Mining: illusory economic gains

Resistance against large-scale mining is gaining ground (Photo from ucanews.com)

On Mar. 3 (Saturday), anti-mining advocates will mark the anniversary of the Philippine Mining Act (enacted on Mar. 3, 1995) with a protest march from the University of Sto. Tomas (UST) to Mendiola Bridge in Manila. Participants will include delegates from various regions nationwide who are attending the two-day National People’s Mining Conference which starts today (Mar. 1). The protest march is the culmination of a weeklong series of activities against mining plunder organized by environmental and anti-mining groups.

New mining EO

The intensifying resistance from local mining communities to national organizations and support groups has forced the Aquino administration to promise a supposedly new mining policy. But Malacañang has yet to release the executive order (EO) for the new policy which was expected by end-February. Apparently, strong lobbying from the mining industry led by the Chamber of Mines, Philippine Mining Exploration Association as well as the Joint Foreign Chambers of Commerce is delaying the issuance of the EO whose initial draft reportedly contained unfavorable provisions for mining investors. What is clear is that the new policy is still framed within the neoliberal Mining Act, as assured by Executive Secretary Paquito Ochoa, and thus dims hope that the plunder, destruction, and maldevelopment that mining perpetuates will be substantially addressed.

P37-trillion mineral wealth

Meanwhile, as if to add to the pressure not to reverse current mining policies, the US State Department in its background note on the Philippines released last Jan. 17, 2012, noted that the country has about $840 billion (about P36.64 trillion at P43.62 per US dollar) worth of mineral wealth. However, such resources that include some of the world’s largest gold, copper, and chromate deposits remain untapped with the State Department noting that the Philippine mining industry is just a fraction of what it was in the 1970s and 1980s. It also said that while the Supreme Court (SC) upheld the constitutionality of the Mining Act in a Dec. 1, 2004 decision, some local government units have banned mining in their areas.

Increased mineral exports

Proponents of the Mining Act argue that since the SC allowed the operation of 100% foreign-owned mining companies, the industry has seen a jump in foreign investments and export earnings. Indeed, mineral exports grew by 27.9% every year from 2005 to 2010 while the annual growth rate in its share to total export earnings also grew by almost 21.1% during the same period. These numbers are a dramatic improvement from negative growth rates recorded in the 1980s and 1990s. (See Charts 1 & 2)

Growing foreign investments

Foreign equity has also climbed both in value and as a percentage of total paid-up investment in the sector. Although lower than its average in the 1990s (202.77%), the annual growth rate of foreign equity in mining remained robust in the 2000s (130.9%), especially in 2005-2008 (146.04%). Meanwhile, the annual growth rate of foreign equity’s share to total paid-up investment in mining increased from 76.69% in the 1990s to 317.74% in the 2000s (and in 2005-2008, to 237.12%). Also, the percentage share of foreign equity to total paid-up investment in mining improved to 14.25% in 2005-2008 from 9.7% in 2001 to 2004. FDI data from the Bangko Sentral ng Pilipinas (BSP) show that from an annual average of $20.99 million in 1999-2004, FDI in mining and quarrying jumped to $104.32 million in 2005-2010.

Insignificant share to economy

However, despite these supposed “developments”, mining continued to fail to contribute to industrialization. The contribution, for instance, of mining’s gross value added (GVA) to the country’s gross domestic product (GDP) even declined this decade compared to its long-term average from the 1960s to 1990s and did not show significant improvement even after the SC declared the Mining Act constitutional in 2004. (See Chart 3)

Chronic trade deficit

Though exports of mostly raw minerals grew substantially, the Philippines continued to rely on the importation of processed mining-based products for our own industrial needs, resulting in a perennial mining trade deficit. Data from the BSP show that from 1990 to 2010, the balance between Philippine mineral exports and imports of mining-based products (i.e., metalliferous ores, non-metallic mineral manufactures, iron and steel, non-ferrous metals, and metal products) averaged a negative $1.17 billion a year. (See Chart 4)

Negligible job creation

Other much-hyped economic benefits like employment and government revenues, meanwhile, were also negligible especially when measured against the social and environmental costs of large-scale mining operations. Data from the MGB and the Department of Labor and Employment (DOLE) indicate that the employment in the mining and quarrying sector is growing by a small 1.17% annually in 1990-2008 as compared to the yearly growth in total employment in all industries of 2.53% during the same period. Employment growth in mining and quarrying, however, did accelerate in 2000s at 5.41%, and especially in 2005-08 with 7.65 percent.

