The Market Monitor Minding the Nation's Business
By Riza Lozada
Trade groups and civic organizations are clashing head-on over the order of the Department of Environment and Natural Resources (DENR) to cancel nearly one quarter of the nation’s mining operations.
Environment Secretary Gina Lopez announced Tuesday she would cancel 75 of the nation’s 311 mining contracts, as well as the environmental compliance certificate (ECC) of the planned $5.9-billion Tampakan copper and gold project. The Chamber of Mines of the Philippines (CMP) said it would fight Lopez’s decision, saying the order threatened $22-billion worth of projects.
The contracts are for projects in the pipeline but are not yet operating. “She’s out to kill the industry. We do not see a future for us under her,” CMP Vice President for Legal and Policy Affairs Ronald Recidoro said.
Strong concern
The influential trade groups Philippine Chamber of Commerce and Industry (PCCI) and the Philippine Exporters Confederation (Philexport) are backing the CMP; both said the closure orders would have a major impact on jobs, exports and supply chain. Philexport indicated its “strong concern” over the DENR directive warning the government of “serious economic repercussions.”
Philexport President Sergio R. Ortiz-Luis Jr. said the new order of Environment Secretary Lopez to cancel 75 more mining contracts was “highly alarming.” The PCCI said both the local and foreign trade and investments communities would have second thoughts about doing business in the country as a result of the DENR order.
“Due process and multi-stakeholder reviews were guaranteed by DENR Secretary Lopez herself and other MICC (Mining Industry Coordinating Council) members just days before the new cancellations orders,” PCCI President George Barcelon said. “She herself signed the MICC resolution and now it is not being followed,” he added.
Unclear rules
“How can a company risk stockholders’ money in projects if the investment rules are unclear and uncertain,” Barcelon said. “Business needs confidence that rulemakers would honor contracts.”
He said the resolution of the MICC, which Lopez co-chairs with Finance Secretary Carlos Dominguez, was clear in installing a multi-stakeholder review of the results of DENR audits of compliance with mining rules and regulations.
Lopez, appointed by President Duterte last year, has railed against what she insists are the environmentally destructive and exploitative practices of local and foreign miners in the Philippines.
“Water is life. If you put at risk the water supply of the community there, you are putting at risk the quality of life of the people,” Lopez said.
Earlier, Lopez also ordered the closure of 23 existing mines and the suspension of five others, saying they encroached on watersheds, leaked waste into rivers and destroyed trees.
The Philippines is the world’s top supplier of nickel ore and main exporter to China, and the government actions have impacted global metal prices.
Legal measures eyed Lopez said mining companies would be given seven days to explain before the cancellation of the 75 contracts were carried out.
However, the mining industry has warned it will take all legal measures to fight Lopez’s moves, which are widely expected to be brought before the Supreme Court. Mining firms accused Lopez of breaching contracts and asked Congress to reject her confirmation as environment secretary.
The Tampakan copper-gold project in the southern Philippines had already been stalled by regulation hurdles, including a local government ban on open-pit mining. Recidoro warned the DENR order would be a huge blow for the local economy.
“This will lead to the loss of what will probably be the biggest employer in the area,” Recidoro said. IBON upholds Lopez
The research group IBON, however, disputed the claims of the mining industry that the closure orders would have a huge impact on the economy. IBON said that while mineral exports hit a high of $3.4 billion in 2013, mining contributed a measly 0.7 percent to gross domestic product (GDP) in the same year.
“The sector’s contribution grew to this level only from 0.5 percent after more than a decade of operations,” it said. The annual average share of mining revenues to total government revenues in 2009 to 2012 was only 1.18 percent, the group added.
“The contribution of the mining and quarrying sector to employment was also negligible at 0.7 percent of total employment,” it added.
The think-tank added that more than 90 percent of Philippine mineral production is exported for use by other countries’ steel industries while the country has none.
“This, despite the Philippines being one of the world’s top producers of gold, copper and nickel,” it noted.
Appeal to President
“The government should uphold the mining ban, and be wary of opposition coming from certain members of the cabinet involved in the mining sector, which could derail efforts to advance the people’s interests,” it added.
Finance Undersecretary Bayani Agabin, who heads the Department of Finance (DOF) Legal Services Group, nonetheless, said companies affected by the recent DENR order could appeal to the President.
The MICC has issued Resolution 6 signed by both Lopez and Dominguez that recognizes the requirements of due process in the applicable mining laws. One of the country’s pioneer and biggest mining company, Lepanto Consolidated Mining Company (LC), vowed to file a notice of appeal with the Office of the President.
DMCI wholly owned nickel mining unit DMCI Mining Corp. said it would seek legal redress against the DENR in its order to suspend the operations of Berong Nickel Corp. (BNC) and Zambales Diversified Metals Corp. (ZDMC)
“ZDMC and BNC shall seek redress from the subject DENR Orders raising, among other things, the lack of due process and legal bases for the issuance of the same. This shall be done at the soonest possible time and within the period set by law,” DMIC reported to the Philippine Stock Exchange (PSE). Cause-oriented groups for Lopez Cause-oriented groups defended Lopez’s hard-line position against mining operations.
“Despite the destruction, protests, and human-rights violations throughout the years, none of her predecessors in DENR had the guts to go against big mining interests,” Bayan Muna Rep. Carlos Isagani Zarate said.
In a statement, Gabriela Party Rep. Emmi de Jesus said the Philippines, having been mined for decades, has “had tragic experiences of rivers and reservoirs being damaged and made toxic due to mine operations all over the country.”
Filipinos lose not just their water, minerals, lands and forests due to mining. According to Gabriela Rep. Arlene Brosas, “the people’s defense of their lands from environmental plunder has resulted in the deaths of tribal leaders and anti-mining activists.”