Mining for Answers in the Philippines

Posted by Bulatlat
Vol. VIII, No. 10, April 13-19, 2008

(New York, NEW YORK) Last month, the municipal government of Nueva Valencia in the Philippine island province of Guimaras passed a resolution opposing the proposed mining exploration by the Fil-Asian Strategic Resources and Properties Corporation. Environmental groups and Guimaras residents fear that the project will threaten the natural resources of the island, which is still recovering from a massive oil spill in 2006. Also recently, Bishop Ramon Villena, the chair of the Regional Development Council for Cagayan Valley, asked President Gloria Macapagal-Arroyo to suspend the operations of the OceanaGold mining project, following the company’s alleged violations of human rights in the region.

There are many well-known negative effects of the mining industry, which uses a tenth of the world’s annual energy supply and accounts for the second-largest source of greenhouse emissions. Farmland, plants, animals and humans all suffer from mining, which pollutes the groundwater, rivers and irrigation lines, leaving open sores of unusable land in its wake. The Lepanto Consolidated Mining Corporation, located in Mankayan, Benguet, dumps its mine tailings into the Abra River. The Manila Times has reported that pollution from the Lepanto operation has caused a 30 percent reduction in rice production in the Cervantes and Quirino areas, communities that rely on rice planting. Additionally, mining pollutants kill marine life, which many coastal residents depend on for their daily survival.

Open pit mining — the standard method for extracting ore such as gold and copper — also impacts on the environment in a unique way: By destroying natural habitats, this type of mining removes a link in the ecosystem chain, adversely affecting the biodiversity of an entire region. BHP Billiton, one of the world’s largest mining firms, recently secured a Mineral Production Sharing Agreement (MPSA) from the Department of Environment and Natural Resources (DENR) for the exploration of nickel deposits in Barangay Macambol. This area is located between the Pujada Bay Protected Seascape and Landscape and Mt. Hamiguitan Range, a newly-established wildlife sanctuary that is home to the endangered Philippine Eagle. Last month, protesters picketed in front of the firm’s office in Mati, Davao Oriental.

But environmental damage, human rights violations and loss of food security are not the only negative effects of the mining industry. The way in which the industry is currently operating may actually be unconstitutional. On March 3, several Lower House representatives filed petitions before the Philippine Supreme Court seeking to scrap the Philippine Mining Act of 1995, a product of the World Bank’s call to liberalize the world’s mining industries. They argue that the act violates an article in the constitution that allows the state to exploit the country’s natural resources in concert with corporations, provided that Philippine citizens own at least 60 percent of those interests. However, the Mining Act permits mining firms to be 100 percent foreign-owned and, most surprisingly, allows the repatriation of all profits. The only money to be made by the Philippines, according to the act, comes in the form of an excise tax. But this is a pittance. The 2005 excise tax collection of the Lafayette Mining subsidiary Rapu-Rapu Mining amounted to only 1.5 percent of the company’s total revenue. Obviously, this is not a fair deal for the Filipino people.

As the petitions slowly make their way through Supreme Court, Ms. Macapagal-Arroyo seems to be in a political bind. As a senator, she was the principal author of the Mining Act under the Ramos administration. Her administration currently has over twenty priority mining projects. And, though legislation has been filed to repeal the act, such as House Bill No. 1793, authored by Bayan Muna Representative Teodoro Casiño, it is languishing in Congress and its Committee on Natural Resources, which is chaired by Ms. Macapagal-Arroyo’s brother-in-law, Representative Iggy Arroyo.

Repealing the act in Congress is a far better solution than having the Supreme Court rule it unconstitutional. A protracted battle between the legislative and judicial branches of the government would not be good for the country. Moreover, solving the issue within the House of Representatives would give Filipinos a much-needed measure of confidence in their elected officials. And this tack affords a big opportunity for Ms. Macapagal-Arroyo to pull herself out of her historical attachment to the law and the current bind she is in: She can be the one to make the call for change. As President, she can urge Congress (and specifically her brother-in-law) to seriously address Rep. Casiño’s bill. Acknowledging that a law she authored is no longer effective would not only be a positive step in moving her country forward, but would help resuscitate her sagging image. Falling on the right side of the current mining issue will show that she is willing to adapt to changing times, and more importantly, willing to be wrong about a past position. Voters would more easily forgive Ms. Macapagal-Arroyo for writing a bad law over a decade ago as a senator than for holding onto it now as president.

In addition to calling upon Congress to address the problems of the current act, Ms. Macapagal-Arroyo should make sure that the DENR includes the voices of domestic mining interests, non-governmental environmental groups and the local communities directly affected by mining in a fresh, progressive and transparent discussion that crafts a sustainable future for the country’s vast, untapped mineral wealth. The local communities that bear the brunt of the harmful environmental impact of mining should also be compensated more than the measly local business tax and other small fees they currently receive from mining companies. A portion of the larger piece of the tax pie, such as shares of remittances from capitals gains and dividend taxes — all of which now go to the national government under the Mining Act — should be reinvested in those communities.

Since 2004, $1 billion has come from overseas into the Philippine mining industry. Considering the country’s proximity to resource-hungry China, the government hopes to increase that figure to $10 billion over the next three years. But if the Mining Act is repealed or ruled unconstitutional, lawmakers must find ways to keep current foreign investors from leaving in the face of major profit margin reductions, and also attract future foreign investment. Improved tax incentives, for example, could be granted when firms upgrade to more environmentally-friendly mining methods or purchase supplies from local businesses. Longer tax holidays can also sweeten investment incentives. Additionally, Congress should demand that the DENR uphold its mandate to “conserve specific terrestrial and marine areas representative of the Philippine natural and cultural heritage for present and future generations.”

The Philippines may hold one of the largest caches of gold and copper in Southeast Asia. These resources should be exploited. Repealing – or at the very least, rewriting – the Mining Act would be a good first step in insuring that the national patrimony of the Philippines is not unfairly exploited by foreign interests. The mineral riches of the Philippines can certainly help its citizens by creating jobs and boosting the economy, but mining the land must be done in a sustainable way that limits the damage to the environment, maintains an interest in foreign investment and keeps a fair share of the profits in the hands of the Filipino people. Posted by (

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