But as a percentage of total employment, mining and quarrying declined from 0.49% in the 1990s to 0.40% in 2000s, although in 2005-10, its share to total employment is higher (0.47%) as compared to its 1990-2004 average (0.44%). In the past two decades, mining and quarrying employment has only contributed an average of 0.44% to total annual employment. (See Chart 5)

Meager government revenues

Data from the MGB and the Department of Finance (DOF) show that the share of revenues from fees, charges, and royalties collected by Department of Environment and Natural Resources (DENR)-MGB; excise tax collected by Bureau of Internal Revenue (BIR); taxes collected by national government agencies; and taxes and fees collected by local government units (LGUs) to total state revenues remained insignificant at just 0.5 percent.

The minimal tax revenues and royalties that the mining industry yields are blamed on the Mining Act itself. It has been pointed out that the State, which supposedly owns all mineral resources in the country as stated in the 1987 Constitution, does not get any share in the profits of mining companies. The only government share is the 2% excise tax on metallic and non-metallic minerals (mandated under the Mining Act). In his dissenting opinion in the 2004 SC decision upholding the constitutionality of the Mining Act, Justice Antonio Carpio argued that “The excise tax is not payment for the exploitation of the State’s natural resources, but payment for the ‘privilege of engaging in business’… the State must receive its fair share as owner of the mineral resources, separate from taxes, fees and duties paid by taxpayers.  The legislature may waive taxes, fees and duties, but it cannot waive the State’s share in mining operations.” (As cited by economist Winnie Monsod in her Philippine Daily Inquirer column.)

Now, juxtapose these illusory economic gains from neoliberal, export-oriented mining to the well-documented and very real cases of environmental destruction and physical, cultural, and economic displacement of indigenous and peasant communities, not to mention the extrajudicial killings that are associated with large mining operations. Clearly, what we need is more than a new mining EO but a deep and far-reaching reorientation of the mining industry. #

Mining and climate change: Aquino’s policy incoherence

The Aquino administration assures the public that it is proactively dealing with climate change but continues to promote programs like large-scale mining that aggravate the adverse impact of extreme weather events (Photo from facebook.com)

First published by The Philippine Online Chronicles

What caused the massive flooding in the provinces of Central and Northern Luzon, several of which remain submerged more than a week after  typhoons Pedring and Quiel left the country? Elderly village folks in affected areas swear that they have not seen such flooding before, that what happened was abnormal. For this, the catch-all explanation of the Department of Science and Technology (DOST) is climate change. “What we consider as abnormal we should now consider as normal,” its undersecretary was quoted as saying.

But the Aquino administration assures the public that it is proactively dealing with the issue of climate change. In fact, President Benigno S. Aquino III has made Climate Change Mitigation and Adaptation as one of the five Cabinet clusters that will implement his programs until 2016. In Aquino’s proposed 2012 budget, P36.2 billion is allocated for climate change adaptation and mitigation activities.

Priority area

Ironically, however, the Aquino administration also continues to promote programs that aggravate the vulnerability of the country to the adverse impact of climate change. One example is large-scale mining, which is among the priority areas of government’s Philippine Development Plan (PDP) 2011-2016. While the PDP talks about linking the mining industry to the domestic production of manufactured goods and industrial products, its ultimate goal is to double the sector’s exports by 2016.

The importance that Malacañang gives to the mining industry as among the sectors with the “highest growth potentials and generate the most jobs” explains its strong reaction to the simultaneous attacks on three mining firms in Surigao de Norte last Oct. 3 by the New People’s Army (NPA). The rebels cited the serious harm to the environment being inflicted by the large-scale mining operations in the province as one of the main reasons for staging the attacks.

Massive deforestation

Mining contributes to both the cause and effect of climate change. The Philippines is considered one of the most mineralized countries in the world (third in gold, fourth in copper, fifth in nickel) due to its location along a belt of volcanoes in the Pacific. According to the Mines and Geosciences Bureau (MGB), an estimated “nine million hectares of the Philippine total land area of 30 million hectares are geologically prospective for metallic minerals”. But much of these areas lie underneath the country’s forests, which have to be cleared to extract the minerals, resulting to massive deforestation. It has been reported that the Philippines ranks number three in the world (behind Honduras and Nigeria) with the fastest deforestation rate. The Center for Environmental Concerns (CEC) Philippines, citing government data, said that the country’s forest cover is just about 18% of the total land area.

Together with corporate logging, large-scale mining is behind the significant deforestation in the country. The forest cover in the town of Claver in Surigao del Norte, where the target of the recent NPA offensive –Taganito Mining Corp. (TMC), Taganito HPAL Nickel Corp., and Platinum Group Metals Corp. (PGMC) are operating – is just one in a long list of forests denuded by large-scale mining. Generated through Google Maps, a satellite image of Claver where TMC operates shows a vast portion of the mountains in reddish hue, indicating massive deforestation.

