Rash

There is a whale of a difference between being decisive and being rash. Rodrigo Duterte found that out when he offered the post of DENR secretary to anti-mining activist Gina Lopez.

Mining stocks promptly collapsed.

Among those losing billions in the market in the course of the bloodletting are government financial institutions. The SSS, for instance, reportedly owns 21% of Philex Mining. In two days after Lopez took the DENR job, Philex lost over P10 billion in stock value. That translates into a P2 billion loss for SSS.

We do not know yet how much the other government financial institutions lost in the mining crash this week. Mining is a heavily capitalized industry reliant on market capitalization.

What we do know is that coal mining Semirara lost about P11 billion and Nickel Asia about P4 billion in the market panic.

On the other hand, Lopez-owned First Gen Corporation gained P9 billion while Energy Development Corporation added P8 billion to its market capitalization. The two companies are involved in alternative or renewable power generation.

Gina Lopez has taken an absolute anti-mining stance as an environmental activist. She has likewise taken strong positions against the use of coal to generate power.

As an activist, she has all the right to take those unremitting positions. As a government official, however, she has to enforce the law and take cognizance of market realities.

For instance, while it may be ideal to generate all our power needs using renewable sources, this is not practicable at the moment. The solar farms, wind energy projects and other newfangled sources of power may supplement our generating capacity, it is a reality that baseload power is generated through heavy-duty diesel and coal plants.

During droughts, our hydroelectric plants generate less power. During storms, we have less solar power. On windless days, the windmill turbines do not turn. We must have enough baseload capacity to meet peak demand.

This might seem evident to environmental crusaders – especially those who advocate “glamping” (glamor camping). So-called “clean energy” is expensive.

As things stand, we have among the highest energy costs in the world. It is a cost structure that forced our industry to hollow out. If we resort only to “clean energy,” this will force our energy cost structure to spike beyond the means of the poor and depress what is left of our industry.

As things stand, we do not have enough power reserves. This is why rotating brownouts happen in Mindanao and “yellow alerts” are raised each time a plant conks out in Luzon. In the near term, we need to boost our energy supplies to meet the needs of a growing economy.

Gina Lopez must realize that there is a whale of a difference between a crusader and a regulator. A crusader is fixed on the best of all possible worlds. A regulator applies the law in imperfect circumstances.

That requires a dramatic shift in attitude. It might be easier for Gina to divest her holdings in the Lopez firms (especially those where conflict of interest is glaringly evident) than to alter her militant stances.

The Duterte camp must have been (appropriately) spooked by the adverse market reaction to Gina Lopez’s nomination.

Last Thursday, presidential spokesman Ernie Abella hastily convened a press conference to stipulate the mining and energy policies of the incoming Duterte administration.

The Duterte administration is not against mining per se. It is adamantly against “irresponsible mining,” those that flout the law and rape the environment with impunity. The case of a nickel mining outfit in Surigao (said to be a major financier of losing presidential contender Mar Roxas) comes to mind.

In a word, there will not be an all-out war against the mining industry. There will be an all-out war against irresponsible mining.

Those are two very different things.

Our mining industry has been thrown into some sort of purgatory during the Noynoy years. Although the Supreme Court, after 10 years, upheld the constitutionality of the Mining Act of 1995, the outgoing administration claimed it was formulating a “mining policy.”

That “mining policy” was never fully formulated even as the administration’s allies in the nickel industry tore up the land and polluted the waterways. These nickel boys are a privileged lot. The rumor among people in the industry is that the same boys supplied low-grade ore to the Chinese who were busy building islands out of reefs in the South China Sea.

Clearly, Gina Lopez needs to modulate her positions on mining and energy to cohere with the articulated policy of the administration she wants to serve. Otherwise, she will find herself at odds with the rest of the Duterte team – maybe even untenably at odds.

Several Duterte insiders, present during the business conference held in Davao earlier this week, expressed surprise over Gina’s nomination. The Lopez-controlled media empire, they pointed out, seemed hostile to the Duterte candidacy through the length of the campaign period.

Notwithstanding, no administration can tolerate discrepancies in the articulation and implementation of its key policies. All the new President’s men must toe the line.

Gina Lopez is not exempt – even if she tends to wander her own way.

The policy on energy is to have abundant supply at the lowest possible cost to enable further economic expansion. The policy on mining is to respect the Mining Act, which is among the most stringent in the world.

As regulator, all Gina might do is to strictly implement standing policy. She may not contradict it.