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12 May 2010 Dr. Esperanza I. Cabral Secretary - Department of Health San Lazaro Compound, Sta. Cruz, Manila

Re: Rio Tuba Nickel Mines, Bataraza, Palawan Dear Secretary Cabral: We write with regard to Rio Tuba Nickel Mines Corporation (RTNMC) and Coral Bay Nickel Corporation’s (CBNC) Hydrometallurgical Processing Plant (HPP) which are operating in Bataraza, Palawan. On November 9 and 10, 2008, the Palawan Provincial Health Office (PHO), together with representatives from the Department of Health (DOH), conducted a water sample collection and air sample analysis of the area where RTNMC and the HPP are located. While the results of the air quality monitoring would show that it falls within the standards set by the DENR (see Memorandum dated November 19, 2008 attached hereto as Annex A), this test in inconclusive in terms of the effects of the HPP’s operations on the air quality in the area precisely because the plant had been shut down for two days prior to the conduct of air quality monitoring. With regard to the water sampling analysis, six water samples were submitted to the National Reference Laboratory, five taken from areas where the mine and the HPP are located, while a sixth sample was taken from commercially bottled water and served as a control sample for the testing. The results were disturbing, to say the least (report attached hereto as Annexes B to B12). All of the five water samples taken from Bataraza failed the Philippine National Standards for Drinking Water. The analysis conducted showed that the water samples grossly exceeded standards for chloride, hardness, total dissolved solids, sulfate, fluoride, pH, and fecal coliform content. It has been over a year and the DOH has yet to present this report to the affected communities, the Palawan Council for Development Staff (PCSD), or in any other public forum. We believe that the results of the testing have to be made officially public considering the continuing health threats posed to the communities. The testing done by the DOH did not include heavy metals, a by-product of the mining activities of RTNMC and the processing done by the HPP. In July and October of 2009, Friends of the Earth-Japan (FOE-J) conducted their own water sampling from various rivers and wells in the area surrounding the mine site and the HPP. FOE-J expanded the test criteria to include heavy metals. These water samples were then sent to Japan for analysis. Tests conducted using inductively coupled plasma mass spectrometry show that while zinc and magnesium did not exceed Japanese standards for water hardness, these metals were still found to be in such high concentrations that they are considered abnormal. With regard to other toxic metals, a majority of the water samples collected grossly exceeded

both Philippine and Japanese water quality standards for metals such as chromium, manganese, and nickel [see table attached hereto as Annex C, taken from The Bulanjao 2010 Geo-tagged Report on Mining Aggression in Core Zones and Ecologically Fragile Areas on Palawan Island (The Philippines) by ALDAW (Ancestral Land/Domain Watch) and the Centre for Biocultural Diversity of the University of Kent (UK), pp. 43-44, www.iapad.org/publications/ppgis/aldaw_bulanjao_2010_report.pdf]. The mining and mineral ore processing being conducted by RTNMC and CBNC have contributed to the decline in potable sources of water for the communities where these companies are located. As tested by the FOE-J, nickel has been found to be in concentrations of more than 10 times the allowable content of Japanese water quality standards. Most alarming of all is the presence of hexavalent chromium in the different water bodies surrounding RTNMC and the HPP, including what is supposed to be drinking water supplied to the communities by RTNMC. The areas where the water samples were collected are from rivers or aquifers which flow through or are adjacent to the mining site and the HPP. Hexavalent chromium at Togpon River registered an alarming 72.7 and 126 for July and October 2009 respectively, way beyond what was estimated in their environmental impact statement. The presence of hexavalent chromium and nickel cannot be said to be naturally occurring in the amounts detected. It is obvious that there is a correlation between the operations of RTNMC and CBNC, and the presence of these heavy metals in the rivers and aquifers surrounding their area. We hope that DOH can act more proactively in safeguarding the lives of the communities of Bataraza, Palawan. In light of the tests conducted by your Department and by the FOE-J, we would like to request the following from your good office:

1) That the results of the tests conducted in November 2008 be formally presented to the affected communities and the PCSD, and that mitigating measures be established by the DOH to protect the health of the communities; 2) That a comprehensive study be conducted by the DOH, including follow-up testing in the same areas to determine any changes in water quality. The study should include testing for the presence of heavy metals in sites visited by both the DOH and FOE-J. It is imperative that residents who have complained about chronic conditions involving skin, respiratory and digestive illnesses should also be examined to determine the effects of the mine and the HPP to their health, including the presence of heavy metals in their bloodstreams. Air quality analysis should also be done while the plant is operating to determine if the HPP’s mitigating measures are sufficient; and, 3) That the results of such comprehensive study be made public at the soonest possible time.

