Original Posting March 1, 2017
Why not welcome the radical stance of DENR Secretary Gina Lopez?
Mining is not purely an economic or merely a legal issue. It is primarily an environmental issue and as such, must be governed and justified within the context of environmental ethics.
Most Highly Mineralized Country
The Philippines is a part of Earth that is so incredibly rich in gold, silver, copper, nickel, chrome and zinc that there is now a consensus among governments and industry in the valuation of the mineral wealth within the territorial limits of the country at more than a trillion dollars’ worth, at least.
In fact, you will now hear from more and more sources how our country has more than seven billion metric tons (BMT) of metallic mineral reserves and 51 BMT of non-metallic deposits – with values ten times our GDP and 17 times our external debt. The Philippines has the fifth largest mineral resources in the world.
It is then understandable how tempting it was for past cash-strapped administrations to give in with very little fight to, say, the International Monetary Fund’s structural adjustment program, and fully liberalize the mining industry, as the Philippine government did in 1995, allowing 100% foreign-owned mining corporations control over our mineral land – in exchange for how much? Well, yes, how much – that remains a big, big question mark. It may be more accurate to ask, how little?
We can, indeed, quite easily grant that in mining there is room for foreign investments – room. It is crazy to give them the whole house. Let us welcome the Philippines becoming at long last a strong state that can rigorously screen and strictly regulate investors, which Secretary Gina is now attempting. Can’t the State make sure that foreign participation in the critical stages of minerals extraction and processing be in accord with a defined program for technology transfer and constitutionally correct equity shares?
It is time we open our eyes to the fact that often we are fried in our own grease. What triggers the activity of foreign funders and investors are the licenses and permits and certificates here, necessary reminders that the resource is here. The power to allow the production of new wealth is here. Indeed, Filipino financiers can do as well if not a better job if backed up by the sovereign state.
Here is a concrete proposal to strengthen the financial capacity of the State so that it can have the wherewithal to become an effective and responsible steward of the national patrimony: amend the Mining Act to include the crucial provision of the government’s pre-tax share of the cash flow generated by a mining project.
A Pre-Tax Share Representing the National Patrimony
In most countries around the world where there is mining this pre-tax share representing the national patrimony averages a hefty 38.15% (Chile 15.00% , Bolivia 27.06% ,Venezuela 32.82% , Peru 36.52%, United States 36.61%, Mexico 37.21%, Botswana 40.10%, Brazil 40.85%, Argentina 46.13%, Canada 46.71%, Guyana 48.16%, Australia 50.60% — and the Philippines? 0%. ) ! Since it is a fact that the Phiippines has for many decades now been idolizing the Australian model of mining, with an Australian propagandist so strongly on our ground that he was even awarded Filipino citizenship a few years back, then we might as well be consistent and follow the Australian example of a 50.60% pre-tax share.
At the present time, the Mining Act is blind on how the State – which has the exclusive duty to explore, develop and utilize natural resources – would participate in the profits of service contracts such as financial and technical assistance agreements with mining contractors. The law also does not guarantee that the government will receive an equitable share on the mining contractor’s profit. The government’s share in the mining deals only includes taxes, duties, and other fees paid by the contractors. The payment of these fees does not immediately benefit the Philippines as the contractors are given the privilege of first fully recovering their pre-operating and property expenses before paying their financial obligations to the government, not to mention the aggressive grant of tax holidays to foreign investors in mining, which does not make sense at all since mining is that kind of investment which is neither market-seeking nor efficiency-seeking so much as clear asset-seeking.
A Give-Away Country
The Philippines has become such a give-away country – one wonders why anyone should even respect it as sovereign at all. The State and the Filipino people have been so remiss in their duty as stewards. Section 80 of its Mining Act expressly states that the excise tax on mineral products shall constitute the “total government share in a mineral production-sharing agreement,” which under the Tax Code is only two percent of the market value of the gross output of the minerals. Section 84 reiterates essentially the same thing. From an ethical standpoint, prescinding from any changing Supreme Court decisions, the law does not make sense when one looks at the provision on the state ownership of mineral resources, because, in effect, the government concedes to the foreign corporation practically for free its beneficial ownership over the mineral resources.
In essence, and in contrast, the moral view understands stewardship properly and asserts: mining projects that cannot absorb the environmental and social costs of modern mining should not be allowed to proceed. Secretary Gina, you are doing fine as far as the interests of the nation and the people are concerned.
We welcome the radical review that has been embarked on based on the following questions: is the current utilization of our mineral endowment designed to serve the basic needs of our people who live and work in a backward agricultural mode of production? Is it geared to addressing the need of our national economy to making a successful leap to becoming a strong industrial state?
Or isn’t our mineral advantage being used again to develop underdevelopment in our land? Isn’t it a fact that for too long a time our mineral resources were extracted purely for the benefit of “imperialism” or the developed nations’ economies and for the super-profitable advancement of a few mining companies?
