To mine or not to mine?

The cancellation of 75 mineral production sharing agreements or MPSAs on Valentine’s Day was another major blow to the country’s mining industry which has yet to recover from the earlier decision of the Department of Environment and Natural Resources (DENR) to close down the operations of 23 mining firms.

Affected mining industry players say they have yet to receive an official copy of the cancellation order which was announced by Environment Secretary Gina Lopez during a press conference, saying the contracts were cancelled because they were located in watersheds.

A friend and supporter of President Duterte, however, expressed concern because Gina Lopez may have “gone too far,” pointing out that the mining law allows operations in watershed areas except if these have been legally proclaimed as protected by the government.

“I don’t think any of those permits she canceled are in protected watersheds,” the DU30 supporter said, adding that the environment secretary is “pandering to public opinion and creating a legal mess which will end up on the lap of the Office of the President – and President Rody will have to decide on each one of these cases. In other words, Gina created a mess for the President. We have to tell him so he gets to realize this problem – and get her out before this explodes. This is a horrible situation for the nation.”

The Chamber of Mines of the Philippines has hinted that members are contemplating legal action, with an official saying the unilateral cancellation was absurd and irresponsible especially because there were no specific grounds cited.

Data from the Mines and Geosciences Bureau (MGB) indicate that the Philippines sits on an estimated $1.4 trillion worth of mineral reserves. The mining industry has a great potential to contribute to the economy but an unstable regulatory regime plus politics and governance issues have led to a decline to its contribution in recent years. DENR has also failed to go after small-scale, irresponsible miners that are employing crude and substandard methods of extraction that destroy the environment.

There are around 300,000 small-scale miners in the country – many of which operate without proper permits and are most likely the same ones that are into gold smuggling. Under the law, all gold production from these miners must be sold to the central bank of the Philippines – and smuggling cheats the government out of rightful taxes and revenues. These small miners have been getting away with illegal activities because they are in cahoots with local officials who also turn out to be the mine owners. Unlike big players that are constantly under scrutiny, these small operators easily escape the notice of authorities.

No matter how passionate Secretary Gina is in protecting the environment and helping the people, failing to go after irresponsible and illegal miners will mean continued destruction of the environment because they do not have the facilities and the technology to operate in a responsible manner – unlike big players who invest in the latest technology, conform to internationally accepted standards and adhere to laws.

One of them is Philex Mining Corp. whose contribution, both to the local and national government, goes beyond just taxes and revenues from the minerals extracted. A significant part of their operating budgets go into social development and management projects or SDMP, wherein billions of pesos are spent to provide livelihood, education, healthcare and even power to residents of host communities and nearby areas.

Responsible mining companies like Philex construct roads, bridges, hospitals and other facilities in areas that are so remote that government does not even reach them. Many of the communities were poor to begin with, but the presence of responsible mining firms like Philex has elevated the quality of life of residents. 

Among the canceled MPSAs is Philex’s Silangan Mining. According to the company, the MPSA was issued by the national government only after a thorough review process by all relevant government agencies plus the endorsement of host communities and concerned local governments. None of the areas covered by the Silangan MPSA are located in a proclaimed watershed, the miner said in a statement, emphasizing that Philex has a longstanding policy of strictly complying with all applicable laws and regulations.

The key in all this is responsible mining – and countries like Australia and Canada have demonstrated that responsible mining does exist. In fact, the Mining Association of Canada’s “Towards Sustainable Mining” (TSM) initiative is leading the way as far as sustainability is concerned, with mining organizations in countries like Finland, Argentina and just recently, Botswana adopting the TSM program that has allowed Canadian mining firms to improve their operational performance across key areas that include tailings management, community outreach, safety and health, biodiversity conservation, energy use, greenhouse gas emissions management and crisis management.

Perhaps the government should spearhead a mining summit where President Duterte can be given accurate feedback by DENR officials like Undersecretary and concurrent MGB head Louie Jacinto, by giving a clear picture about the industry. Through the summit, comprehensive guidelines can be adopted to balance environment and business concerns, and ultimately determine needed reforms to help maximize the potential of mining in contributing to the economy. A sweeping cancellation would not only destroy the industry – it will ultimately mean open season for illegal and irresponsible miners.

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