This is the 3rd in a 4-part analysis of mining in the Philippines today. Read also the first two:
Digging deeper into the global mining context | 4 ominous trends in global mining
MANILA — Smartphones. Spoons. Steel bars. These items cannot have been made without metals wrung from red clayey soils that stain your jeans when you stumble upon them.
Known as laterite, this red, metal-rich soil abounds in various parts of the Philippines. It’s currently being dug out of mine pits in Surigao in Mindanao, in Southern Palawan, and in Zambales. The Philippines has tons of nickel laterite that in mining circles they have this joke: ‘You want to get rich quick in the mining business, better invest in nickel mining than in gold.’
But without a domestic industry processing this red clayey soil to make our own metals, only the large corporations exporting it reap the most benefit, at the expense of the poor and the environment. The damage to the environment is the price we have to pay for the mining profits of these corporations. Some of our countrymen and women pay with their lives.
Despite the vast mineral resources of our country, the Philippines has not yet used these to build its own heavy industries, unlike our neighboring Japan, Korea, and Taiwan. They managed to industrialize despite having less metal mineral resources than our country.
In 2015 the Philippines exported minerals amounting to US$2.797 billion, mainly to Japan, Australia, Canada, and China. Based on the data of the Mines and Geosciences Bureau (MGB), from 1997 to 2017 the total mineral production value generated was P1.69 trillion while the total exports for that period were P1.59 trillion (Figure 3). This means the country lost 93.4 percent of the total extracted mineral wealth from its mines to foreign customers over the past 20 years.
Production in mining is not driven by local demand and needs but by the export market, resulting in the unprecedented plunder of our country’s natural resources. Without or with lack of manufacturing there are no finished products that can be readily used in the country which could fuel the local economy.
The import-dependent and export-dependent character of mining has intensified under the Philippine Mining Act of 1995. The law is suffused by the spirit of economic liberalization. It opens up the economy to foreign investors by removing trade barriers and restrictions, encouraging them to flock here and grow their capital. Mining companies are enticed with incentives under the Omnibus Investments Code of 1987 (Executive Order 226) and the Philippine Mining Act of 1995.
In 2012 alone, the government lost around P2 billion due to Income Tax Holidays (ITHs) granted to large-scale metallic mining companies, according to the Philippine EITI Report 2014 and financial statements of companies from the Securities and Exchange Commission. Even OceanaGold, the Australian mining company and FTAA holder for a gold mining project in Nueva Vizcaya, says their project is “the lowest-cost gold mine on earth.”
Of all the mineral agreements, the FTAA allows 100 percent foreign equity participation or ownership. Ramon Paje, the DENR secretary during the administration of President Benigno Aquino III, bragged that the mining sector is the only one in the country where foreigners are allowed to own 100 percent of the operations. According to the MGB, as of September 30, 2017, there are five existing FTAAs covering 100,136.08 hectares (Table 5 and 6) and 36 applications under process as of September 27, 2017 (Table 7) (MGB, 2017).
PH Shortchanged in current mining setup
In 2016, the mining industry contributed less than one percent to the Gross Domestic Product (GDP), giving a mere 0.79 percent compared to agriculture which contributed 9.65 percent, according to data from the Philippine Statistics Authority. The DENR said the industry’s contribution to government revenue only accounts for 0.004 percent. This shows the measly contribution of the mining industry compared to agriculture as an industry that also relies on natural resources.
Large-scale mining operations are not labor-intensive. It is the lowest contributor to employment among industries, with an average of 219,000 (0.53 percent) employed persons in 2016 as compared to agriculture with 11,023,000 (26.89 percent) employed persons, as per data from the Philippine Statistics Authority. The quality of jobs should also be considered, which are mostly contractual, with low wages, few to no benefits and intensely hazardous conditions.
The weighty income of the mining companies does not compare to the income of and development of local communities. The promise of development brought by mining operations is not seen in the quality of people’s lives.
