Mining in the Philippines

Presented by Andy Whitmore

Indigenous Peoples Links (PIPLinks)

PIPLinks (Indigenous Peoples Links)

Our mission is to support Indigenous Peoples and other land-based communities in their efforts to defend and promote recognition of their human rights to protect their lands and culture – with a focus on the Philippines

We started in 1992 & are based in UK (in EU) & Philippines

For Indigenous Peoples it is a global problem - one estimate as much as 50% of the gold produced between 1995 and 2015 will come from indigenous lands

We are link from local and national to international

PIPLinks (Indigenous Peoples Links)

We now have a Philippine as well as UK office

Our main partners nationally are LRC, ATM, Kalikasan, PAFID, and various local partners

We work on advocacy, research, education & networking

We have helped form the UK Working Group on Mining in the Philippines, Campaign for Human Rights in the Philippines, London Mining Network

PhilippinesPhilippines

Scope of presentation

My background (work for Mines & Communities as well)

Apologies this is in English!

It is difficult to know level of background (re mining / Philippines)

There should be plenty of time for questions at the end (but please ask / contribute)

Outline

I. International background

II. Mining facts and figures

III. Government / legal background

IV. Issues and Concerns

V. People’s Response

Observations on Mining Industry

John Steinbeck - short story of ‘The Pearl’ & the Philippine’s ‘$1 trillion’ in mineral reserves

Resource curse at work

Experience shows that extractive industries ‘unbalance’ the economy – ‘Dutch Disease’ & encourage corruption and conflict – which is self-reinforcing – and known as the ‘resource curse’

Study by the University of Chile shows conventional economic measures do not take into account of the depletion of (non-renewable) long term resources in the country, let alone the costs in terms of the environment, health or in alternative development models

Is it possible to break the resource curse? Possibly, but with a great deal of work and sacrifice (positive examples include Norway, Chile & Botswana).

Given current starting point in Philippines - no optimism

Top 10 Multinational companies in 1995Company Nationality Capital ($bn) %share in top 100

BHP Australia / UK 24.08 8.35RTZ UK / Australia 13.62 4.73Anglo-American UK (SA) 12.38 4.30CVRD Brazil 9.17 3.18Barrick Gold Canada 8.90 3.09Alcoa US 8.28 2.87CRA Australia 7.97 2.76Alcan Canada 6.65 2.31Placer Dome Canada 6.03 2.09Western Mining Australia 5.90 2.05

Source:James Cappel Global index, 1995

Top 10 Multinational companies in 2010Company Nationality Capital ($bn) %share in top 100

BHP Billiton Australia/UK 209.11 10.45Vale (CVRD) Brazil 165.70 8.28Rio Tinto Australia/UK 135.45 6.77Shenhua China 83.70 4.18Anglo American UK (SA) 60.99 3.05Suncor Canada 58.15 2.91Xstrata UK/Switzerland 57.13 2.85Barrick Canada 40.98 2.05FreeportMcMoRan USA 37.87 1.89NMDC India 37.20 1.86

Source: Barry Sargant, Mineweb – 12 January 2010

Mining industry recovery

Industry has bounced back from low point in late 2008

It is important that the lows were very low – so this is only a relative recovery, mostly based on opportunism, but not many companies went bust – although predicted by Frasier Institute (half the companies on TSX)

It is important that many think we are in a new bubble, mostly based on minerals

The recovery is very fragile – extreme volatility & reliance on China

Most companies are still badly in debt – industry as a whole estimated to be over £50bn in debt, which is a weak position (although have been winners & losers)

Return of ‘CSR agenda’

During the financial crisis CSR in the mining industry was mainly ‘downgraded’

It is now ‘back with a vengeance’ - 2010-11 are to be the years that ‘sustainable mining’ will be discussed at the UN Commission on Sustainable Development

Industry body ICMM working on a number of initiatives, including a flawed process on engagement with indigenous peoples

Climate change is increasingly a big issue for industry & the major players have shifted from a denial position to damage limitation

Human Rights abuses

There has been a growing correlation globally between resource extraction & human rights abuses – it is getting worse e.g.

