Sunday, February 6, 2011

Govt, Mines Chamber say industry is in great shape But damage to ecology and human communities boost pressure for passage of new mining law

THE election of President Benigno Aquino 3rd in May last year immediately buoyed up hopes for and in the mining industry. When he visited the US, he said in speeches there that the mining industry would be a top priority of his administration under his public-private partnership (PPP) program.

The Arroyo government had a different way of promoting the mining industry.
Mining was in her Medium Term Philippine Development Plan (MTPDP). Her Executive Order (EO) 270 of January 2004, or the National Policy Agenda on Revitalizing Mining in the Philippines and its Minerals Action Plan (MAP), revitalized the mining sector during President Gloria Arroyo’s term.

The Philippines is considered to be a highly mineralized area. Geological estimates show that mineral resources cover about 9 million hectares or about 30 percent of the total land area. In 2004, at the start of Mrs. Arroyo’s fresh term, less than half a million hectares were under exploration or development.

Today, the Aquino government considers the mining industry in very good shape because of the renewed investors’ confidence in the Aquino administration coupled with good prices of minerals in the global market. Investors in mining have been coming, from Australia and Europe and China and South Korea.

Leo Jasareno, the acting director of the Mines and Geosciences Bureau (MGB), told The Manila Times in an interview that currently his agency’s focus is to strengthen government policy, as well as to intensify the efforts of the government to address the problems being faced by the industry.

“The thrust is to have mining projects that contribute to revenues of the government. It’s included in the President’s PPP. It’s also included in the IPP [Investment Priorities Plan]. There’s a lot of opposition because, you know, mining is a destructive industry. You can’t mine without altering the land. But we have to mine because if we don’t mine we don’t have minerals needed to build our nation and society,” Jasareno said.

Aquino admin’s blue print
The major policy of the Aquino administration is to protect investments in the mining sector, Jasareno said. Secondly, it wants transparency in transactions and maintains good governance. At the same time, it wants a level the playing field.

“That’s why you see that the investment confidence is high for the President.

Investors are coming they are looking for new mines because they are confident that they will be treated fairly that if they invest the government will protect,” he said.

To attract more investors, the MGB has started cleaning the files and cancelling dormant mineral exploration applications. Jasareno said there are applicants just want to speculate. These people just want to sell their mining licenses to the highest bidder. That is bad for the industry.

These applicants who have been there for eight to ten years, Jasereno said, hamper investments because serious who want to start a project have no place to go.

“So far we were able to cancel around 300 applications. At this time we have a pending 2,800 applications covering 10 million hectares. That’s one-third of the Philippine area. These are all applications for exploration,” he said.

Promoting mining abroad is not the responsibility of the MGB but that of the Department of Trade and Industry (DTI). MGB only provides its support by doing information campaigns locally, Jasareno said. “We go to a place where there are issues against mining, we hold fora, discuss papers promoting mining and we answer the issues raised by the community.”

The road shows are, however, initiated by the Chamber of Mines of the Philippines, a purely private initiative. When the Chamber invites MGB, Jasareno said he sends representatives from the bureau.

Chamber of Mines
Although the opposition by local governments and indigenous peoples has been mounting, the Chamber of Mines said it abides by its policy of responsible mining and promoting the practice of sustainable development.

Mining companies say they comply with the law and their duty to protect the welfare of indigenous peoples who inhabit many concession areas. They say they carefully observe the provisions of the Indigenous People’s Rights Act (IPRA).

The chamber also said its members have undertaken programs for the equitable sharing of the fruits of mining operations as part of their corporate social responsibility (CSR).

The Chamber officials are calling for sobriety on the part of anti-mining lobbyists, which are backed by environment protection groups like Greenpeace International and Haribon Foundation, along with other global organizations opposing mining operations.

The bishops of the Roman Catholic Church are calling for a total mining ban in some areas.

PH performance
Jasareno admits that the Philippines is at the bottom of the total global list of mining countries. But within Association of the Southeast Asian Nations (Asean) neighbors the Philippines is at the Top 5 in terms of being an investment destination.

“As usual, the reason we are not at the top even in Asean are our two major problems: corruption and social issues,” Jasareno said.

