Mining in Tampakan: will the long wait calm the storm

In a couple of years, the languid lifestyle of the town folks in and around this municipality will turn into a frenzy of cascading boom of engines, deafening whirls of humongous machineries and flurry of activities residents never have imagined in their lives.

When the first gigantic earthmovers roll down from the mountains of Tampakan and areas around them, the landscape will change forever and the tribal communities living there will probably also lose their cultural heritage for good.

Open pit

Sometime in 2010, Sagittarius Mines Inc. (SMI) will begin commercial production of its copper and gold project in the highlands of Tampakan.

Nestled atop the forested villages of Bong Mal, Tablu and the sparsely populated barangays of Danlag and Folu Bato is the proposed open pit mining complex of SMI, underneath which, according to company sources, lay some two billion tons of copper and gold deposit.

With the confirmed staggering find, the Tampakan Copper and Gold Project gained pre-eminence as the largest in South East Asia and Western Pacific region.

Sometime last year, SMI announced that its Tampakan Copper Project has a potential two billion tons of mineral deposits, containing 11.6 million tons of copper and 14.6 million ounces of gold at a 0.3 copper cut-off grade.

The disclosure sent a major ripple in the international mining community and drove the value of stocks of Indophil, listed in the Australian Stock Exchange, soaring northwards.

With China and India enjoying unprecedented industrial boom, the Tampakan copper Project was projected to provide these countries the industrial resources they needed to propel their respective economies.

Indophil chief executive officer and managing director Richard Laufmann said China alone needs additional nine million metric tons of copper annually to maintain its current gross domestic product (GDP) up to 2015.

Mineral experts of SMI said the Tampakan Copper and Gold Project of SMI has a potential mining lifespan of 50 years and predicted that prices of copper in the international market will remain competitive in the next five years..

"Long term estimates have move substantially moved, from less than US$0.80 per pound to more than US$.350 per pound," Laufmann said in a 2007 second quarter report in June.

As a result, XStrata announced it is ready to infuse additional US$1.4 billion in capital and operational expenditures and a potential US$500 million additional investment for other major facilities once it decides to go full commercial production.

SMI is concentrating its drilling operations in Tampakan where results led to the discovery of the enormity of mineral deposits in the area.

While the original 99,000-hectare coverage of the Columbio FTAA has been reduced to just over 23,000, its present area however still covers several villages in the towns of Columbio in Sultan Kudarat, Kiblawan in Davao del Sur and in Tampakan, South Cotabato.

Company sources said SMI will eventually settle to a 3,000 hectare mining development area with commercial production concentrated in a 600 hectare site.

And although SMI has yet to officially announce it, open pit mining looms as the likely method of extracting the mineral deposits.

The XStrata takeover

In December 2006, XStrata Copper, one of the biggest diversified mining firms in the world, exercised its options to acquire majority stake in SMI from Indophil Resources NL which owned 40 percent of the company.

In March 2007, Australian-based Anglo-Swiss mining firm acquired "62.5 per cent of the controlling interest" of SMI making it the single biggest stockholder of the company.

Under the takeover agreement, Alsons Corporation will eventually have to sell its remaining 3.5 per cent stake to Indophil after reaching certain "milestones."  Alsons used to own five per cent of the company before the XStrata takeover.  SMI has other non-controlling partners in South Cotabato Mining Corporation and Tampakan Group of Companies.

The takeover came after SMI finished its pre-feasibility studies in December 2006 at a cost of AUS$55 million which was bankrolled by XStrata.

In 2001, SMI, then known as Tampakan Mineral Resources Corporation, acquired the 99,000-hectare mining development area from another Australian-controlled Western Mining Corporation (WMC) which previously held the right over the Columbio Financial Technical Assistance Agreement.

SMI resumed drilling operations and started its pre-feasibility studies in 2002.

SMI was to start its feasibility studies stage early this year but its pre-feasibility study was extended up to middle of 2008 to further explore several options for XStrata.  

These options include mining method, required facilities, mode of transportation, road system and several other key and strategic factors for full commercial mining operation.

Under the Mining Act of 1995, SMI is supposed to finish its feasibility studies within two years upon completion of its pre-feasibility studieswhich included drilling operations.

But XStrata reportedly wanted more detailed information and list of options which the pre-feasibility study apparently failed to provide.

Roy Antonio, SMI senior coordinator for corporate affairs, said the mining project essentially covers four phases namely: pre-feasibility study; feasibility studies proper; construction and commissioning; and commercial operation.

XSrata's takeover came at the critical transition period between phases one and two.