So, at the outset the question should be articulated correctly: shouldn’t we only allow the development of our mineral resources for our own use – rather than mainly for money-making by a few in the world market?
No one, including our moral leaders, should be or can be against mining per se. Mining has been an important part in the historical development of civilizations – from first (agricultural) to second (industrial) to third (information) wave of social formations. Industries need minerals to support the production and flow of basic goods and services. How fortunate should our country have been, given the mineral resources vital for industrialization!
The problem, however, has been – again – the fact that the State and the Filipino people did not really own and control mining as a crucial part of basic industry. In no other sector than in mining is the Philippine state exposed to be unarguably weak – till Secretary Lopez came supported by the incumbent President (for how much longer, though, still remains to be seen) – with no one truly responsible on the government side, no one liable. The organs of government were captured instruments of the mining companies, as former Secretary Heherson Alvarez discovered in his time, when he suddenly found himself out of a job because of the mining lobby. Because of this, we could never really have hoped that mineral production and development would serve the modernization of agriculture and the launching of rural industrialization with all that this could have entailed in terms of food security and economic self-reliance, generally.
In sum, the Philippine State and the Filipino people have been rather remiss in their stewardship of the national patrimony.
Understanding Stewardship
Stewardship understood in this way means primarily the preservation and conservation of nature. However, it does not in any way preclude the creative transformation of nature, represented by human ingenuity and technology. In performing this task, however, human beings must recognize that they can only proceed within a certain limit and that the resources with which they must work are not necessarily inexhaustible.
Thus, stewardship – to the chagrin of many businessmen – is not a license for doing just about anything or for trying out anything just because it is possible. Rather it entails more than anything else, restraint and responsibility in the use of this world’s resources. No matter how human beings may progress in science, freedom, and power, they should not dare abuse this responsibility and in the process contradict their own human nature with the consequence of destroying themselves and their environment.
Nature is to be creatively transformed but not to be relentlessly exploited. The slogan should be, “Need not Greed.” We will not encourage people to be simply driven by the desire to satisfy wants and wantonly engage in research and experimentation without taking into consideration risks and negative consequences.
Who will foot the bill for researches and applications in the area of footprint reduction, innovations in waste management, mine closure and rehabilitation, and ecosystem risk management?
At this juncture in our history, we ask: is enviro-friendly mining even possible and can we be convinced? Is “sustainable mining” not an oxymoron? Even with the best of intentions, is it possible for mining to ever really be sustainable? Can a company extract millions of tons of rock from the Earth and still manage to be a friend of the environment? And is it good enough to “contain” mining’s toxic by-products indefinitely, as current ‘green’ mining companies do?
Another problem with the whole sustainable mining debate has to do with secrecy in reporting toxic mining waste. Mining companies have not been accurately reporting the amounts being dumped into the environment and in doing so have kept the people in the dark. While sustainable mining looks good on paper, the industry has a way to go before it can be considered even remotely green
How real and true and effective is a Norwegian Company’s claim of adopting green mining in its Mindoro operation?
Lastly, consider another proposed amendment to the Mining Law – such that the government must have a representation in the board of directors (even as a non-voting Member) in all mining companies operating in the Philippines in order to safeguard the data and information filed as a basis for taxes and royalty payments to the government.
The case of the Rapu-Rapu Mining operation became public knowledge when it was discovered that the Australian-owned mining firm violated Environmental Laws. The tailings in the gold mine spilled-out into the adjacent river, causing tremendous damage to the environment and to fish & fowl in the area. Tragically, it caused damage to human life in the surrounding community because of the poisoning caused by the highly toxic nature of the tailings.
Among a number of violations which the Rapu-Rapu Fact Finding Commission found was something which stood out as a serious economic flaw. The Commission audited the amount of tons ore milled (as reported in its books and to the government) against the shipping documents presented by the shipping companies.
The discrepancy was in the neighborhood of 50% more shipment than what was declared and reported in its books and to the government. Would not the Government take for every ton-ore-milled also be slashed into half?
One of the reasons why this violation had gone unchecked was the fact that there was no effective control and monitoring mechanism by government in place. It also showed that operations monitoring by representatives of government on the lower levels were ineffective (and even prone to graft and corruption).
The point here is that Government must establish basic and workable controls to make sure that its share from the incomes (via taxes) and fees (via proposed Royalty payments) from mining companies are reported and paid properly and fairly. Placing a Government-Representative into the Board of Directors of these companies would help ensure proper reporting of revenues and the correct payment of taxes and royalty fees.
Meantime, the Catholic Bishops Conference of the Philippines keeps reiterating its concern not against mining per se but against mining as it is practiced in our country.
“Our experiences of environmental tragedies and incidents with the mining transnational corporations belie all assurances of sustainable and responsible mining that the government is claiming,” the bishops have said time and again. They lamented the rising figure of mining affected communities, human rights violations and economic depravations. Rapu-Rapu was only the latest, and the Marinduque tragedy is all but forgotten. Aggrieved parties have had to go to the United States to file their cases of complaint there.
