A reader’s view of small-scale mining

We give way to one of our readers, Deo Contreras, on the issue of mining, specifically of small-scale gold miners. Please read on.

“Legitimate mining companies are not smuggling out of the country the minerals they extract, especially gold. Mining companies are heavily regulated and monitored, most specially in their production as the government is on the watch to collect the revenues which are quite sizeable as the excise tax on mineral products is based on gross sales before expenses are deducted.

“The smuggling out of the Philippines, specially of gold, is being done by illegal small-scale miners. Small does not necessarily mean it is not big! Small-scale mining (SSM) in the Philippines is an oxymoron, using a popular term nowadays. Rather, SSM is a thriving underground economy in the Philippines!

“Presidential Decree 1899 (PD 1899), called Small- Scale Mining Law, issued by the Marcos martial law government in 1984 intended to allow SSM as a cheap activity with cheap labor costs and viable to be done through artisanal or ‘shovel and pick’ style of mining in order to extract and utilize the mineral resources of the country, giving wide-spread livelihood to the impoverished Filipinos especially those staying in mountain areas. PD 1899 did not impose any tax except on income.

“But so many ways and means were resorted to by irresponsible individuals that SSM areas were eventually controlled by middle-men who financed the activities and simply paid the small-scale miners meager compensation or wages.

Minahang Bayan

“The living existence of Filipino small miners remains impoverished. Hundreds of them still excavate with their crude shovels and picks the unguarded mountain areas of the country.

 “In 1994, in order to abate such wanton violation of PD 1899, the Philippine Congress passed the Peoples Small-Scale Mining Law (Minahang Bayan) as Republic Act 7076, which in essence required small-scale miners to form into cooperatives for proper technical control and supervision by the MGB-DENR.

“As a result of the passage and imposition of RA 7076, small scale mining activities went underground and were not officially reported to the government as required by law.

“No gold produce was sold over the counter to the Central Bank by small-scale miners unlike before, and the mineral products were simply smuggled out of the country apparently undetected by the government authorities. Many jewelries and gold articles in Southeast Asia and beyond like Hong Kong are made of gold from the Philippines.

“To date, no serious and formal approaches have been taken by the government to handle effectively the SSM phenomenon.”

Legal framework review

“The MGB is also now reviewing the legal framework for the small-scale mining industry as part of the multi-dimensional approach in addressing the concerns of Filipino small-scale miners.

“It may be recalled the Revised Implementing Rules and Regulations (RIRR) of Republic Act No. 7249, the People’s Small-Scale Mining Act of 1991, was issued in 2015 in accordance with the reforms instituted through Executive Order No. 79. However, some industry stakeholders are already clamoring for revisions of the said RIRR.

“Struggling to get the attention of the government, a group of artisanal and small-scale mining companies earlier formed a coalition to mark their existence in the controversial industry and to seek support from the Duterte administration.

“About 28 tons of gold, or 80 percent of the country’s annual gold production, was produced by the artisanal and small-scale mining (ASM) sector in the past decade.

“However, the ASM sector and its miners have long been neglected and regarded as illegal despite the fact that the sector consists of roughly 350,000 people, as per Department of Environment and Natural Resources estimates.

“If 28 tons of gold are produced yearly by SSM in the Philippines, that will translate roughly into P56 billion worth of annual production of gold by SSMs at an average of $1,200 per ounce, or about P2 billion per ton at the average current price of gold this early 2017.

P560 billion over 10 years

“As reported by the Mines & Geo-Sciences Bureau that such yearly gold production of SSM has been going on for the past decade, then it translates into a staggering amount of 280 tons for 10 years, and at P2 billion per ton, the total production amounts to a staggering P560 billion produced by SSM in the past 10 years. Where did the gold and money go?

“In the old gold-rich Benguet province, the president of the Benguet Federation of Small-Scale Miners Inc., Lomino Kaniteng, disclosed that PD 1899 and RA 7076 were never reconciled, and no Minahang Bayan was ever declared in Benguet province.

“Significantly, Kaniteng also revealed that their group of Benguet small-scale miners produces roughly three to four tons of gold yearly. (In peso value at current 2017 price of gold at about $1,120 per ounce, a ton of gold values at about P2 billion, and three tons is about P6 billion worth produced by the Benguet small- scale miners.)

“Kaniteng added that there are about 30,000 small miners together with their families in Benguet. Lumped together, the combined total revenue per year of the informal and hidden gold trade easily comes to billions of pesos. It explains the existence of millionaire small-scale miners.

“This is the small-scale mining industry in the Philippines — hidden and a huge money-making activity rationalized and justified by employing the populist term ‘small and poor’ to hide the true nature of the silent business from northern, southern and Mindanao regions of the Philippines. There are many true, but unwritten or unspoken stories about SSM in the Philippines.

“In this different view and perspective of SSM in the Philippines, the word most apt to describe it is epiphany: a moment in which you suddenly see or understand something in a new or very clear way (Webster Dictionary)!

“Technical knowledge, scientific know-how and proper supervision and control by the government are imperatives in mining to be able to extract efficiently, properly and safely the minerals underneath the ground for the benefit of those engaged in it and importantly, the communities and government affected.

“Mining is more than a mere livelihood.”

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Should you wish to share any insights, write me at Link Edge, 25th Floor, 139 Corporate Center, Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at [email protected]. For a compilation of previous articles, visit www.BizlinksPhilippines.net.