Vengeance is mining (Part II)

THE AQUINO (Part II) administration, featuring our leader Benigno Simeon (a.k.a. BS), refuses to do something about the scandalous Philnico case.

The case involves the 25,000-hectare Surigao Mineral Reservation in Mindanao. Some 15 years ago, during the time of Kuya Eddie (former President Fidel V. Ramos), the government sold the mining license in the reservation to a company, Philnico, for $294 million plus P74.5 million.

Up to now, the government has not received a single centavo in payment. Meantime, mining companies—all subcontracted by Philnico—reportedly are feasting on the rich mineral reservation (Breaktime, May 16, 2011).

Just to give you an idea of what kind of feasting is being done there, a mining firm called Hinatuan Mining owned by Salvador “Buddy” Zamora II, whose group also operated the Rio Tuba mine site in Palawan, posted some P13 billion in net profit in the last six years.

The poor taxpayers, on the other hand, shouldered the P13 billion in Philnico debt, which were absorbed by the government.

It seems that such a clear irregularity could not bother our beloved BS. From what I gathered, earlier on in the Aquino (Part II) administration, the Department of Environment and Natural Resources proposed to BS that an executive order (EO) be issued to declare that all “mine tailings,” which are those large piles of leftover crushed rocks in mines, belong to the state.

The tailings actually still contain minerals. Local mining companies still export them.

But once the EO takes effect, Hinatuan Mining and the other raiders in the 25,000-hectare Surigao reservation can no longer sell the tailings to their buyers in China.

According to our sources in the mining sector, DENR Secretary Ramon Paje himself has been pushing for the EO for several months now, even slating it for open discussion during Cabinet meetings. But no dice. The proposed EO remains that—a proposal.

While the proposal is gathering dust somewhere in the Office of the President, there’s talk going around in business that, as usual, somebody in the Palace is suppressing the issuance of the order, probably hiding it from BS.

But there is one disturbing fact in this whole scandalous affair: Paje has been pushing for the EO in Cabinet meetings. I suppose that BS attends them. Or not!

Anyway, the same NAT (as in, “no action taken”) became the topic of whispers in mining circles concerning the Privatization and Management Office (PMO) and the Department of Finance (DoF).

The PMO, which is under the DoF, is simply the new name of the infamous Asset Privatization Trust (APT), which handled the sale of assets (i.e., companies) turned over to the government, because the government had to shoulder their huge debts of billions upon billions of pesos, which we are paying for with our taxes. One of them was Nonoc Mining, owner of the 25,000-hectare Surigao mine, which went to Philnico.

From what I gathered, PMO boss Karen Singson, one of the respected figures in the Aquino (Part II) administration, being a Wall Street-type Harvard-educated technocrat, sent a memo to her boss, Finance Secretary Cesar Purisima.

In effect, Singson was asking the DoF to take drastic steps to protect the government’s interest (i.e., our tax money) in the problematic Philnico privatization. One possibility was for the government to cancel the mineral production sharing agreement (MPSA) for the Surigao reservation.

The MPSA is like a license issued by the government to operate the mine. It was actually the MPSA that the old APT, er, “sold” to Philnico—minus the payment, of course.

Thus the cancellation of the MPSA in effect would stop the raid of the rich Surigao mineral reserves. After all, the DENR was used to closing down mines for all sorts of reasons. Just recently, for instance, the DENR closed down mining operations in Zamboanga del Sur, despite the presence of security personnel from a group reportedly owned by former Armed Forces generals (Breaktime, May 19, 2011).

The Singson memo is probably also gathering dust at the DoF. After all, the PMO was only trying to watch out for the government’s interest.

Hey, from what I gathered, the PMO is still spending your tax money to the tune of P400,000 a month, for security personnel at the—you will never believe it—Philnico operated mine site in Surigao.

Here is the situation: The government already did not get back some P13 billion in debt in connection with the Philnico mine. Plus, it did not get the payment for the MPSA it sold to recover the unpaid debt. Worst of all, it is still spending a lot of money for some useless security arrangement. Look, it could not stop the shipment of minerals from out of the reservation.

Word goes around that there are at least four groups operating the 25,000-hectare reservation. For instance, official figures from the Mines and Geosciences Bureau and the Bureau of Customs showed that a company called Shulley Mining last year undertook 13 shipments out of the country, possible to China. Total shipment for the year reached more than 600,000 metric tons, estimated at more than P300 million.

Still, the case of Shulley is nothing compared to the luckiest of them all, the one and only Hinatuan Mining. In 2001, it reported to the SEC a deficit of P50 million. Its financial statements, after it raided the Surigao mineral reservation, showed profit of between P12 and P13 billion in the past seven years.

What is stopping the Aquino (Part II) administration from doing something about this?

In mining, the operators always tap the high-yield deposits because of low operating cost, and thus the highest possible income. Such must be the case at the Surigao reservation. It would be stupid of anybody, including anyone in the Palace, to think that the operators in the reservation would do otherwise.

Time is running out. Or better yet the mineral deposits are running out.