NEWS

By Val A. Villanueva | Rappler | July 17, 2022 11:00AM

When it comes to the mining industry, the Marcos Jr. government should strive to strike the right balance. It should never settle for a zero-sum game.

The government of Ferdinand Marcos Jr. now eyes the mining industry to be one of the major contributors to the country’s economic development.

Previously deemed to be too hot to handle by previous administrations, mainly due to environmental concerns raised by anti-mining groups, the industry’s potential has remained buried in the bowels of the earth.

The nation nestles on mineral assets valued at more than $.1.4 trillion, but its total land area covered by mining is only 0.872 million hectares or 2.91% of the country’s 30-million total land area. In terms of non-metallic minerals, the country has untapped coal resources estimated at about 2.4 billion tons.

For miners, the Philippines is the fifth most attractive among mineral-rich countries. It has the third largest deposits of gold, fourth for copper, fifth for nickel, and sixth for chromite.

To date, we have 44 mining companies – 37 of which are operating mines: six gold mines, three copper mines, and 28 nickel mines – as well as 65 non-metallic mining companies. The Department of Environment and Natural Resources (DENR) has been tasked to undertake audits to ascertain that each company adheres to strict environmental standards. These miners have to be ISO14001-certified with Australian and Canadian standards being the reference points, as designated by former President Rodrigo Duterte.

But Duterte himself at the onset of his administration appeared lukewarm to the economic potential of the industry – or should I say – it was his way of projecting himself as pro-environment, a tack to differentiate himself from his predecessors. He appointed the late Gina Lopez, a staunch anti-mining advocate, to head DENR, a move which infuriated the industry. It was just like designating Dracula to be the blood bank’s gate keeper, the miners mourned.

In 2017, Lopez ordered the shutdown of the operations of 27 mining companies in various areas of the country because they were presumed to be nestling in “functional” watersheds. Before completely shutting down their operations, these companies were initially suspended. Lopez based her decision on an initial audit done in September 2016 which alleged that the mining operations were violating environmental and other government regulations. The government revealed then that some of the miners, most especially those in Surigao de Norte, had been causing siltation in coastal waters, endangering marine biodiversity.

Fast forward December 2019 when the World Health Organization declared COVID-19 an outbreak and a global health emergency – and the virus started claiming millions of lives across the globe upending the world’s economic order – the Philippine government had to resort to extraordinary measures to contain the virus. The country amassed P12.76 trillion debt over the course of the pandemic with the funds going to social amelioration, medical cost, and alleged corruption committed by those tasked to handle COVID-19 funds.

With the virus scaling down growth targets, and the bleak prospect of economic fallout, Duterte in December 2021 reversed his own directive to ban open-pit mining, a follow-through of his April 2021 directive (EO 130) which lifted a nine-year moratorium on granting new mining permits.

Now, the Marcos administration wants to continue where Duterte left off. Finance Secretary Benjamin Diokno said the economic team has already presented the medium-term fiscal framework to President Marcos during their first Cabinet meeting. “[F]or targets to succeed under the two-part framework,” he said, “all sectors would have to perform well, including the mining industry…which will be accelerated.”

In 2021, the sector’s contribution to the gross domestic product (GDP) improved to 5.2% from 5.1% during the height of the pandemic in 2020. The Marcos government sees the industry as crucial in resuscitating the country’s economy which got bogged down by the COVID-19 pandemic. The industry had contributed to Duterte’s flagship infrastructure program by generating revenue and jobs.

Unlike other sectors which suffered a decline due to the pandemic and the seesawing lockdowns that were imposed because of COVID-19, the mining industry actually grew by 1.13%, driven mainly by nickel demand overseas and a high gold price. In August 2021, the precious metal peaked at $2,000 per ounce and is expected to average at $1,700 this year, as investors seek out a safe-haven asset.

The Philippine Statistics Authority (PSA) reports that the mining industry contributed 0.76% to the country’s GDP in 2020. The government, however, expects an increase in earnings from excise tax collections which may be attributed to the Tax Reform for Acceleration of Inclusion (TRAIN) Act passed in 2017 that “doubled the rate of excise tax on minerals, mineral products and quarry resources from 2% to 4%.”

In behalf of mines that were shut down in 2017, the industry appealed the case before the DENR. Together with the Mining Industry Coordinating Council (MICC), the DENR conducted a thorough audit of the firms affected by the closure. The inter-agency MICC is chaired by the DENR and the Department of Finance (DOF). Its other members are the Department of Justice, the National Commission on Indigenous Peoples, and the Union of Local Authorities of the Philippines. From the first batch of miners audited, 24 were given the green light to operate after they were found to be in compliance with environmental and other government regulations. Only three did not make the grade. They were recommended for closure, but were nonetheless allowed to appeal the decision with the Office of the President.

Mining stakeholders now describe the almost three years of closure of these companies as “arbitrary” and claim that the industry practically “gasped for breath.”

“Prior to the audit, we suffered negative cash flow,” representatives of the affected companies said. “Since there’s no money coming in, we had to scramble for whatever funds we could squeeze from our savings to pay our employees. Most importantly we had difficulty complying with the government mandate for us to implement safety, environmental and social development in areas where we operate, given that the funding for these things is hinged on 1.5% of our operating cost.”

The result of the 2018 audit, however, gave these mining firms the much-needed reprieve. Most of them passed the audit and were allowed to operate on a limited capacity.