“Social issues, the LGUs [local government units], the mayors oppose because the people also oppose that’s a social issue. Corruption is common in our country that’s why the President’s is calling for the matuwid na daan, the right path,” he said.

“Bribery and corruption are not allowed in MGB. Its part of the President’s program to intensify the fight against corruption,” he added.

PH is a gainer
But in the Fraser Institute’s Survey of Mining Companies of low and middle-income jurisdictions, the Philippines belongs to the gainers. The country rose from 12.6 to 34.0 points, and with that, its rank climbed from 49th in the adjusted 2009/10 survey to 35th spot in the updated survey.

The survey is based on the opinions of mining executives representing 429 mineral exploration and development companies on the investment climate of 51 jurisdictions around the world.

In comparison, the bottom 10 scorers in the 2009/2010 annual survey were: Venezuela, 6.9; Ecuador, 10.5; Philippines, 14.0; Zimbabwe, 14.7; Democratic Republic of the Congo, 18.9; Mongolia, 19.0; Bolivia, 20.1; Honduras, 20.4; Guatemala, 21.9; and California, 22.6.

Five nations moved out of the bottom 10 in the update: Philippines, Democratic Republic of the Congo, Honduras, Guatemala, and California. Two of these, Honduras and Guatemala, were not in the update.

“In order to attract mining investment, jurisdictions must uphold the rule of law and respect negotiated contracts and property rights. Jurisdictions that fail to do so can not compete successfully on a global scale,” said Fred McMahon, coordinator of the survey and the Institute’s vice president of international policy research.

Analysts said this good rating was the result of a relatively clean and peaceful presidential election in May.

Great increases
In a mining conference presentation last year, Environment Secretary Ramon Paje reported that investments in the mining sector reached $2.80 billion from 2003 to 2009. He projected that total investments up to 2013 may reach $13.5 billion.
There is also an increase in gross production value of 159 percent from $758 million (P41.1 billion) in 2003 to $2.23 billion (P106.1 billion) in 2009.

Export contribution also increased tremendously in the last six years from 1.8 percent ($637 million in 2003) to 5.4 percent ($2.72 billion) in 2009.

For 2010 the Department of Environment and Natural Resources projected that the gross production value would be around P138.5 billion, or $2.95 billion while the contribution to the country’s gross domestic product would be P110.4 billion.

Total exports of minerals and mineral products was expected at $2.980 billion; taxes, fees and royalties were at P10 billion. Total employment for the mining and quarrying sectors was around 200,000.

Industry integration
Integration and value adding are possible in the local mining industry according to Jasareno. Many companies both local and foreign have already expressed interest in this area with some of them even started operating.

But President Aquino has some reservations before allowing a full scale integration having in mind the failed case of car industry in the country when it attempted to integrate.

“The concern of the President is that it may have the misfortunes similar to that of our car industry. We planned integration in the car industry but we didn’t have the capacity to achieve. For instance we allow value adding, no raw materials are allowed to be exported but the problem is we still have to import other raw materials,” he said.

This is also similar with the case of the steel industry and its dependence on the coal imports to continue operating.

“The President said we should study it very carefully but in principle we would want to join the developed countries. The reason they developed is because they have downstream industries,” he added.

For instance companies in the nickel industry have started putting up processing plants. The Citinickel Mining in Palawan wanted to set up an electric furnace, a smelter for nickel. Also, the Taganito Mining Corp. in Surigao, which is currently in the process of building its plant for nickel processing that also entail huge investment. Rusina Mining, a foreign-owned mining company operating in Zambales has bleaching process for minerals.

Talented Filipinos are also showing great interest in integration and Jasareno said that two weeks ago he was approached by Filipino investors proposing a new invention to process nickel, upgrading low grade nickel to increase its value before its is sold.

“We allowed them to hire a place in our laboratory to test their technology. They will stay for six months and hopefully if it’s successful we can use it for nickel wastes. These are low grades .9, .8-percent nickel. But upgrade them to 1.3, 1.4, 1.5 percent, they can be sold. They have invented a machine. It’s value adding, waste to be disposed and still they can recover nickel,” he said.

Other businessmen are interested. They are confident of putting up a plant but the only problem is capital, which requires huge amount of investment, Jasareno said. “The Capital even reaches millions of dollars.”


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