COMMENTARY: The titans clash but where is mining headed to?

GENERAL SANTOS CITY (MindaNews/03 March) — Two prominent persons representing the richest families in the country let their hair down and let loose scathing remarks against each other in front of national television in a forum Friday on the future of the mining industry in the Philippines.

Manny Pangilinan, whose vast business empire has made him one of the most influential persons in the country, traded barbs with Regina Lopez, she of the old rich Lopez family who are into mass media and communication, real estate and utilities.

While the two shared the same table during the mining conference, they are as diametrically opposed to each other as the west is to the east as far as mining issues are concerned.

Lopez, whose anti-mining advocacy has rubbed off members of her own elite class, claimed the Philippines is better off developing its agriculture and tourism industries than destroying the forests and timberland in the name of mining.

Pangilinan retorted that the country cannot move out of its backward economy without harnessing its mining potential even rattling off the precious metal components of one’s indispensable mobile phone.

Pangilinan owns Smart Communications Inc., the country’s largest mobile communications provider with over 60 million subscribers (including that of its recently acquired Sun Cellular Inc.), and is also into the television industry where the Lopezes hold sway and are the acknowledge industry leader.  Pangilinan is also the president of Philex Mining, one of the country’s largest operating mining companies today.

Beyond their personal differences and rhetoric, Pangilinan and Lopez represent two contrasting and opposing camps on the mining issue in the country today.

Pangilinan took the cudgels for the mining industry, which has traditionally drawn support from the country’s chamber of commerce, also offered middle ground where both government and the industry could resolve issues on revenue sharing and strict monitoring of the environment.

Government wants more

Secretary Ramon Paje of the Department of Environment and Natural Resources had earlier stated that the government wants to increase royalty fees on mining from 2 percent to 5 percent on top of the 2 per cent excise taxes.

The Chamber of Mines however fears the government is moving towards a confiscatory policy which could drive away foreign investors.

In setting the tone of the conference attended by well over 600 delegates, Leo Jasareno, Mines and Geosciences Bureau director, said the choice is between mining “that significantly contributes to the economic growth in a manner that mitigates impact on environment and improves the lives of the people or no mining at all.”

In 2011, the metallic mining sector posted a gross production value of P122 billion, a 9 percent hike from the 2010 production.

But Jasareno said despite the increase, the mining sector has not increased its share in the gross domestic product beyond 1.5 percent over the last few years.

Paje also said the government loses about P5 billion a year for failure to collect royalty fees.

The government said it is looking into other options and models and may adopt possible imposition of mineral resources rent as well as carbon tax.

In the end, Jasareno said the “government was not against mining but that the industry should be made to cough up more money, mainly because of its bad track record in the Philippines and the country’s need for more revenues.”

Pangilinan himself called on the private sector to be open to profit sharing scheme including giving host local government units their fair share of the revenues.

Social issues

Former Commission on Election chair Christian Monsod said mining has become and is a social issue given the dismal track record of large mining companies in the Philippines.

One major concern he raised is whether mining companies should be held perpetually responsible for the post mine closure maintenance of leftover structures and for any damage that will arise from the hazards left behind by these mines.

He suggested that the mining companies set aside an upfront fund to ensure that these issues will be covered in the future.

Jasareno admitted that this concern is not covered under Republic Act 7942 or the Mining Act of 1995 .

Clive Wicks, noted environmentalist and co-author of the book Mining or Food: Report on mining operations in the Philippines, warned that the biggest mining project in the country, the Tampakan Copper and Gold project poses a high-risk exposure to environmental disaster.

The project is located in one of the active fault lines in South Cotabato and is less than 20 kilometers from the active volcano Mt. Matutum.  He said the proposed two mine tailing dams with million gallons of hazardous mine leftovers could collapse in an event of a strong earthquake, both natural and induced, or when Sagittarius Mines Inc (SMI) begins blasting the area.  A disaster of such magnitude could wreak unimaginable havoc to both lives and properties downstream.

But SMI general manager Mark Williams said the Wicks scenario will not happen.  Asked what guarantees these dams would not collapse, he said these will be designed to be virtually indestructible.

The Catholic Church, three dioceses of them, in south central Mindanao is strongly opposed to the operation of SMI.

The provincial government of South Cotabato has even passed an ordinance banning open pit mining operation in the province.

This alleged ‘incongruence’ of local application and national policies on mining has been a major concern of the mining industry.

The blame game

Chamber of Mines of the Philippines president Benjamin Philip Romualdez  urged the government to look into the small scale mining operations throughout the country which he claimed are almost beyond the reach of government regulators.

Romualdez said unregulated small scale mining operations have left a negative impact on the industry.

Oddly enough, small scale miners were not represented in the mining conference Friday.

Romualdez said the imposition of higher royalty fees in gold production among small scale miners coincided with the drop in gold purchase by Bangko Sentral ng Pilipinas.

He said small scale miners are now smuggling gold outside the country.

Jasareno however said of the 30 tons of gold purchased by the Bangko Sentral ng Pilipinas last year, 68 percent of them came from small scale miners.

But the mines bureau chief acknowledged that two conflicting laws on small scale mining have contributed to the inability of MGB to enforce the laws aside from the perennial lack of personnel and government geologists.  He said the government is now looking into the situation and may introduce amendments to Congress.

Controversial EO

Malacañang (Office of the President) is already poised to release an executive order that would address concerns of the industry after it was delayed last month.

Included are the royalty fee provision and a possible hike in the excise tax.

The proposed EO also calls for the review of all existing mineral development and mining contracts which raised uproar in the business community.

Finance secretary Cesar Purisima later assured industry leaders that the government will honor all existing mining contracts.

The Philippine Chamber of Commerce and Industry, which most likely has seen the draft order, has cited lack of consultation in opposing the proposed executive order.

Chamber president Ed Lacson said the controversial EO could “make or break” the mining industry.

But Jasareno believes the country “possess a strong mineral resource base that justifies mining as a development option – for as long as it is responsible mining where benefits far outweigh the costs.”

“Left on the ground, these minerals cannot generate wealth,” he added in his opening speech.

But ABS-CBN Foundation director Regina Lopez is unconvinced.

What wealth are we talking about?” she said.  She said Filipinos can earn more when the same mining areas are developed into tourism areas.

Despite fundamental differences between pro-mining group and advocates of environment protection present in the conference, all were agreed that Philippines “can’t live without mining.”

One wonders what would have been the outcome of the conference had the organizers also invited peasants, workers and indigenous peoples who are first to be affected by the operations of these big mining companies.

All these marginalized people would have preferred that is when the rich are clashing, the poor should not be bearing the blame. (MindaViews is the opinion section of MindaNews. Edwin Espejo writes for