispatch
Posted by Bulatlat

BAGUIO CITY - The 1,687 rank-and-file employees of the Lepanto Consolidated Mining Company (LCMCo) are on their 6th day of strike as this article is being written. The work stoppage started on the foggy dawn of June 2 in Mankayan, Benguet. To date, underground operations remain paralyzed.

The miners were exploited and oppressed in all imaginable means by the management, a classic example of struggle between capital and labor. Hard labor is one of the simple bases of the demand for wage increases and benefits. It is also a known fact that the economic crisis has affected the Filipino people — and the poor is hit the hardest. The workers of LCMCo and their families need not be shown macroeconomic statistics to prove this. They live it everyday.

The workers, led by the Lepanto Employees Union (LEU), ask how LCMCo can go on expanding its operations when it cannot respond to the needs of its labor force first. The workers ask why, in spite of LCMCo’s profits, adjusting their wages to realistic rates seems unworkable.   

Profile of a mining giant

More than a century ago, Spanish occupation in Mankayan prompted copper mining which lasted for some 19 years under the Sociedad Minero-Metallurgica Cantabro-Filipino de Mankayan. But it was American colonization that paved that well-cemented way for the entry of mining corporations in Benguet province. Several laws were eventually enacted, including the Public Land Act of 1903 and the Mining Act of 1995. Business boomed in the 1930s. By 1936, a group of investors led by Victor Lednicky formed the LCMCo. 

The LCMCo started operating in Mankayan primarily for copper production. It has become the biggest gold producer in the country after expanding its copper operations in 1995 to include other minerals.

According to research conducted by the Cordillera chapter of the Kilusang Mayo Uno (KMU, or May First Movement), LCMCo established major subsidiaries in the names of Far Southeast Gold Resources, Inc., Diamond Drilling Corporation of the Philippines (DDCP), Diamond Boart Philippines Inc., Shipside Incorporated and the Lepanto Investment and Development (LIDC).

In a primer titled “Large-Scale Mountain Top Mining: Its Impact on Land, Water, and Indigenous Peasant Communities in the Agno and Abra River Basins,” the peasant alliance Alyansa dagiti Pesante ti Taeng iti Kordilyera (Apit Tako, Alliance of Poor Peasants in the Cordillera) noted that small-scale mining accounts for 54 percent to 59 percent of all gold remitted to the Bangko Sentral ng Pilipinas (BSP) annually. Large-scale mineral production accounted for only 41 percent to 46 percent of the annual gold remittance.

The same KMU research stated that LCMCo occupies 4,621 hectares of Mankayan land, specifically the villages of Paco, Sapid, Poblacion, Colalo, Cabitin, Tabeo, Bulalacao, and Suyoc. In January 2005, it applied for an Application for Production Sharing Agreement (APSA) in Maintin, Bontoc, Mt. Province covering 3,924.67 hectares, and another APSA in Mankayan covering some 1,057 hectares. It also has an approved and registered Mineral Production Sharing Agreement (MPSA) for copper mining also in Mankayan.

According to the Department of Environment and Natural Resources (DENR), LCMCo filed in January 2005 for an Application for Financial Technical Assistance (AFTA) covering 77,549 hectares in Benguet; 81,000 hectares in Ifugao, Nueva Vizcaya and Benguet; and another 81,000 hectares in Ilocos Sur and Abra.

For its foreign partners, KMU reported that the company clinched deals with big foreign investors from the US, Japan and Australia, specifically with NM Rothschild & Sons-Australia, Dredsner Bank for their Gold Hedging, Financing and Loans, Chemical Bank, International Metal Company, ASAP Company (USA), Nippon Mining (Japan), Conzinc Rio Tinto (Australia) and Ivanhoe Mines Ltd.

The capital that gold built

The company posted retained earnings amounting to P2.72 billion, P2.57 billion and P2.59 billion ($49.21 million, $46.63 million and $46.86 million, based on an exchange rate of P55.20 per U.S. dollar) for the years 2002, 2003 and 2004 respectively, according to a recent KMU fact sheet on the ongoing strike at Lepanto.

The economic slump may not seem to affect to the sale of gold. Independent research think-tank IBON Foundation explained that gold, as a commodity, reacts inversely to the crisis. During global economic recession, the demand for gold increases, and similarly in instances of wars and currency turmoil. IBON clarifies that gold is the traditional store of value such that investors buy gold when prospects of other assets are at risk.

From its Teresa Ore Body expansion, Lepanto targets to produce P83.02 billion ($1.50 billion) from its estimated gold reserve of 110,418 kilograms (kg). This mine site has a 15-year lifespan. These figures were derived from converting the estimated gold reserve (110,418 kg) to grams (110,418,000 g) and dividing it by 31.157 g, which is the value of 1 troy ounce. The quotient was multiplied by the $428.50, the price of gold in the international market as of June 7, 2005. (The computations were lifted from an article posted at the Cordillera Peoples Alliance website at http://cpaphils.org/campaigns/cpa-teresa_4c04.htm, except for the recent price of gold in the world market.)

The Victoria Gold Project meanwhile started in 1997, where Lepanto produced 3,432.47 kilograms of gold and earned P1.47 billion ($26.63 million) for that year alone. The Save the Abra River Movement (STARM) in its 2003 primer on the effects of corporate mining on the Abra River System stated that from 1998 to 2002, the company earned P9.55 billion ($173.04 million).

Clearly, the money does come in.

In the June 5 issue of Northern Dispatch, we presented the figures the union would acquire if its proposal – i.e., to increase daily wages by P29, P29 and P33 for the first, second and third year of the collective bargaining agreement’s (CBA) effectivity – were approved, which is P93.69 million ($1.70 million) for three years. This amount is only 4.7 percent of the company’s retained earnings in 2004.

The company issued a statement last May 24 titled Updates on the CBA negotiation which claimed that the total proposed package (wages and non-cash benefits) of P133 million ($2.41 million) is greater than the previous package, which is P103 million ($1.87 million). But with the rising cost of living, it would only be proper for a corporation like LCMCo to increase the wages of its workers. Using the same formula, P133 million ($2.41 million) is only 3.95% of the 2004 retained earnings.

A worker’s daily pay is P340 ($6.16). In monetary terms, the benefits per worker amount to P260 ($4.71), which is why company reports the daily wage at P610 ($11.05) per worker. Then again, the benefits refer to boots, eyeglasses, allowances and the like which are not given daily but monthly or yearly.

The National Statistical Coordinating Board (NSCB) and the National Economic and Development Authority (NEDA) reported that in the Cordillera region, a family of six needs P573 ($10.38) to survive daily.

IBON stressed that the buying power of the peso continues to slide, such that its real value is down to P0.53 ($0.01). And this is due mainly to the increasing prices of goods and services.

Buying power or purchasing power is the amount of goods and services a person can buy with P1 ($0.02) using a base year as point of comparison. This means that P1 ($0.02) can now only buy P0.53 ($0.01) worth of goods and services.

The workers’ basis for their proposed wage hike is therefore valid. It is also just and legitimate. This truth cannot be denied. Nordis/Bulatlat

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