A golden opportunity we can’t miss
(First of two parts)
Filipinos who travel for the first time to the United States, Europe and to our well-developed Southeast Asian neighbors probably go through a progression of feelings that starts with awe and admiration, which quickly turns to frustration and envy.
The level of infrastructure and highly developed system of these countries will put anyone in a positive mood. It is an environment conducive for whatever purpose, whether it is for business, pleasure or, maybe, migration.
Many thinkers have analyzed the success of these nations from the point of view of history, philosophy, politics, economics, culture and even religion.
What can be seen as a common denominator is that, in their own way, they went through a difficult process of evolving a system and culture where they are able to use their human and natural resources to build industries that created both domestic and international demand for their products and services.
There is always an elite and determined leadership that rose up to fulfill a vision for their country. They all had poor beginnings and inefficient governance, but there was a resolute effort to bring their country to a tipping point, eventually creating a strategic advantage that would sustain their development and power.
They had very few or no hang-ups when it comes to their economic objectives.
Many authors have also analyzed the Philippines and many factors have been blamed, but all have recognized that the country has barely tapped its potential in rich mineral resource which is the first natural asset developed countries learned to effectively exploit.
Visitors hunting for business opportunities soon forget the initial shock of humid heat, polluted air and airport reception and quickly realize that the Philippines is a unique English-speaking, western-Latin American, Asian cultural mix that has the friendliest people living on top of one of the richest mineral deposits in the world.
Some are dazed in amazement, and ask, “What are we waiting for?”
Filipinos now enjoy the modern conveniences of technology and, like everyone else, they don’t care to know that their average cell phone contains about 24 mgs of gold, 250 mgs of silver, 3,800 mgs of cobalt, and 9 mgs of palladium.
All our homes, buildings, every single thing that does not grow from the ground will contain or was made with machines and technology made from metallic and non-metallic minerals that were created by the stars, billions of years before our solar system. As the world is now so connected and dependent on technology, the demand for these minerals has increased at such a rapid rate unseen in history.
Amid this global setting, the Philippines is ranked as the fifth-most mineralized country in the world. One of the few rankings Filipinos can be proud of.
According to the National Statistics Coordination Board (NSCB), the Philippines’ gold reserves based on 2011 world market prices are worth P7.36 trillion (P7,360,000,000,000). This does not include copper and nickel of which the country is also well blessed.
Potentially, the country’s mineral resources may be enough for all the things we need to make the Philippines a truly prosperous paradise and a “more fun” place among developed nations.
But the 7-trillion-peso question is, How do we do this?
Opportunities, uncertainties
The mining industry has been attacked by anti-mining groups not just in the Philippines but everywhere in the world where there is mining.
The issues raised are not without basis, and are mostly from accidents and neglect from legacy mines that used old and less safe methods under deficient regulation.
But the protests against mining are not the only roadblocks facing the industry. Mining has become a divisive and complicated issue that involves all sectors of Philippine society now caught in an uneasy stalemate in pushing the government leadership to enforce policies that would harmonize polarized agendas of the Church, environment, governance, indigenous people’s rights and, most of all, what the real bottom line is: how the huge wealth should be shared.
Amid the heated arguments among stakeholders, in a recent forum between pro-and anti-mining advocates, Manuel V. Pangilinan, a strong believer in the Philippine potential and leader of one of the country’s biggest investor groups, gave the most sensible and forward looking statement in the conclusion of his speech.
He declared that “mining is not the enemy, poverty is.”
The Philippine government is steering its mining policy toward the same bearing with the latest draft of a “Six-Point Agenda to Ensure Responsible Mining.”
Though this work is still in progress, the draft was presented to the Chamber of Mines of the Philippines (CMP) as part of the government’s ongoing consultation efforts with concerned sectors.
This step is well appreciated by the industry that hopes for a fast and clear and solid policy that will support sustained growth, securing safety and profit for all stakeholders.
A successful and responsible mining operation is good business for all parties. But before a successful and responsible mining operation can even start, millions of dollars in risk capital will be invested by the mining contractor to deploy experts and the latest technologies just to explore and assess not just the financial viability of a project but also the required environmental and social impact assessment.
After a gauntlet of consultations, permits and an approved closing and rehabilitation plan, the mining contractor is finally given the authority to proceed.
These and very strict rules and safeguards that are already part of the existing Mining Act that took decades to craft and finally confirmed by the Supreme Court.
Though it received international praise as a world-class mining law, it is being attacked by anti-mining groups whose demands range from repealing the law to outright banning of mining in favor of ecological and social preservation or alternative uses that they assert will not endanger the existing livelihood and safety of inhabitants.
The concern for the environment and safety is a concern of everyone. Lack of confidence in the enforcement of safeguards is an argument by critics pushing for a mining moratorium to give the government time to retool its agencies and ensure strict regulation.
This threat has already caused uncertainty and opportunity lost to the tune of P10.4 billion in lost foreign direct investments in 2011.
There is a de facto moratorium since applications for mining permits are still frozen pending the request of the Department of Environment and natural Resources for clearance from the Office of the President, which the industry is hoping will happen soon.
Lifting this will send a clear signal that the government is indeed open for mining business and will renew interest from investors.
Yet another barricade has been set up by the new guidelines issued by the National Commission on Indigenous Peoples (NCIP) and the suspension of the issuance of new Free and Prior Informed Consent (FPIC), a requirement before a company can start mining operations.
Sadly, this was done without any consultation with the mining industry to which these new guidelines will be imposed.
Six-point agenda
In principle, the CMP agrees with the six agenda items of the draft mining policy committing the industry’s close participation in its further study toward needed improvements.
Many proposed reforms rightly focus on issues involving illegal and small-scale mining, which accounts for 60 percent of the country’s gold production.
The following are some suggestions and comments being forwarded by the CMP to hasten the process:
Agenda 1: Ensure responsible mining’s contribution to the country’s sustainable development.
1. On the creation of an interagency council on mining and other standard-setting entities:
a. Ensure adequate representation from competent technical experts from the industry;
b. Establish the clear dichotomy in the participatory process between interagency council and the Mines and Geosciences Bureau (MGB) as the agency with the legal mandate over mining issues; and
c. Focus efforts on formulating standards through participatory mechanisms that consider investment concerns rather than on creating new entities.
2. On the conduct of public bidding/auction of mining rights/tenements for areas with known mineral resources:
a. This is good for mineral deposits with previously defined resources by qualified mining experts.
b. This should not prejudice existing mineral claims/rights.
3. On the enactment of a Comprehensive Mineral Code:
a. The Mining Act is a good law and much time and resources will be saved to immediately focus on strict and consistent implementation. Enactment of a new law will further delay an already stalled industry and will cause the fall of mining in the Philippines.
b. The Asian Institute of Management (AIM) has recommended to the government that presenting amendments on sections that need rethinking will be the best approach.
Agenda 2: Adopt International best practices to promote good governance and integrity in the sector.
1. Consistent to this policy, the CMP has pushed for the Philippine government’s participation in EITI [Extractive Industries Transparency Initiative].
2. The CMP has launched a Corporate Social Responsibility Guidebook that encourages companies to go beyond compliance with national law by adopting international best practices.
3. The industry, in partnership with respected CSR institutions, is developing a Mining Score Card as a gauge for responsiveness to best practice standards such as the Global Reporting Initiative’s Sustainability Reporting Guidance and Integrity Initiative.
(To be continued)
(This article reflects the personal opinion of the author and does not reflect the official stand of the Management Association of the Philippines. The author is senior vice president for corporate affairs of Philex Mining Corp. Feedback at [email protected]. For previous articles, visit <map.org.ph>.)