The current assault of the Indian Government on ‘naxalites’ in the tribal areas in the North-east of the country

Arrests and harassment of anti-mining activists in China & Vietnam

Riots & community confrontations in Panama, Peru & Ecuador

Recent murders of activists in El Salvador, Guatemala & Mexico

UNSRBHR – John Ruggie – notes that the majority of the cases brought to him are on extractive industries

Increase in international work on mining

As there is a growing increase in local concern, there are more local & national groups focussing on mining (or perhaps we are just discovering them?)

International networks are growing & strengthening – on companies (e.g. Barrick, BHP Billiton, Xstrata…) and across the industry – Mines & Communities, FoE Mining Campaign, Extractives and Indigenous Peoples Network

More materials are being produced – and attempts made to summarise / bring together different resources and hand-books

-GoldGold-CopperCopper-NickelNickel-ChromiteChromite-IronIron-bauxitebauxite-MarbleMarble-limestonelimestone

Quantity of Mineral Quantity of Mineral Resources per unit areaResources per unit area

33rdrd in the world for gold in the world for gold 44thth in the world for copper in the world for copper 55thth in the world for nickel in the world for nickel 66thth in the world for in the world for

chromitechromite

Philippine Philippine mineral mineral reservesreserves::

0

10

20

30

1

No. of Operating Metallic Mines (DENR-MGB, Jan. 2010)

2006 2007 2008 2009

16 23 26 29

23 23

32

6265

32

0

10

20

30

40

50

60

70

1 2 3 4 5 62005 2006 2007 2008 2009 2010

No. of Priority Mining Projects (MGB, Jan. 2010)

Scope of Mining Operations

1. 65 priority projects in 2009 (at the peak) 10 are in full operation 5 second-tier development stage 8 in construction stage 8 are in financing (fund-raising) 9 in advanced exploration 23 in early exploration

2. Over 2,000 small-scale mines and quarries – and many more that are unlicensed

3. Increase lately in Philippine capital

Mining Tenements (Sept. 2009)

4 FTAAs (80,502 has.)

297 MPSAs (480,524 has.)

47 EPs (183,172 has.)

Total of 348 mining agreements

744,199 hectares mineralized lands, up from about 515,000 hectares in January 2007, and 722,691 in 2008

Philippine Mining Statistics

Crunching the Numbers Job creation was only at 158,000 in 2008

Actual tax collection was only at 11%

GDP contribution is only 1%

Agriculture GDP contribution is at 16.5%

Minute Economic Contributions of Mining to Philippine Economy Mining gross production value in 2007 was valued at

Php 101.5 billion pesos ($2.2 bn) Government tax collection (in 2007) was at

Php 10.4 billion pesos ($0.23 bn) National Gov’t. (Agencies) collected Php 8.35 bn pesos

($0.18 bn) BIR collected Php 942 million pesos ($20.8 mn) DENR/MGB collected Php 774 million pesos ($17.1

mn) LGUs collected Php 357.9 million pesos ($7.8 mn)

Background - Government Recent legislation 1995 Mining Act (proposed

by GMA as a Senator) Conflicting legislation (IPRA, LGC) Judicial decisions -> reversal of Jan. 2004 SC

decision re constitutionality of certain provisions of Mining Act

Under President GMA, policy shift in 2004 -> from tolerance to “aggressive promotion”

Uncertain position under President N. Aquino

Mining Act of 1995 100% foreign ownership Claim of up to 81,000 has Investment Guarantees

Repatriation of profits Freedom from expropriation Remittance from earnings and

interest on foreign loans Confidentiality of Information

Tax Holiday during recovery of pre-operating expenses for a maximum of 8 years from commercial production

Income tax carry forward of losses

Water rights, timber rights, easement rights

Conflicting laws But it is not just the Mining Act – there are a number

of potentially conflicting laws, the two most important being …

Indigenous Peoples Rights Act of 1997 (IPRA) which allows for FPIC within delineated Ancestral Domains

Local Government Code which allows for local government autonomy (especially re 2 of the 3 relevant LGUs decide on development projects)

La Bugal B’laan case on Mining Act 27 January 2004

The FTAA held by WMCP was declared unconstitutional 1 December 2004

Extraordinary turnaround “We must see the constitution in broad strokes” Climate of anxiety scaring away foreign investors,

therefore SC had to rule with urgency What this means?

