Going Down the Drain'

'Going Down the Drain'

Foreign investors asked to withdraw from Arroyo's flagship mining project Philippine environmentalists will bring the controversial Lafayette mining project to international forums and ask foreign investors to withdraw as the operation violates environmental standards and local community rights.

BY BULATLAT, Vol. VI, No. 42 Nov. 26 - Dec. 2, 2006

Environmental activists affiliated with the Defend Patrimony! alliance and Kalikasan-Peoples Network for the Environment (Kalikasan-PNE) Nov. 24 vowed to increase international pressure on mining investors and financial institutions (FIs) involved in the controversial Lafayette mining project in Rapu-Rapu, Albay.

They said that the project clearly violates the social and environmental standards that these FIs supposedly stand for.

In a press conference held at the Ibon Foundation office in Quezon City, Defend Patrimony conveners showed reporters findings by Johan Frijns, coordinator of the international financing watchdog BankTrack.

BankTrack is a network of grassroots organizations and individuals tracking the operations of the private financial sector, such as commercial banks, investors, insurance companies and pension funds, and its effect on people and the planet.

The Lafayette project is financed through a syndicate of banks including ANZ Investment Bank in Australia, NM Rothschild and Sons of the United Kingdom and the Australian branch of ABN AMRO Bank NV.

Trixie Concepcion, Defend Patrimony! spokesperson, said that the alliance will ask the investors funding Lafayette Mining's operations to withdraw their support.

Pull out

"The FIs propping up Lafayette's operations should concretely manifest their commitment to advocating environmental and social sustainability by pulling out their support for Lafayette, which has clearly violated environmental standards and local community rights," Concepcion said.

Defend Patrimony is a multisectoral alliance opposing government's mining liberalization program of the government and calling for the closure of Lafayette.

Concepcion said that it would do ABN Amro and ANZ investment bank good to adhere to the Collevecchio Declaration, endorsed by over 200 grassroots organizations, which calls on FIs to embrace six commitments (to Sustainability, to Do No Harm, to Responsibility, Accountability, Transparency, and Sustainable Markets and Governance) and take immediate steps to implement them as a way for FIs to retain their "social license" to operate.

The spokesperson said that the Arroyo government has been giving Lafayette much leeway over their operations despite their adverse negative effects on the small island ecosystem and local populace.

"Three extensions of the Lafayette's test run are way too much. The DENR is giving Lafayette too much slack and the general welfare of the local community and environment in the process," she said.

Losing, destructive, and controversial

Clemente Bautista, Kalikasan-PNE national coordinator, said that it was no use for investors to support a losing, destructive, and controversial venture such as Lafayette's polymetallic project.

"Based on the Annual Financial Report of Lafayette (released last Sept. 29), the company recorded a consolidated loss as of June 30, 2006 of Aus$111,034,348 or 17.8 cents per share," Bautista said. "According to the report this loss includes an amount of Aus$83,130,033 which is attributable to the accounting of losses on base and precious metal hedge contracts."

The report also stated that Lafayette Group's consolidated Balance Sheet as of June 30 this year, disclosed a net working capital deficiency of Aus$89,748,451 and a deficiency of net assets of Aus$172,202,840.

"Lafayette continues to bleed profusely, is now on the brink of bankruptcy, and has no capital to finance its own mining operation. It is actually the Philippine government through the DENR with its lax monitoring and control of Lafayette's operations that is serving as its guarantor to its investors. As the Arroyo government inexplicably refuses cancel their mining permit, investors should take the initiative to pull out," he said.

'Going down the drain'

Bautista also said that government's so-called flagship mining project "is going down the drain" and its expectation that the Lafayette's Polymetallic Project would generate millions of pesos of taxes does not hold water.

"Lafayette, in effect, has been using our precious mineral resources which it still has to mine as collateral to its foreign financiers through hedge contracts. As of June 30 this year, it accumulated a debt of US$11,607,143 (Php638,392,865) and obligated to settle additional base metal hedge contracts that matured last September 29 which is approximately US$13 million or Php650,000,000.00," he said.

Sorsogon Bishop and Rapu-Rapu Fact-Finding Commission (RRFC) chairperson Arturo Bastes said that 'he was saddened over the Arroyo government's non-implementation of the RRFC's conclusions and recommendations."

"We fear that the situation in Lafayette will worsen and that more mining tragedies and accidents will happen as President Arroyo pursues the destructive policy of mining liberalization and program for Charter Change," Bishop Bastes said.

Those present at the press conference vowed to bring their calls to their international network.