We are anticipating your prompt response to our request. Very truly yours, Atty. Edward G. Lorenzo Legal Officer

Friends of the Earth Japan 2009.12.09

Summary of the meeting with Sumitomo Metal Mining and JBIC

With Sumitomo : November 16, 2009 : 14:00-16:00

At Tokyo Office of Sumitomo Metal Mining

With JBIC : November 17, 2009 : 14:00-15:00

At Tokyo Office of JBIC

● The points FoE Japan stressed out to Sumitomo and JBIC in each meeting were;

1. The possibility of contamination, especially by Hexavalent chromium (Cr6+ or Cr(VI)), in

Togpon River due to the effluent from the Tailing dam

2. The possibility of contamination of truck-delivery drinking water by RTNMC

3. The double-standards policy adopted by Sumitomo or CBNC as a Japanese company (Lower

standards are applied to this Project in the Philippines than Japanese standards), while the project has

complied with the Philippines standards and laws

4. The bad smell has been still continuing, depending the wind direction

5. There should have been consultation with local communities first, if there was any change in

SDMP, and there should be no threat to local leaders.

● Sumitomo and JBIC's answers to those above were;

1. (Sumitomo)

- The surface water of Tailing dam has discharged into the sea through the pipe, but not into the

River.

- But Sumitomo would consider providing some information to NGOs as much as possible, such as

maps and baseline data of water quality before the Project started, so that the contamination source

of Cr(VI) in Togpon River would be identified.

(JBIC)

- It doesn't seem that Cr(VI) is produced naturally in the Togpon River, as far as we see any other

data of Cr than Togpon.

- Even though there is no effluent from Tailing dam into the River, there might be a leakage from the

Project site. JBIC would confirm such points and whether there is any Cr(VI) to be produced in the

process of HPP or not.

- JBIC would also confirm the places, methods and results of monitoring by the proponents, and

would consider disclosing those information to NGOs, if possible.

Friends of the Earth Japan 2009.12.09

- JBIC would confirm how the proponents did EIA and other investigation around the project site

before the project commencement. (confirming if there is any baseline data as well)

2. (Sumitomo)

- The source of delivery water would be from the deep-well. But Sumitomo will confirm it again

with RTNMC and will tell NGOs about it later.

(JBIC)

- JBIC will confirm the source of delivery water again and also whether there is any problem about

the way to deliver the water, such as trucks etc...

3. (Sumitomo)

- The Project still complies with the Philippine Environmental Standards. But Sumitomo will

confirm why the target set by itself in EIS has been at such level, and will tell NGOs about the

reason later.

- Sumitomo used to have a position that projects should comply with only local standards, but would

like to make efforts now not to adopt "doble-standards", considering the international standards.

(JBIC)

- JBIC will confirm why the target set by Sumitomo in EIS has been at such lower level.

4. (Sumitomo)

- Basically, bad smell cannot come out of the HPPs. But because there was a report from a Japanese

NGO about bad smell outside the HPPs, CBNC has installed a scrubber at the HPP1 this year.

Another scrubber will be installed at the HPP2 next year due to the budget. (CBNC is now covering

the portion with blue sheet at HPP2.)

- The source of bad smell might be the roots of plants contained in low latelite ore that has been left

for a long time. Such roots would be heated and might come out smell, but it is still not sure.

(JBIC)

- The scrubber has been installed at HPP1. The same will be installed at HPP2 in 2010 due to the

budget.

5. (Sumitomo)

- The budget for SDMP implementation has been delayed due to depression. More budget will be

allotted for 2010.

- The consultation should be held, if any change. Sumitomo will confirm it.

(JBIC)

- JBIC will tell the proponents to consult with local communities appropriately, and also tell them

Friends of the Earth Japan 2009.12.09

about the importance of the special consideration on the threat to the local people.

