Government Moves To Boost Mining Industry

Gov't Moves to Boost Mining Industry

The recently concluded Prospectors and Developers Association of Canada (PDAC) 2006 Mining Convention held at the Intercontinental Toronto Centre proved to be an occasion for the Philippine government to make its presence felt in the mining industry.

BY EDWIN C. MERCURIO, Bulatlat - Vol. VI, No. 7

19th - 25th March 2006

TORONTO, Canada – Mining can boost the country's economy.

In an interview, Environment Secretary Angelo Reyes said that the Mining Act of 1995 whose constitutionality was upheld by the Supreme Court is a boon to the Philippine economy. He said that the country has "a strategic geographical location for those looking to sell in Asian markets of Japan, China, Korea and neighboring countries."

"Mineral reserves are present in the country and we have gold, copper and nickel," Reyes said. "We have the workforce with competent skills to support the mining industry, legal backing and framework with the Supreme Court legalizing the Mining Act and the Presidential Executive Order 270 which sets a clear road map for the development of the mining industry."

Reyes added that the RP "government has targeted 24 major and medium mineral projects for development in the next five years at a total investment of over $8 billion in 2013." As of December 31, 2005, the total number of mining rights issued by the national government was 762.

Indeed, the mining sales pitch is now massive. According to media observers and participants of the Prospectors and Developers Association of Canada (PDAC) 2006 Mining Convention held at the Intercontinental Toronto Centre from March 5 to 7, "the Philippines is all out campaigning and has lately made its presence felt in the mining industry."

Is the Philippines up for sale?

If the government and large-scale miners will have their way, the Philippines will be the "world's number 4 in gold, number 6 in copper and number 7 in nickel production," said Artemio Disini, chair of the Chamber of Mines of the Philippines and president of Natural Resources Mining Development Corporation. "It will also uplift the livelihood of lowland communities and highland indigenous communities who will be benefit from the one (1%) share of the profits from these foreign investors."

According to the March 2006 issue of the London-based Mining Journal, the Philippines is "well endowed with mineral resources, and its long history and experience in mining has demonstrated its very rich potential for copper, gold, nickel, chromite and other metallic minerals. It has also abundant industrial minerals, such as marble, limestone, clays, feldspar, rock aggregates and dolomite."

Among the major players in the Philippines are Crew Minerals AS operating a nickel project on Mindoro Island, Apex Mining Co (recently acquired by Crew Gold Corp and Mapula Creek Mining Corp), Benguet Corporation (which operates under Ampucao Copper Porphyry Project, Kingking Copper Gold Project, Kingking epithermal gold project, Santa Cruz nickel project, Pantingan Epithermal Gold Prospect), Climax Mining Ltd., Coral Bay Nickel Corp., Indophil Resources NL (Tampakan copper-gold project), Lafayette Mining Ltd. (Rapu-Rapu mining), Mindoro Resources Ltd and TVI Pacific Inc., a Canadian Mining Company operating at Canatuan and Balabag.

Gavan Collery, Manager-Corporate Affairs of the Indophil Resources NL (Sagittarius Mines, Inc.) said that his company recognizes that its Tampakan Mining Project in South Cotabato is the "largest underdeveloped copper-gold resource in Southeast Asia with 8.9 million tons copper and 11.6 million ounces of gold (0.3% copper COG) with significant higher grade zones."

Indophil's North American Investor Briefing added, "There is excellent potential for increased resources, new exploration initiatives are in place and pre-feasibility study is in progress."

The Tampakan project is situated some 50 kms. north of General Santos City in South Cotabato province which is home to six tribal communities such as the T'boli, B'laan, Kalagan, Ubo, Manobo and Tasaday with the mining sites presently situated in tribal ancestral territory of the B'laans.

"At least five B'laan datus (tribal chieftains) have agreed to allow mining in their ancestral abode, namely, datus in Pula Bato, S'bangken, Tablue, Datal Biao and Danlag," Collery said. The Indophil project locations are in Tampakan, Cu-Au Deposit, Columbio FTAA, Hillcrest FTAA Aplication and Southcot EPA.

Columbio FTAA is a partnership agreement between Sagittarius Mines Inc. and the Philippine government. Sagittarius equity includes 60% of Tampakan Group of Companies and 40% of Indophil and Alsons Corporation.

Indophil has conducted 200 exploration holes from the surface and projects a development cost of $1 billion. The project, according to Collery, will last 40 to 50 years and will have a payback after seven years. "With the market value of gold at $450/ounce and copper at $2.50/pound, the Tampakan Project is a promising investment," he added. In October 2005, the company had five drill rigs on site and will start production in 2010.

Environmental problems

Disini said that the danger of toxic spills and pollution caused by mining is minimal. He handles all government contracts with mining and his responsibility includes bidding out the mining sites and calls this "a joint venture between the government and the private sector – for profit." His other responsibility, he said, is checking the records of companies for adherence to sound environmental practices, safeguards and commitment.

With regard to the toxic spill at the Rapu-Rapu mining site of La Fayette Mines, Ltd., Disini said, "There where only 10 kilos of fish that were affected in Rapu-Rapu mine spill and it was not a big health issue."

"Marcopper (Placerdome) paid $70 million to clean up the toxic spills in Calancan Bay and nature has a way of cleaning up the environment. When the rains came all the toxins and pollutants were washed away downstream and into the sea," Disini said. "The Department of Health came out with something but it really was not a big issue. Today, marine life has returned to Calancan Bay. Nature has a way of cleaning the environment."

Will mining ease the RP government budget woes?

Last September, President Gloria Macapagal-Arroyo, signed the national policy agenda to revitalize mining in the country as detailed in the Mineral Action Plan (MAP). According to Kalikasan – People's Network for the Environment (K-PNE), this is the start of a "frenzied rush to mine all Philippine mineral resources."

K-PNE national coordinator Clemente Bautista scored government claims that MAP's implementation would lead to a more prosperous minerals industry that could help ease the government's budgetary and fiscal woes. "The liberalization of the mining industry, which MAP is all about, will worsen the fiscal crisis."

The MAP allows 100 percent repatriation of capital and profits, a 10-year tax holiday, capital tax exemptions, duty-free importation of equipment and machinery and other rights and privileges that tend to trample upon rights of host communities and the wanton disregard of the environment. It also shortens the processing time for mining applications by downgrading the participation of local government units in approving mining projects in their respective areas and harmonizing conflicting laws such as the Indigenous People's Rights Act (IPRA) with the Mining Act.

Bautista said that these erroneous economic policies are one of the major reasons in the government's low revenue collection and a ballooning budget deficit.

The Bureau of Treasury records as of September last year revealed that the Philippine has a budget deficit totaling P4.02 trillion ($78.76 billion, based on an exchange rate of P51.04 per US dollar).