According to Finance Undersecretary Bayani Agabin, the miners were assessed based on standard criteria and the benchmarks on social, technical, legal, and environmental aspects of their operations. “The system was such that three is the highest score; two is minor reforms needed, [and] one is for major reforms. Zero is not acceptable… [and] the passing score is 1.5,” he pointed out.

Rappler was able to secure the scorecard of the mining audit done in 2018 showing their respective scores:

For the 2020 and the 2021 audit, we were able to obtain only the scorecards of the mining firms operating in Zambales area, but this sample size is already indicative of the performance of the industry as a whole. Here are the aggregate scores of Benguet Corp. Nickel Mines (BNMI), Eramen Minerals Incorporated (EMI), LNL Archipelago Minerals, Incorporated (LAMI) and Zambales Diversified Metals Corporation (ZDMC).

Mines and Geosciences Bureau (MGB) Regional Director for Region III Alilio Ensomo Jr. told Rappler that most mining firms, particularly those located in Zambales, have been fully compliant, with most of them receiving higher grades since they were last audited. Explained Ensomo, “This just shows that when strictly and properly monitored, the government and the industry can go hand in hand in making sure that mining flourishes and contributes not only to the communities they operate, but to the upliftment of the country’s economy.“ He added that the MGB thoroughly reviews the mining industry regulations and has in place enough environmental safeguards.

To date, Ensomo said, for every million metric tons derived from mineable areas, where only 50 hectares are allotted for mining, mine operators are “mandated to rehabilitate-vegetate the rest of their service areas” and all of the companies concerned have been compliant. He added that the MGB periodically conducts monitoring “to ascertain that [these companies] comply with strict environmental protocols.”

Lauro Garcia, MGB Central Luzon Mine Safety, Environment and Social Development Division chief, explains that rehabilitation of the mined areas should be expeditiously done by mining firms before they could advance their operations to the next real estate. “It is all done it stages, ensuring that the first mined area is completely rehabilitated even before they are allowed to continue mining in their next area of operations,” he said.

Various anti-mining groups nonetheless see Duterte’s EO 130 as a policy favoring “profit over a healthful ecology.” They noted that penalties for environmental violations under the law “are a mere slap on the wrist of mining companies, failing to deter them.”

Amidst all this discussion, however, it is imperative to distinguish between illegal mining and responsible mining. During the years that mining operations were shut down, illegal mining flourished. The mine closure was not able to address wanton environmental destruction caused by crude mining practices done by illegal miners who were masquerading as indigenous people. They are in fact illegitimate settlers who have taken over the properties of rural townsfolk.

Indeed, mining could be destructive when conducted by illegal miners who are operating in cahoots with corrupt local government officials. Incidents of flashfloods, mudslides, and marine disturbances paint a very negative perception of the industry.

The environmental destruction caused by illegal mining has unfortunately blurred the lines. Public perception has lumped illegal mining with large-scale mining. Unlike illegal mining which has no accountability for environmental degradation, large-scale mining is heavily taxed and is subject to stringent monitoring by the government. Mining is actually the only industry which is grossly regulated, and the only business mandated by law to uplift the lives of people within the scope of its operations.

The mining industry has been demonized, and yet, it cannot be denied that the world could not live without it. Without the minerals that have been extracted from the earth through the years, people would be moving around practically naked, without nourishment, and tools to survive. Almost everything we do to sustain life is aided by the things that are mined and harnessed underground.

Responsible mining advocates point out that smoking cigarettes and drinking alcohol kill more people than mining does. There are more people who die of inhaling or imbibing pollutants than those who perish from any toxic elements from the rehabilitation of mine sites after mineral excavation, they point out. Although smoking and drinking could kill, the companies which manufacture and distribute cigarettes and alcoholic drinks also provide livelihood. It’s just a matter of skillful governance on the part of state regulators to minimize the risks associated in consuming these products. In the same breath, mining companies provide livelihood to townsfolk where they operate.

Anti-mining advocates should understand that modern mining methods employed by licensed mining companies greatly lessen the occurrence of mining catastrophes of yesteryears. What they should rile about are the harmful practices used by illegal miners who are being coddled by corrupt government officials, such as those irresponsible and illegal Chinese miners who buy their way to destroy the countryside.

In many parts of the world, the mining industry has proven to be a partner of communities in environmental protection and social development. The concept of sustainable mining requires a mining company, among other things, to re-develop the area and ensure that the host-community thrives long after the company has extracted the minerals it needs. A study made by the Mining Association of British Columbia reports that “[m]ining represents the highest value use to which a hectare of land can be utilized.” Indeed, mining has gone a long way to shed its ugly image.

Time and again, large-scale miners immerse themselves in the dissemination to the public of its best practices in responsible mining, with emphasis on rehabilitating the environment and improving the lot of the community where they operate. Illegal miners, on the other hand, wantonly pillage the environment, usually in collusion with local executives who, Rappler sources intimate, receive a share of the “loot.”

When it comes to the mining industry, the Marcos Jr. government should strive to strike the right balance. It should never settle for a zero-sum game. The government should ensure that all mining is done responsibly, while remaining vigilant for any possible abuse. It has to be extra sensitive to the social impact of shutting down or restricting the operations of industries on which hundreds of thousands of people depend for livelihood.

Source: Rappler.Com