Putting it very clearly, the CBCP reiterated its demand for the government to repeal Republic Act 1942 known as the Philippine Mining Act of 1995, recall all approved mining concessions and cancel pending applications, claiming that the mining act destroys life. Secretary Gina is coming close to this even more radical stance of moral leaders.
The bishops said that the guaranteed economic benefits of mining by transnational corporations are outweighed by dislocation of communities, the risks to health and livelihood, and massive environmental damage and the loss of mining resources to giant foreign companies. They added that mining rights granted through the “National Policy Agenda on Revitalizing Mining in the Philippines” have encroached into 17 “important” biodiversity areas, 35 national conservation priority areas and 32 national integrated protected areas.
The bishops have cited Caraga, a mining area listed by the government’s statistics office, whose four provinces are among the 40 poorest of the 79 Philippine provinces, and the Bicol and Cordillera regions, where some provinces are among the 20 poorest.
The Mining Act of 1995 allowed 100-percent foreign investment in mining operations in the country despite a constitutional cap of 60-40 equity in favor of Filipino investors. In January 2004, the Supreme Court declared the act unconstitutional, but it reversed that decision in December that year when it took up the government’s counter-petition.
As early as February 1998, the Philippine bishops’ conference issued “A Statement of Concern on the Mining Act of 1995.” They called for the repeal of the 1995 Act and for the government to rescind all mining concessions it granted to foreigners.
Now they are reiterating those appeals and calling religious leaders to “unite and strengthen” local people, especially indigenous communities, in fighting to stop the government’s 24 priority mining projects.
More and more sectors have assured the bishops of their support at all levels of this struggle.
The bishops’ statement specifies the Rapu-Rapu operations, the Hydrometallurgical Processing Plant project in Palawan, the Didipio gold and copper project in Nueva Vizcaya, and the San Antonio copper project in Marinduque. They also singled out the Tampakan copper and gold project in South Cotabato, and the Canatuan gold project in Zamboanga del Norte.
Back to the Moral Basics
In the course of economic development and growth, many human acts can be either right or wrong relative to their effects on the house of life we call the environment. Human acts are rarely value-free or ethically neutral. They are always either right or wrong. And when they are wrong – no matter what great profits they had brought to some corporations, or revenues to some states, and prosperity to some individuals and social sectors – if and when those human activities we refer to were essentially wrong, they ultimately and inevitably would have to bring worse problems and deeper crises, for truth is one: the truth of science, the truth of economics and the truth of ecology are one many-sided, non-conflictual truth.
For instance, a certain way of exploiting some mineral resources could bring irreparable, and therefore irreversible, damage to the environment. Any damage to the environment in this way can in turn bring irreparable harm and injury to human health. The dramatic example of the Minamata disease in Japan took years and years to establish, before effects could be linked to original causes beyond reasonable doubt. In our own country today, after Marinduque and Rapu-Rapu, the question necessarily pops up: What is the right thing to do? Undoubtedly this is, quite properly, an ethical question – whether or not it is recognized as such.
Another fact is the non-renewability and non-inexhaustibility of mineral resources. Once they are depleted, there is no way that they can be replaced or restored. We know, as many scientists have pointed out, that the essential resources upon which our global progress depends are not inherently and exclusively created by human ingenuity and technology. On the contrary, the essential resources upon which global progress depends are inherently natural in origin so that resources are fundamentally in limited supply.
Putting it another way: our technological systems and we humans exist within and are subject to the rules and processes of the ecosystems of the natural world. It is not the other way around. We are a part of and not apart from the natural world. Nature does not exist within a human-made and manipulated landscape. The biology of natural systems simply does not function subject to our rules, economies, and decisions. In other words, it is we who exist within and are subject to the natural setting. The natural world does not exist within and is not subject to human artifice.
A given mining operation, therefore, will have to be viewed by people and the State according to this perspective and first be evaluated as either ethically right or wrong, good or bad, before it could even be considered legal or illegal, before it can be judged economically profitable or non-profitable, before it can be tested as socially acceptable or not. Without a full respect for the principles of geo-ethics, the exploitation of mineral resources can be very dangerous indeed.
From the very outset, then, the objective of any country that seeks to derive any good from the mining industry should be to ensure that mining is done the right way. Only such a view stands to reason, which posits that mining is not purely an economic nor merely a legal issue. It is primarily an environmental issue and as such, must be governed and justified within the context of environmental ethics or what is now called geo-ethics. In fact, underlying any mining law and the economics that appertain to it should be a solid geo-ethical foundation – a foundation of rules for the use of mineral resources, which are designed to protect people against environmental catastrophes.
All Presidents, including PRRD, easily vow transparency in governance. The Faith-inspired movement to regard mining in the context of environmental concerns is getting stronger by the day. It is time to agree on a new synthesis, towards a stable, healthy and prosperous Philippines: that all may be one. FINIS