Summary of the meeting with Sumitomo Metal Mining

With Sumitomo : December 9, 2009 : 13:30-14:45

At Tokyo Office of FoE-Japan

● Sumitomo’s additional explanation were;

Effluent from Tailing dam

● In terms of toxic materials, the Project has complied with the Philippine Standards for

effluent. Please see the table of No. 2 in the reference. (The outlet of effluent from the

plant means the outlet of pipeline in the sea.)

● As overflow from the tailing dam happens in the rainy season, it is not necessarily said

that 100 percent of effluent from the tailing dam would be released only through the

pipeline. However, there is no problem arisen from such overflow, since the surface

water of the Tailing dam has complied with the Philippine Standards.

● Cr(III) subsides in the water, while Cr(IV) doesn’t subside but is aqueous. Therefore,

even though the sedimentation in the tailing dam would be overflowed, it is not Cr(IV)

but Cr(III).

Analysis results on Cr(IV)

● In terms of Cr(IV), Please see the tables of No. 1 and 2 in the reference. The

maximum amount found in the analysis by the company itself was 0.05 mg/L and also

the maximum amount found by the MMT was 0.04mg/L, both of which comply with

the Philippines Standards (0.2 mg/L). (The outlet of effluent from the plant means the

outlet of pipeline in the sea.)

Monitoring system

● The Environment Technical Division of CBNC conducts the regular monitoring of the

surface water in the tailing dam and the effluent from the tailing dam at the outlet of

pipeline in the sea, twice a month. Those results are reported quarterly to EMB.

Delivery drinking water by truck

● The company currently takes the delivery water in the upstream of Ocayan River.

● There is an annual analysis and report on the delivery water. Please see the in the

reference.

Friends of the Earth Japan 2009.12.09

*FoE-Japan asked Sumitomo to confirm again if the water supplied through the pipe in Rio

Tuba is the same as the drinking water delivered by the truck, or not.

Comparison with Japanese Standards

● For example, the Japanese Standards for Nickel only applies for the drinking water,

but neither for the industrial water nor the effluent. Therefore, it is not necessarily

comparable. (It is not said that lower standards are applied to this Project in the

Philippines than Japanese standards.)

Others

● Sumitomo is still collecting some information and data, such as the baseline data of

water quality surrounding the Project site (the data before the Project started).

(Partial translation of the page 1 of reference by SSM)

Reference 2009.12.9

To: FoE Japan Sumitomo Metal Mining Corp.

The followings are the results of water quality analyses on the effluent from the Plant by the CBNC. 1. Results of Analysis on Cr at the outlet of effluent from the plant (the outlet of pipeline in the sea)

Super-natant Cr6+ mg/l Also, the followings are the sampling results by MMT. Super-natant Cr6+ mg/l

2. Results of Analysis on heavy metals etc. at the outlet of effluent from the plant (the outlet of

pipeline in the sea) Unit mg/l

Philippines Standards for effluent

World Bank Standards for effluent

* Results of Analysis is about total Cr, but the Philippines Standards shows about Cr6+

November 19, 2008 MEMORANDUM FOR: DR. YOLANDA E. OLIVEROS Director IV, NCDPC DR. GLORIA BALBOA OIC- CHD-MIMAROPA FROM: Engr. Ana Trinidad F. Rivera SHPO, EOHO-NCDPC

SUBJECT: Environmental Health Assessment conducted at Rio Tuba, Bataraza, Palawan from November 9-11, 2008.

Background Information: The undersigned proceeded to Rio Tuba, Bataraza, Palawan to conduct a

rapid environmental health assessment for possible nickel and other chemical contamination in selected communities during the aforementioned dates. This activity was undertaken upon the request of the Provincial Health Office and the CHD 4B- MIMAROPA Office brought about by the repeated complaints/outbreaks of skin lesions which was attributed to the operation of the hydrometallurgical plant of the Coral Bay Nickel Corporations. Previous investigations showed hygiene and sanitation as possible factors for the skin ailments. However, monitoring for possible chemical exposures was also recommended in the previous health investigations undertaken. A local NGO, Palawan Network of NGO Inc, (PNNI) also requested that this activity be undertaken in the area because of repeated complaints of foul “rotten egg” odor from the emissions coming from the plant operations. The Provincial Health Office coordinated all the activities with the local government units, PNNI and CBNC. However, during a courtesy call with the Barangay Officials on November 09, 2008, we were informed that the plant shut-down its operations for preventive maintenance on November 07, 2008 and will

