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Philex loses P1B appeal, ordered to settle penalty

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Philex Mining Corp.’s appeal has been denied and it is now ordered to settle P1 billion in penalties for having been found negligent in averting a mineral waste spill at its mining site in Benguet.

In a four-page letter dated November 21 to Philex president Eulalio Austin Jr., Mining and Geosciences Bureau (MGB) director Leo Jasareno rejected Philex’s invocation of “force majeure,” or problems brought on by forces beyond the firm’s control.

Jasareno said the incident “was not a fortuitous event.”

He explained that force majeure can only be invoked as an excuse from liability if it was the proximate and sole cause of the incident.

At a press conference Thursday at the Ninoy Aquino Parks and Wildlife Center, Environment Secretary Ramon Paje also said that Philex would only be allowed to operate once it completed its cleanup of the mining site.

Paje emphasized that the mining company must settle the penalty of P1.034 billion within 45 days.

In its appeal, Philex claimed the mine tailings spill had been a fortuitous event and that the mining firm could not be held liable for the incident.

“The typhoons and southwest monsoon that brought unprecedented and unexpected amount of rainfall in the area are … acts of God. The advent of climate change must also be considered,” Philex said.

But the MGB director replied that the Philippines “is now facing a new normal” in weather disturbances.

“This has become public knowledge and, therefore, PMC should have already prepared the appropriate contingency measures,” Jasareno said.

He pointed out that the state weather bureau had issued typhoon warnings, which were “supposedly foreseen.”

Philex “had the opportunity to prepare and check the operations and stability of its mine structures and facilities. The safety standard regulations call for a routine and periodic inspection of such structures and facilities, especially if the weather condition requires extraordinary care and maintenance works,” Jasareno stressed.

“In the face of such weather possibilities known to it, [Philex] then was negligent for failure to exercise the necessary diligence required by the safety standard and regulations for the care and maintenance of the mine structure and facilities,” said Jasareno, explaining that PMC is also liable for any resulting injury or damage caused by its negligence.

In a phone interview, Philex SVP for corporate affairs Michael Toledo said that the company already received the letter from the government agency and that it would file another appeal.

“We will exhaust all available remedies and reiterate that … there was no negligence,” Toledo said. “While we question the fine, we will continue with the cleanup. We submitted the rehabilitation plan today and this plan is the product of months of studies by experts, including our foreign consultants.”

The company hopes to complete its remediation efforts by the second quarter of 2013.

Hopefully we can restart operations then, subject of course to government approval,” Toledo said.

The PMC tailing pond in Itogon, Benguet, started to leak in August, discharging tailings from its Padcal gold-copper mining site.

Approximately 20.6 million metric tons of waste spilled over to the Balog Creek and other tributaries of the Agno River and accumulated at the San Roque Dam.

Also, the MGB upheld the P1-billion penalty assessment of its fact-finding team, which had been calculated based on the bulk density of 1.531 tons solid per cubic meter of the mine tailings.

Philex opposed the team’s findings, saying the penalty should have been computed at 1.3 tons solid per cubic meter.

But Paje said that while the DENR is open to a third-party validation of the penalty computation, the agency “still maintains that [Philex] must pay.”

“Penalties are penalties because of the law, our concern is more on environment protection,” Paje said.

The DENR secretary added that the government is determined to help out in the cleanup of Philex.

And with the ongoing rehabilitation, Paje hopes that the affected area would be restored to its original state before the incident.


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