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A longer-term view of mining

Just like agriculture, all’s not been well with mining. From its peak in the 1970s when there were 45 operating large-scale mines and minerals accounted for as much as 21 percent of our country’s total exports, mining had been in decline except for a brief boom in the late 1980s. For the period 2003-2012, minerals averaged only 3.94 percent of total exports.

The “anti-mining” campaign with the high profile audit by the Department of Environment and Natural Resources (DENR) of the compliance of existing mines particularly with environment laws and issuances has sent chills to the local mining industry and prospective foreign investors. The bluster of the President that the country can do without mining, if the industry does not behave, reinforces the low esteem of government and many communities and non-government organizations (NGOs) on the relevance to society of the mining industry.

The alleged supply of landfill by certain mine operations in Zambales for Chinese reclamation in Scarborough Shoal further added to the pariah image of mining.

Since 2012, mining has been deleted from the Investment Priorities Plan. All incentives have been removed except those in Republic Act (RA) 7942 or Mining Act of 1995 and the National International Revenue Code.

Pursuant to Executive Order (EO) 79 signed in 2012 by President Benigno Aquino III which imposed a moratorium on new mining applications until new legislation is passed rationalizing revenue sharing, the Mining Industry Coordinating Council (MICC) issued a new map showing mining NO-GO areas. The new map excludes tourism development areas as well as prime agricultural lands and effectively closes off 65 percent of the total nine million hectares identified by the Mines and Geosciences Bureau (MGB-DENR) as having high mineral potential.

The popular view is that government and the host communities are only getting a pittance from the revenues from mining but are saddled with the responsibility for looking after the immediate and long-term adverse consequences. Consequently, bills have been filed in Congress which propose that government share should be equivalent to 10 percent of gross revenue, or 55 percent of adjusted net mining revenue, whichever is higher, in lieu of all national and local taxes.

This proposal, by estimate of the Chamber of Mines of the Philippines, is tantamount to a punishing 79 percent take of any prospective mining project net cash flow averaged over its mine life.

There is a growing trend among local governments invoking their power under the Local Government Code to declare their jurisdictions “mining-free zones.”

There are likewise pending bills in Congress for total ban of exports of unprocessed mineral ores. The objectives are to increase domestic revenue, encourage investments in mineral processing and create jobs much like what Indonesia has done to force its mining industry into nickel ore processing.

The Chamber of Mines, however, cautioned that there are vital prerequisites to building profitable and sustainable mineral processing plants. In the first place, mineral processing plants require vast amount of reliable, inexpensive power. They need accessible, high quantity coal to feed the blast furnaces which will process the ores, which natural resources Indonesia has plenty of and we don’t!

If the investment prerequisites are missing and/or inadequate, a ban of ore exports will not lead to construction of mineral processing plants but to mine closures, job losses and economic dislocation in mining communities.

To date we have 37 abandoned mined-out sites including the monumental Marinduque copper mine tailings dam disaster. They are painful reminders of what had gone wrong in the manner that we have managed mining. Not only are they ugly, they pose continuing risks to the health of people (exposure to heavy metals) and safety (floods and landslides) of the surrounding communities. And as long as these scars in the landscape remain unattended to, they are grim reminders of what has and can get wrong with mining.

Indeed with all the foregoing why should we bother with mining? Shouldn’t we be better off closing all our mines and shift our attention and resources to more profitable, more healthful and environmentally benign endeavors?

To be continued . . .



Dr. Emil Q. Javier is a Member of the National Academy of Science and Technology (NAST) and also Chair of the Coalition for Agriculture Modernization in the Philippines (CAMP). For any feedback, email eqjavier@yahoo.com.