resume operations on November 10, 2008 at 10 pm. In view of this, the undersigned decided to continue with the environmental health assessment by conducting water sampling as well as ambient air monitoring for carbon dioxide, sulfur dioxide, nitrous oxide and lower explosive limit using the RAE multigas monitor which is a direct reading instrument. Data from the air monitoring will serve as baseline data for the communities, and will be compared with the monitoring results that will be obtained when the plant will be in operation. This activity will be conducted at a later date. The undersigned explained in detail the process of water sampling collection and air monitoring to the barangay officials, local NGO and a representative from the company. Each water sample collected were processed according to standard protocol which included proper sealing of the sample. A chain of custody form was also completed. Drinking and surface water samples were collected from six sites with a seventh sample collected as a blank sample. Samples were collected from barangays whose community residents had a previous history of skin lesions and respiratory complaints. (Table 1). Most of water sampling sites were not chlorinated due to complaints of smell and taste of residual chlorine among the indigenous groups. Sampling done at the loading area of CBNC was undertaken during the time when loading operations of sulfuric acid was on-going. Samples were submitted to the National Reference Laboratory at East Avenue Medical Center for physical, chemical, microbiological and metal analysis. Results of the analysis will be released in 2-3 weeks. Table 1: Water sampling Sites, Rio Tuba, Bataraza, Palawan

Water Sampling Rio Tuba, Bataraza November 9-10, 2008

SN DATE/TIME COLLECTED SOURCE SAMPLING POINT

ADDRESS OF SAMPLING PT. REMARKS

1 11-10-08; 8:40 am Surface water Tagdalungon Coastal area, Tagdalungon high tide

2 11-10-08; 8:55 am well water Sitio Tagdalungon well area, Sitio Tagdalngon

washing/bathing,nr cemetery

3 11-10-08; 9:20 am water(piped-in) Marabuhay

Coast Guard Stn,Marabuhay supplied by CBNC

4 11-10-08; 10:50 am brook(dam) Buoy Buoy (non-chlorinated) supplied by CBNC, IP area

5 11-10-08; 11:40 am pump (deep well) Tagpisa Bgy Ocayan

6 11-10-08; 2:10 pm Surface water Loading area-CBNC CBNC

7 11-10-08; 2:20 pm drinking water Rio Tuba Rio Tuba Initial air sampling results showed ambient air levels of NO2, SO2 and CO to be within the prescribed DENR-EMB standards (Table 2). Data generated from this

sampling event will serve as baseline/background ambient air monitoring levels during periods where the hydrometallurgical plant is not in operation. These levels will eventually be compared with levels to be obtained during actual plant operations, Table 2: Results of the Ambient Air Monitoring for SO2, NO2, CO and LEL, Rio Tuba, Bataraza, Palawan

Air Sampling Rio Tuba, Bataraza November 9-10, 2008

Range

SN DATE AND TIME COLLECTED

ADDRESS OF SAMPLING PT. NO2 SO2 CO LEL REMARKS

1 11-09-08; 6:45 pm Anaconda 0 -0.2 0 0 0 clear weather

2 11-09-08; 6:55 pm Mahogany 0 - 0.1 0 0 0 clear weather

3 11-10-08;9:00 am Sitio Tagdalungon 0 - 0.1 0 0 0 86 o F 4 11-10-08;9:25 am Marabuhay 0 0 0 0 90 o F 5 11-10-08;10:55 am Buoy 0 0 0 0 93 o F 6 11-10-08;11:50 am Tagpisa, Ocayan 0 0 -0.1 0 0 95oF 7 11-10-08; 2:00 pm Loading area 0 0 0 0 95oF

* Note: shutdown of plant operations during ambient air monitoring measurement

Recommendations:

1. Conduct of the ambient air monitoring during actual operations of the plant.

2. Conduct health education campaigns on health, sanitation and hygiene among the local indigenous communities.

3. Consider alternatives to drinking water sources or in the relocation of the cemetery of the local Muslim communities through dialogues with community leaders, taking into consideration their cultural beliefs and traditions.

4. Continuing medical surveillance among the communities surrounding the HPP plant. There is a need to document the health complaints among the residents in the area.

5. Analyze environmental data and look into the possibility of the conduct of an epidemiological study to determine potential heath impact of exposure to chemicals among community residents.

For information and guidance.