Antonio added, however, that phase one and phase two are now practically overlapping as XStrata decided to commence with other technical aspects of phase two while refining some fine prints of phase one.

Winds of change

With the entry of world mining giant XStrata into SMI late last year, changes have also occurred in the company.

The sudden departure of former presidential assistant for Mindanao Paul G. Dominguez as erstwhile president of Sagittarius Mines Inc. (SMI) early this year hardly got noticed, buried in the business page of major dailies.

But his resignation may have started a new beginning for the copper and gold project in Tampakan, South Cotabato.

Although Dominguez remains a member of the board of director of SMI representing the decreased shares of Alsons Corporation, a new management team has taken over the copper project, reputed to be the biggest in South East Asia and Western Pacific.

The takeover came just months after XStrata PLC, exercised its options over SMI and in the process became the majority stockholder of the said firm.

The changes were not only in the faces of top management following the XStrata takeover.  SMI, with its present Australian executives, is taking a new tack and it is showing in how it is handling the recent protest actions that have hit the company.

Introduction of new layers of management and diluted authority given to long-time executives, however, may have created confusion.  And the situation has apparently driven a wedge among executives who were before given enough elbow room to commit and to exercise certain degree or level of authorities.

The new top SMI executives so far have been insulated from the issues that are threatening to bring irritants within and from outside the company.

Now at the helm as president of SMI after Dominguez resigned is Peter Forrestal, an Australian.  Briton Mark Williams was appointed by XStrata as general manager. Also taking over as manager of SMI community and local affairs is Peruvian national Raul Farfan.  Xstrata also appointed Filipino Gerardo Laviste as SMI resident manager in Tampakan.

Company statements and figures are now being filtered and take long before they are released for public consumption.  Request for interviews with company officials are now to be cleared from top management and decisions are now carefully weighed against its implication to the company.

Birthing pains

SMI's multi-billion dollar project, however, is now facing testy waters after management ordered a review of its hiring policy.

SMI recently place an ad in several local newspapers for the opening of 37 permanent positions, most of them technical.  This triggered a slew of apprehension among members of tribal communities who were earlier promised priority in employment.

Antonio however said they have not excluded qualified members from the tribal community in the hiring process.

The confusion and apprehension spilled to agency and rotational workers whose employment status was suddenly left hanging following the management review order.

The database agency and rotational workers of SMI reportedly contained names of 3,000 members of five tribal communities covered by the copper project.  These tribal residents are hired on a rotational basis to accommodate growing clamor for temporary employment.

Several workers picketed and padlocked SMI premises last October 1 in Tampakan town to demand their regularization in the company. Protesting workers also barricaded the core load site of SMI in Barangay Liberty, also in Tampakan.

A crack in the relationship between SMI and the local government is also slowly showing after Tampakan acting Vice Mayor Relly Leysa asked for proof from SMI that its ongoing operation is covered by necessary laws and permits.

In a strongly worded letter, Leysa told company officials that for as long as SMI "cannot produce an acceptable, appropriate proof for an 'extended' exploration permit…we cannot help nor (sic) argue among ourselves but to exercise a stringent restriction of your presence in Tampakan."

But Mines and Geology Bureau regional director Constancio Paje said the exploration permit of SMI is covered by the Columbio FTAA which was absorbed by SMI upon the sale of WMC rights over the area.

"They (SMI) are only required to submit work programs every two years.  Otherwise, their permit is valid for 25 years," Paje said.

But on top of emerging opposition from the local officials of Tampakan, the company is also yet to finish reviews of the Principal Agreements between five tribal communities and the defunct Western Mining Corporation.  

The Principal Agreements, signed before the Indigenous Peoples Right Act became a law, contained provisions that gave WMC permission to explore the area.  It was then signed by WMC and the Philippine government through the Department of Environment and natural Resources.

With the passage of IPRA, mining companies are now required to obtain free and prior informed consent (FPIC) of tribal communities which hold Certificates of Ancestral Domain Claim (CADC) over areas covered by their mining development projects.

When SMI acquired the rights of WMC, the Principal Agreements were absorbed by the company without the "free, prior and informed consent" of the tribal communities.  

Also under the agreement, the company and the affected tribal communities were to review the whole agreement every four years.

Dr. Rolando Doria, former SMI project coordinator who now heads the restructured local and regional affairs division of SMI, said interim principal agreements between the company and the tribal communities of Sebangken, Folu bato, Danlag, Bong Mal and Salnaong have already been signed.

"But the final agreements will have to wait as some provisions may be affected by the final results of the feasibility studies," he said.