As global companies spend only a pittance on so-called “social responsibility projects,” compared to the huge profits they raked in from the environmental destruction and displacements, so do the local mine operators. Canadian mining company Oceana Gold spent $2,611,757 for their corporate social responsibility programs in the Philippines in 2014, a measly 2.3 percent of their total earnings compared to its net income worldwide of $111.5 million (OceanaGold, 2015) (OceanaGold, 2016). For the year 2015, they earned $ 53.1 million worldwide; in the same year, they spent $ 3,589,381 for the CSR programs in the country, which is just 6 percent of their total income (OceanaGold, 2016) (OceanaGold Factbook, 2016).
In 2014, Marcventures Holdings, Inc (MARC) which operates in Surigao del Sur and serves a nickel ore supplier to China spent Php 19.8 million on “Social Development Program,” an equivalent of 2.35 percent of their net income which was Php 841 million (The Wall Street Journal, 2017) for the same year. Local mining giant APEX Mining Co. boasts having spent PhP 38.02 million into their Corporate Social Responsibility programs in 2016 (Apex Mining Co., Inc., n.d.). It was 11.7 percent of their net profit for the same year, Php 326 million (The Wall Street Journal, 2017).
Mounting environmental costs
There have been at least seven (7) mining-related disasters in the last four (4) years (Table 8). The Manny V. Pangilinan-led Philex Mining Corporation’s mine tailings spill in Itogon and Tuba, Benguet in August 2012 was considered the biggest mining disaster in the Philippines, according to former MGB Director Leo Jasareno. The five (5) instances of leakages in the tailings dam brought around 20 million metric tons of sediments into water channels such as the Balog Creek that flows into the Agno River.
This coincides with previous findings in independent scientific investigations that show how companies such as OceanaGold, Philex, and Nickel Asia have indeed caused environmental destruction and adverse social impacts. These are hardly surprising as they prefer low-cost but environmentally-destructive mine practices. There is a dearth of environmental protection mechanisms as these often require much cost.
The government and mining industry lack means to account for the damages caused by mining disasters. In the 2012 Philex mine spill disaster, the company was made to pay just P1.034 billion for a 20.69-million metric ton spill. It was based on a very low fine of P50 per ton of spilled tailings.
Compare this to the 60-million metric ton spill caused by mining transnational corporations BHP Billiton and Vale in Brazil where the mine companies agreed to a $5.1-billion (P255.6 billion at a P50.11/dollar exchange rate) penalty by the Brazilian government. The amount covers only rehabilitation and compensation costs and not other civil suits. Going by this standard, Philex should have paid at least P4,260.00 per ton of tailings it spilled, or a total of P88.14 Billion and not P1.034 billion.
Benguet Corporation was fined a mere P24 million for the leakage of at least 50,000 tons of silt tailings in 2016. Again, going by the rate the Brazilian government fined BHP Billiton, Benguet Corp. should have paid a fine of at least P213 million.
In terms of greenhouse gases, the mining sector is considered one of the major emitters since it is extremely energy-intensive, according to a report on climate change and mining by Lukas Rüttinger and Vigya Sharma.
The DENR Forest Management Bureau (FMB) has also cited mining as one of the factors that contributed to deforestation in the Philippines especially of the forest over limestone and ultramafic rocks. Deforestation associated with mining reduces the effective carbon sinks we have that could have helped in reducing the carbon emitted into the atmosphere.
Mining’s Blood debts
During President Duterte’s first year in power, there have been 30 extrajudicial killings related to mining; 12 of the victims are indigenous people. Killed are members of communities suffering the negative impacts of mining operations. Up to now, justice has not been served.
Paramilitary groups remain intact. These include the Investment Defense Force (IDF) created by executive order of former President Gloria Macapagal-Arroyo, and the Special Civilian Armed Auxiliary (SCAA) revived by former president Noynoy Aquino, both supporting the AFP and the Philippine National Police (PNP) in protecting “development projects”. These groups have been known to take action against the residents of communities opposed to the mining operations. These armed groups have been proven as protectors of erring mining companies that are destroying the environment and the livelihood of the Filipino people.