Eenie meenie mining

The Aquino (Part II) administration, as it turned out, at least according to news reports, had to defer the issuance of an executive order spelling out its new mining policy. The Palace was supposed to issue the EO about a month ago, which was moved to the end of February. The EO has yet to come out. Something obviously happened.

Executive Secretary Paquito Ochoa Jr. reportedly said the administration wanted to get the “necessary input” from the mining industry.

Can you believe that? Wait a minute here, boss, because it seems to us that the administration bypassed the very sector that the new policy would disturb—if not totally distress. I guess somebody in the administration forgot to do his job. And that could only be Natural Resources Secretary Ramon Paje, who rose from the ranks at the Department of Environment and Natural Resources, having started as a junior forester back in 1982.

From what I gathered, Paje was only supposed to be a temporary head of the DENR. His position was reserved for a losing senatorial candidate in the party slate of our leader Benigno Simeon (a.k.a. BS) in the 2010 national elections. The law prohibits a losing candidate from taking up position in the government within a year of the elections. The one-year ban passed, but Paje remained as DENR head. This guy, according to DENR insiders, has been a crafty player in the department under any of the past administrations.

Anyway, the decision of the Aquino (Part II) administration to defer the EO issuance seems to be another attempt to bail out the DENR head, particularly when it came to critical issues affecting the sector that the good secretary must supervise: the very same mining industry.

Whatever happens in the mining sector, actually, is an important part of his job!

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Not too long ago, for example, the DENR head simply turned down the application for ECC [environmental clearance certificate] requested by Saguittarius Mines, which was willing to sink more than $5 billion in a huge copper and gold mining project in South Cotabato called Tampakan. There was a last-minute ordinance in the province banning open-pit mining—a method adopted by the company from the inception of the project. Paje simply ruled that the company could not get the ECC because of the ban.

In effect, the DENR passed on the authority to approve or reject mining projects to LGUs, basically surrendering the authority of the national government over the large-scale Tampakan prospect, together with all the national economic interests attached to it.

Also, just to be given a chance to be heard on something that would mean life and death to their business, not to mention the thousands of workers dependent on the mining sector, the Chamber of Mines (COMP), which groups together some 30 large-scale mining companies in the country, had to raise hell. Paje refused to listen to their arguments, telling COMP that they would have to go straight to our leader BS.

Yes, ladies and gentlemen, the very official who must be on top of the mining industry, without much ado, just closed the door to any “consultation” with the mining industry. Our brave DENR head passed the buck to our leader BS.

From what I gathered, Paje never really heard the side of the large-scale mining industry, as opposed to “small-scale” mines, whose permits come not from the DENR but from the LGUs. The “mining study group” that crafted the proposed EO, actually, gave COMP a consultation time of all of two hours. That was it. Paje reportedly was not even present during the two-hour consultation.

According to organizations in big business, such a bypass was bad for the country’s investment climate. It could ruin confidence in the business community. After all, survey after survey showed that “investment climate” has direct links to the actual amount of investments being made in any country.

Moreover, we are talking here of an industry that, in 2010, based on the latest available official figures, exported something like $2 billion worth of minerals, and it was this industry that contributed about P14 billion in taxes and other fees to the government.

And the boss in the DENR never even heard the position of the industry that was the most important sector in his area?

Major dailies quoted Paje as saying that all the views of the mining industry regarding the new EO must go straight to our leader BS. And so the Palace deferred the EO. As I said, the administration said it had to get “input” from the mining sector. Wow.

Do we take it then that we do not need a DENR secretary anymore? We just go straight to BS, right?

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Now, the Palace has been saying that the new mining EO aimed to correct what the administration called “loopholes” in the government rules on the mining industry.

On the part of COMP, the EO would be good for the industry, as it could help normalize the investment climate in the sector. It could perhaps resolve several conflicts, such as the ordinances issued by LGUs, which directly contradicted laws passed by Congress. The rules of the business, in other words, have become an eenie-meenie guessing game for the mining companies.

Thus, COMP entertained hopes that, with the EO in place, all conflict would be resolved, and the mining companies could finally start doing what they did best: extracting minerals from the ground and turning them into national economic wealth.

You see, according to published reports by the US State Department, the Philippines has been sitting on mineral resources worth about $840 billion—or about P3.7 trillion at the current exchange rate of the peso. To think, certain economic think tanks have always believed that the US figure was even conservative.

To the industry’s surprise, however, the EO turned out to be the exact opposite. For instance, the draft would require existing mining companies to cough out to the government an additional amount (called “royalty payment”) equivalent to 5 percent of their gross income.

At present, as the chamber claimed in a paper presented to the Palace, the large-scale mining companies already remit to the government, as taxes and other fees, more than 50 percent of their net income. After all, the government already determined that the so-called revenue leakage comes from small-scale mines. Large-scale mining companies, for instance, paid taxes and fees amounting to P14 billion in 2010.

Thus the EO, to the mining industry, seemed punitive. And so nobody could blame the industry if it feared that the new rules were designed to discourage investments in the sector—simply a veiled mining ban.