Doria said there is already implied compliance of the FPIC when the tribal communities signed the interim agreements.

When pressed for further details, Doria said his present job description no longer allows him to give statements on what position the company will take when the final principal agreements will finally be signed.

But Antonio said a far-ranging review is being considered in the light of eroding living standards.

"The (economic and compensation of the principal agreements) rates are no longer equal to what they should be now," Antonio said in a recent interview.  Like Doria, however, Antonio declined to further discuss the issue.

Also still to be taken up are agreements between the company and the local barangay units covered by the SMI operations.

Opposition

Panalipdan! Mindanao, a network of church and sectoral organizations and NGOs, however, accused SMI of "steadily doling out money for socio-economic projects to appease local leaders, buying their passive consent to the mining project, promising thousands of jobs and other benefits."

Bishop Dinualdo Gutierrez of the Diocese of Marbel has also resumed his strong opposition to the continued exploration of SMI in Tampakan.

Last month, Bishop Gutierrez and several other bishops from the Philippines went to London where they appealed to the British House of Parliament "to end British investment in destructive mining."

Bishop Gutierrez of Marbel also explained in the September 17 gathering of bishops in London how the Catholic bishops of Mindanao have joined forces to stop the open-pit copper and gold mining operation of XStrata in Tampakan.

Opposition to mining exploration and operation in South Cotabato dates back in the mid-90s when Western Mining Corporation began drilling operations.  When Western Mining abandoned the project in the late 90's, protest actions against mining operations simmered but sprang back to life following the entry of SMI.

A network of local and national non-government organizations have also joined the Catholic Church in the campaign to stop SMI's exploration activities.

The communist-led New People's Army (NPA) has likewise repeatedly issued warnings against the continued operation of SMI in the area where it maintains some degree of influence over several villages.

Now, the militant Kilusang Mayo Uno (KMU) and its allied organizations like Gabriela and Kilusang Magbubukid ng Pilipinas have become active again.  KMU even provided support to the protesting workers of SMI when the latter padlocked the premises of the company.

Some quarters believe the eminent role XStrata executives will exercise in the following months will give critics of SMI a rallying point as national sovereignty remains a strong battle cry among opposition to the multi-billion dollar project.

Fears

Fears of environmental destruction and foreign exploitation remain on top of the agenda of critics of the project.

Bishop Gutierrez brought with him images of people covered with sores and poisoned fish stocks to demonstrate the "links between leaks of toxic mine wastes, such as cyanide, and the loss of health and livelihoods of local communities."  He and other Filipino bishops even wore Episcopal crosses made of bamboos to dramatize their protest.

According to company sources, however, SMI will not build a smelter plant in Tampakan but instead ship the ore somewhere else.  One of the smelter plants being considered is PASAR in Marinduque.

"Or we will ship them to China or Australia wherever it is more economical from the point of view of production cost," said a company source who declined to be identified.

How this would be done is still subject of SMI's feasibility studies.

But Antonio assured that SMI will adopt a policy of "full disclosure and open dialogue" with communities that will be affected by its operation.

Assurances

While recognizing that some issues raised by the opposition to the mining operations are legitimate, Antonio believes the company is taking the right track to address them.

He said one of the reasons of the extension of the pre-feasibility study is that the company "needs time so that we will have final mining plan to mitigate the environmental impact" of the project.

He also admitted that an undetermined number of residents in the tribal areas will be affected once commercial production begins.

"Yes, there will be people that will be moved or resettled for safety purposes.  But the company is taking pains in seeing to it that these communities will retain their lifestyle and cultural heritage as much as possible," he added.

XStrata, through SMI, Antonio said will take all necessary steps to abide by international standards and Philippine laws in the course of its mineral exploration and anticipated commercial production.

He believed that SMI continues to enjoy the support of majority of the host communities where they are now conducting further drilling operations and doing community work.

Assurances aside, SMI is undoubtedly preparing the groundwork for full commercial operation at least five years from now.

Construction and commissioning of its plant and machineries are expected to commence in 2009 and completed in three years.

Many are waiting on the side how this will eventually impact on the community and the economy which government opened mineral exploration to foreign corporation following a Supreme Court decision reversing its 2004 decision that limited the mining industry to Filipino controlled companies.

But in a few years time, it will become clear if the anxieties and concerns are just warm enough to fight the cold environ of the uplands in Tampakan or whether the expectant wait is good enough to calm the storm.

But life won't be same again once the earth begins moving in thehighlands. (Edwin G. Espejo was formerly editor in chief of SunStar General Santos).

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