100% foreign owned companies are allowed to be involved in the extraction of minerals

SC upholds the Regalian Doctrine Effectively calls for ‘national sacrifice’ for greater good

From tolerance to promotion Under GMA the move to active promotion of

mining took a number of forms…

National Minerals Policy (2003), EO 270-A (2004) & Mineral Action Plan (2006)

“Mining Road Shows” overseas

MGB inside the DENR – you cannot serve two masters

New Administration, Same Old Mining Policies

Appointed Ramon Paje as DENR Secretary

• Increased target mining output from 2009 to 30% for 2010 (Arroyo was 10-20% only)

• Interfered in the South Cotabato open-pit mining ban to pursue a “win-win” solution

Did not act on Mt. Diwalwal mining privatization

Did not reverse midnight mining deals like FTAA in Palawan and MPSA in Camarines Sur (21 MPSA, 2FTAA, 13 EP)

Issued logging moratorium

Cancel 600 mining applications

Background – Concerns Bad legacy on mining issues – pollution issues

Problem of conflicting land use – deforestation

Mining is leading to conflict and human rights abuses

Problems of pollution In 1996 catastrophic failure of tailings (waste) dam

at Marcopper led to 4 million tonnes of waste pouring into BOAC river

Many lesser examples – including Mankayan (Lepanto) & Rapu Rapu (Lafayette), many ongoing

8 tailings dam failures since 2001

Landslides also lead to environmental problems and deaths

TVI sulphide tailings dam collapse - 2007

Rapu Rapu 2005 - Tailings Rapu Rapu 2005 - Tailings overflow along the overflow along the walkways all over the walkways all over the plantplant

• The Philippines has The Philippines has 1818 identified identified major river basinsmajor river basins

• 1313 out of out of 1818 major river basins major river basins have forest cover below have forest cover below 20%20% of of its total areaits total area

Major WatershedsMajor Watersheds

LRC-KsK, irlg 2005

Other risks of Other risks of mining in the mining in the PhilippinesPhilippines

• More than half of More than half of active active concessions and concessions and two-thirds of two-thirds of exploratory exploratory concessions are concessions are located in zones located in zones of high seismic of high seismic riskrisk

Killings of Environmental Activists

This checkpoint is manned by elements of the This checkpoint is manned by elements of the Special Civilian Armed Auxiliary (SCAA)Special Civilian Armed Auxiliary (SCAA)

Company bulldozing homes – Company bulldozing homes – most of the homes are now most of the homes are now cleared cleared

Last house holding out against demolitionLast house holding out against demolition

Councillor Armin Marin, married with 5 Councillor Armin Marin, married with 5 children, was shot dead in a demonstration children, was shot dead in a demonstration by SNPDC’s head of security by SNPDC’s head of security on 3 October 07on 3 October 07

Peoples Response (local) Local alliances (Task Forces in Nueva Vizcaya,

Masbate, CARAGA, Zambo Norte)

Legal actions, such as in Gambang & Palawan

Local government moratoria / open pit bans

Barricades have been set-up in 3 communities (Nueva Vizcaya, Masbate and Surigao del Norte)

Moving towards armed resistance of indigenous B’laan at Xstrata Tampakan mine

Peoples Response (national & international) At national level is filing of Alternative Mining Bills

CERD complaint from community leaders in Canatuan

OECD Complaint through Norwegian NCP

Complaints to UN Special Rapporteurs

Tribal elders who are Tribal elders who are barricading against mining in barricading against mining in DidipioDidipio

Timuay Noval Lambo and Sololing Onsino Timuay Noval Lambo and Sololing Onsino Mato at the United Nations in Geneva Mato at the United Nations in Geneva

LRC-KsK, irlg 2005

Maraming Salamat Po!