An Open Letter on Minerals and Investment Policy in the Philippines

An Open Letter on Minerals and Investment Policy to all Incumbent and Aspiring Government Leaders

On the Eve of the Anniversary of Republic Act 7942, the Mining Act of 1995 (as of 4 March 2004)

Nine years since the promulgation of Republic Act 7942, a heavy blow has been dealt the advocates of a policy which treats foreign capital infusion as the sole remedy for the ills of the country’s large-mining industry. Just as the government of President Gloria Macapagal Arroyo was completing its preparations for the implementation of a National Minerals Policy that would accelerate the processes through which transnational interests could gain control of, and presumably reform, Philippine mining, the Supreme Court declared unconstitutional and void the main instrument of foreign capitalist access to large mineral deposits in the Philippines – the Financial or Technical Assistance Agreements provided for in the Mining Act of 1995.

The Supreme Court decision regarding FTAAs underscores the commitment of the authors of the current Philippine Constitution to the protection of the national patrimony against foreign usurpation. It also underscores the intention of the authors of the Constitution to eliminate the legal loopholes that have enabled transnational exploitation of the country’s mineral wealth.

But holding back from declaring the entire Mining Act unconstitutional, and instead limiting its decision to the matter of FTAAs, the Supreme Court left a loophole open to foreign exploiters – partnership with Filipino interests that could legally enter into Mineral Production Sharing Agreements with the Philippine state.

It is by virtue of such partnerships that foreign firms are able to take control of the mining operations of Filipino companies – such as Anglo-American has achieved with Philex. Besides these partnerships, financing agreements and technical consultancies also serve as channels through which foreigners garner super-earnings from Filipino mining operations – such as those of Lepanto, whose workers have helped provide the gold that now lines the pockets of Rio Tinto executives, and of bankers like Dresdner and NMRothschild.

Large mining in the Philippines undeniably lacks domestic sources of capital and thus leans heavily on foreign powers in industry and finance. Requiring huge returns on investment, and thus demanding high productivity, foreign capitalists have pushed Filipino firms to extract minerals intensively, with little regard for the future ecological and economic viability of this country, or even for the rights of the communities and the workers that the pressures of mineral production currently affects.

The complex of problems raised by the situation of large mining in the Philippines requires not a desperate but a carefully thought-out minerals and investment policy that takes into consideration both present needs, and the need to protect and conserve our natural resources as a patrimony on which depends the survival of future generations of our people.

As the Supreme Court deliberates the Motion for Reconsideration filed in regard to its decision on FTAAs;

As the government of President Gloria Macapagal Arroyo considers how it shall move to salvage its minerals policy;

As nation prepares to choose its next leaders in the coming elections –

We, the undersigned, call on

1. The Supreme Court to stand firm in its commitment to the Constitution and the safeguards that it provides our country’s people and its resources;

2. President Gloria Macapagal Arroyo and her government – and particularly the Department on Environment and Natural Resources – to abide by the decision of the Supreme Court;

3. Incumbent and future legislators at both the national and local levels to junk the Mining Act of 1995 and forge new national as well as local policies on mining and investments that are nationalist and pro-people.

Cordillera Peoples’ Alliance for the Defense of Ancestral Domain and for Self-Determination

with its sectoral affiliates:

Alyánsa dagiti Pesánte iti Taéng Kordilyéra

Kilusang Mayo Uno sa Kordilyera

Innabuyog-Gabriela