Small scale mining: Immeasurable damage

I learned from the Blacksmith Institute the following: “Almost a quarter of the world’s gold supply can be traced back to 10-15 million poor small-scale gold miners, or artisanal and small scale mining (ASM), scattered about the globe. These miners are also the third largest source of mercury pollution today, however, comprising about 30% of the world’s anthropogenic mercury releases.”

“One of three things will happen once the mercury has evaporated. The gaseous mercury may be inhaled by the workers and their families, leading to serious health issues. It may also settle into the surrounding environment, seeping into the ground and contaminating the water supply. It could also rise into the atmosphere, where it circulates for about three months before raining down again…. The effects of evaporated mercury affect not just the area in which it is released, but the entire globe equally and this is reflected in elevated mercury counts in organisms located far from artisanal gold mining activity.”

Inhalation of mercury vapor is particularly hazardous for kidneys, the central nervous system, and the respiratory and cardiovascular systems. Inhalation of mercury vapor has also been found to cause neurobehavioral disorders, such as hand tremor and mental retardation. Exposure to other forms of mercury – and in particular the methylmercury that accumulates in fish – can also lead to problems with the kidneys, lungs, and central nervous system, in addition to arthritis, reproductive problems, loss of memory, psychosis, and in some cases, death. Children exposed to mercury contamination have a higher risk of developmental complications.

Chinese in ASM

As everyone knows, China continues to reach out overseas for minerals needed to fuel its dramatic economic growth, and long-term prospects show it will only become more aggressive in its pursuit of mining deals abroad. Our estimated $1 trillion-worth of untapped mineral reserves has seen a notable influx of Chinese mining investments in recent years. For the Philippines, Chinese money from legitimate mining companies has been a welcome relief for its troubled mining industry that has seen a flight of investment from Western mining giants on top of a growing list of stale and frozen projects.

Before I proceed further, I must inform that what I am about to describe is based on information derived entirely from industry sources who do not wish to be identified. I understand further that certain senior government officials have been provided similar information. 

There are an estimated 500,000 small-scale miners operating in more than 30 provinces and some in the industry have begun to question the increasingly aggressive involvement of Chinese firms in these activities. The entry of questionable Chinese mining investors into the country has posed significant challenges to the Philippines. Substantial evidence points to unaccountability, misconduct, and corruption in many Chinese mining deals—all of which have created an unfair playing field. Philippine authorities have in fact arrested more than 100 Chinese nationals since January 2012 for their involvement in illegal mining operations across the Philippines.

Most Chinese mining firms operate under the cover of domestic small-scale miners to bypass Philippine mining laws and protocols, as well as to avoid the large capital requirements, fees, and taxes associated with large-scale mining. The Chinese firms circumvent the enormous time and expense of complying with large-scale mining requirements by co-opting a Philippine proxy and purchasing small-scale mining permits or special ore extraction permits for a minimal fee.

The sheer amount of minerals exported from the Philippines to China is further evidence of this exploitation and abuse. The Philippines is already the largest provider of nickel ore imported into China, and the leading provider of gold imported into Hong Kong. Few experts believe the volume of gold and nickel ore going into these territories could be achieved by legitimate mining operations.

The massive export smuggling of minerals to China has led to major tax losses to the Philippines. In 2008, the Department of Environment and Natural Resources (DENR) disclosed that an estimated three million metric tons of Philippine mineral ores processed in China were unaccounted for by the Philippines. In June 2012, the DENR sought help from the Presidential Anti-Organized Task Force (PAOCTF) and the Bureau of Customs (BOC) after the Mines and Geosciences Bureau (MGB) reported a 38 percent first quarter decline from the previous year in total metallic mineral production value allegedly due to mineral ore smuggling.

In the second quarter of 2012, the amount of gold sold from small-scale mining to the Central Bank of the Philippines dropped by 98 percent. MGB director Leo Jasareno said the figures showed that gold extracted from the Philippines was likely being sold illegally on the black market or smuggled out of the country. Significantly, official Philippine data reflect legal exports of gold to Hong Kong in both 2010 and 2011 at approximately just three percent of the total volume recorded by Hong Kong authorities.

Hong Kong’s top source of gold imports from 2005 to 2010 was the Philippines. Official Hong Kong data show that Philippine gold shipments hit a record-high of 81,471 kgs in 2010, only slightly dipping to 81,192 kgs in 2011. Conversely, official Philippine data reflect legal exports of gold to Hong Kong in both 2010 and 2011 at approximately just 3% of the total volume recorded by Hong Kong authorities. According to UN trade data, Hong Kong’s official figures of Philippine gold in 2011 were 11 times the Philippine numbers for gold shipments to Hong Kong.

Corruption and manipulation of the law has rendered national agencies such as the DENR helpless in regulating and monitoring small-scale mining operations, as provincial mining and regulatory bodies often become rubber-stamp institutions of local politicians in cahoots with the mining companies.

I was also informed the Catholic Church, environmentalists, and other activists are not particularly aggressive in directing their ire at Chinese mining practices in the Philippines.

At the end of the day, it is my fervent prayer the national government will prevail over the corrupt local officials’ heinous practices which has wrought irreparable damage to its constituents, the environment and the nation.

(I wrote this column in 2013. I believe the situation is probably worse at the moment, Therefore, I am having it reprinted).