Arroyo Risking Social Upheaval for Mining Policy

President Macapagal-Arroyo may be dreaming of peddling the idea of sustainable mining as a savior of the fiscal crisis. She is basically courting disaster by opening up almost all mining sites and making people pay for whatever bad would come out of it.

By John Paul E. Andaquig
IBON Features Vol XI No. 1

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President Gloria Macapagal-Arroyo’s admission of the country’s fiscal crisis last year proved beneficial for the business sector after all, particularly for mining companies.

The government’s fiscal woes were enough reason to sway the Supreme Court toward eliminating probably the last obstacle to the full liberalization of the country’s mining sector.

Last Dec. 1, the country’s justices decided that the 1995 Philippine Mining Act is constitutional–completely reversing its Jan. 27 ruling that said foreign-led mining is tantamount to foreign ownership and control of the country’s resources.

The Mining Act, or Republic Act 7942, has been described by people’s organizations, NGOs and environmentalists as a legal instrument that essentially sells the country’s sovereignty in managing its resources. The Mining Act allows government to enter into Financial or Technical Assistance Agreements (FTAAs) with mining companies in the extraction of mineral resources abundant in the country.

“Economic development” through mining investments was the goal of R.A. 7942. For the World Bank, which pushed for the passage of the law, this means the Philippines should live up to its reputation as the 5th most mineralized country in the world. For the government, the message was clear: export your natural resources through foreign companies to be able to pay your debts.

Mining Act author

As a senator in 1995, Gloria Macapagal-Arroyo authored the Mining Act and by the time she became President, turned out to be the heaviest borrower among Philippine presidents. Her administration eventually faced a crisis characterized by ballooning debts, widening budget deficits and falling tax collection.

Desperate for investments, she set her sights on the one sector she has promoted for years– the mining export industry.

Proving that she can walk the talk after saying her government is shifting its mining policy from “tolerance” to “actual promotion” in late 2003, she unveiled the Minerals Action Plan (MAP) last year, which was basically a policy document taken entirely from the Mining Act, but only added a few provisions on “social and environmental protection” to make it appear that large-scale mining can be “responsible and sustainable.

Anti-corporate mining groups thumbed down the government’s mining policy, and clamored for the junking of the mining law. They challenged the constitutionality of the law with regards to national patrimony way back in 1997– a petition filed by B’laan tribal groups under the La Bugal Tribal Association.

This petition however is now junked by the SC, apparently convinced of the mining industry’s arguments of “economic benefits for the majority”. While the decision is taken as a go-signal by the government and mining leaders, communities and people’s groups vowed that they would not take it sitting down.

Good news?

Arroyo didn’t hide her elation with the court ruling, describing it as a “stroke of good news.” She was particularly referring to how mining can contribute to ongoing government efforts to douse the country’s fiscal crisis by relying on the bankrupt solution of more debts and more reliance on exports and investments.

Speaking of investments, trade officials are presently harping about the country’s rich mineral potential at a road show in China to attract cooperative ventures with Chinese mineral firms. By early next month, the government is expecting to draw the attention of major global mining corporations in its mining summit ahead of the World Mining Conference in Africa.

And government expectations are high. Trade and Industry Secretary Cesar Purisima said they hope to attract $6.5 billion in mining investments for the next six years and export some $3.1 billion worth of minerals annually.

In an old trick to further gain public approval, the government added that new and expanded mining projects would generate $490 million in tax revenues and employ 34,800 workers, aside from providing more than 200,000 indirect jobs.

Arroyo, in an interview by a major daily, said that the country’s mineral worth over $840 billion was more than enough to erase the government’s budget deficit and other fiscal woes for the years to come.

Such claim effectively shows the government’s ignorance or outright denial of past experiences with mining companies, in which mine-affected communities have suffered displacement from their homes and livelihood, destruction of their water systems and resources areas and human rights violations. NGOs have estimated roughly millions of pesos in social and environmental costs, though figures would not really measure actual people’s experiences at the hands of mining companies.

Not to mention the billions of pesos lost in potential tax revenues as a result of incentives given to mining firms under the Mining Act, Arroyo may be dreaming of peddling the idea of sustainable mining as a savior of the fiscal crisis. She is basically courting disaster by opening up almost all mining sites and making people pay for whatever bad would come out of it.

Faulty argument

In its Jan. 27, 2004 ruling, the SC had decided that the Mining Act is unconstitutional for it allows foreign control of the country’s natural resources through FTAAs, which are no different from service contracts.

In overturning this decision later, the SC said, “the Constitution should be read in broad life-giving strokes.” Simply put, the justices are agreeing with the government’s argument of the importance of investments and the mining industry’s argument that the SC should not intervene on “urgent” economic matters.

But these arguments are not only faulty but are made to deceive public opinion into accepting large-scale mining.

The MAP for instance allows various leeways for mining corporations to evade social responsibility altogether and to simply secure their investments.

The country is not even assured of increased tax revenues since the government can only collect taxes from companies only after the company has earned its capital, which can take at least seven years– enough time for mining firms to underdeclare their profits or simply pull out and claim “unstable investment climate” or other reasons.

Moreover, how can the government earn from mining when it is hell-bent on increasing incentives for mining companies? About 23 big-ticket mining projects, including those of companies such as Lepanto and Philex Mining, firms with bad environmental records, are included in the government’s Investment Priority Projects (IPPs).

These additional incentives include 6-year tax holidays, 3-year tax holidays for expansion projects, 10-year exemption from export taxes and other fees, and exemption from corporate income tax, and all other ways in which the government may squeeze something out of the mining firms’ fat profits.

Simply put, the government’s mining policy allows mining firms to fully repatriate their earnings, including any excess capital, in its first decade of operation and even beyond.

Also worrisome is the control it will give to foreign banks through loans appropriated for mining companies. A provision in the MAP gives foreign banks rights to re-classify mining lands whenever a mining company defaults on its loan payment.

Opening more dangers

In essence, NGOs and people’s organizations are pressing that the SC decision opens the floodgates to more disasters since the government’s “revitalized” mining policy expands, if not advances, the perks and incentives already provided to mining companies under the Mining Act.

The Mining Act itself allows foreign control of resources through such access to rights over use of water resources, the right to classify mining lands, and the right to displace communities in the right-of-way of exploration projects.

This has been concretely experienced by many mine-affected communities and indigenous groups around the country, such as the Subanon people who have been calling Arroyo’s attention over recent spate of militarization in their areas as a result of mineral operations by Canadian company Toronto Ventures, Inc.

Communities are also expressing their concern that the MAP’s “one-stop shop” process of rushing the application of permits by mining companies would result in less capabilities for government regulatory agencies such as the DENR to monitor mining firms that are entering the country in terms of environmental and social responsibility records.

These concerns however were not registered during consultations by the DENR to mining stakeholders in 2003 when the government railroaded the National Minerals Policy (NMP), the precursor of the MAP.

As the crisis continues to grip the economy and the lives of Filipinos, Arroyo cannot simply risk more social upheaval by insisting on foreign-dictated policies such as the Mining Act and its present arm of implementation, the MAP.

Above all, the issue of national patrimony in the extraction and use of natural resources can only be addressed if people themselves are the ones directing its development and benefiting from it. IBON Features / Posted by

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