A recent documentary by the GMA’s “Reporter’s Notebook” also presented the extent of environmental damage, including deforestation, caused by the mining operations in Claver as well as in Surigao del Sur. The GMA report said that the massive mining in Claver has almost leveled the mountains with the extracted minerals being exported to Australia, China, and Japan for processing.

Aggravating climate change

The clearing of forests is one of the factors behind global climate change as forests store huge amounts of carbon. According to the Greenpeace, “when forests are logged or burnt, that carbon is released into the atmosphere, increasing the amount of carbon dioxide and other greenhouse gases and accelerating the rate of climate change. So much carbon is released that they contribute up to one-fifth of global man-made emissions, more than the world’s entire transport sector.”

In the Reporter’s Notebook documentary on mining in Claver, reporter Jiggy Manicad noted the thick blanket of dust from the mining areas. Environmental advocacy group World Rainforest Movement (WRM) pointed out that this dust does not only pollute the air and causes serious health problems but also triggers a release of gases and toxic vapor, including “sulphur dioxide – responsible for acid rain – is produced because of metal treatment, and carbon dioxide and methane – two of the main greenhouse effect gases causing climate change – are also released, due to the burning of fossil fuels and the creation of artificial lakes for the hydroelectric dams, built to provide energy for the casting ovens and refineries.”

Of course, the amount of GHG emissions of the Philippines, including from deforestation, is dwarfed by the emissions of the world’s largest industrial countries. The US alone accounts for 25% of historical GHG emissions, according to the Friends of the Earth (FOE). Furthermore, much of the GHG emissions of poor countries actually come from the operation of First World companies plundering the natural resources of poor countries such as in the case of the Claver mines where Japanese giant mining company Sumitomo Metal Mining Co. has stakes in the TMC and Taganito HPAL Nickel Corp. Nonetheless, it does not downplay the incoherence in the Aquino administration’s proclaimed environment-conscious medium-term plan and its avowed promotion of supposed “development” programs that worsen climate change such as large-scale mining.

Worsening impact

But for Third World countries like the Philippines, the bigger concern is how deforestation and other environmental problems caused by large-scale mining increase the vulnerability of communities to extreme weather events such as unusual volume of rainfall (like typhoon Ondoy in 2009, which according to local weather officials poured a month’s volume of rain in barely six hours) due to climate change. Deforestation, for instance, aggravates flooding in rural and urban areas, which in the Philippines has become increasingly worse and more frequent. Forests play a crucial environmental role in preventing  floods. A report said, quoting the findings of a research conducted by the Charles Darwin University and the National University of Singapore, that “as little as 10% loss of forest cover leads to an increase of as much as 28% in flood risk.”

Another way that large-scale mining aggravates flooding is the siltation of rivers. One source of sediments are the tailings disposed by mining companies in rivers such as in the case of the Abra River that according to the Cordillera People’s Alliance (CPA) has become heavily silted because of the tailings disposal of Lepanto Consolidated Mining Company. As a consequence, an estimated 465 hectares of riceland have been washed out, the CPA claimed. Experts have also attributed the heavy flooding in Centra Luzon, aside from the ill-timed release of water from privatized dams, to the siltation of rivers due to denuded mountains in the region, which also hosts a number of mining operations.

Not a recent concern

Contrary to the common notion, climate change is not a recent concern of the government. In fact, the Philippines was among the first to recognize, at least on paper, climate change as a phenomenon and the urgent need to address its causes and mitigate its impact. As early as 1991, Noynoy’s mother, the late President Cory Aquino has already created the Inter-Agency Committee on Climate Change (IACC) through Administrative Order (AO) No. 220.  The Philippines was also among the first to ratify the United Nations Framework Convention on Climate Change(UNFCC), which it did in 1994.

These initiatives suffer from basic defects such as the promotion of market-based mechanisms to mitigate climate change (e.g. allowing rich countries to buy cheap emission credits from poor countries which allow industrial countries to evade their responsibility to cut down their own emissions) as well as low emission reduction targets. Worse, as a result of lobbying and pressure from First World corporations and financial institutions and their local agents, Third World countries like the Philippines continue to implement programs that allow the wanton corporate plunder of natural resources and enormous destruction of the environment. A year after ratifying the UN agreement on climate change, for instance, the Philippine Congress passed the Philippine Mining Act of 1995 or Republic Act (RA) 7942, which liberalized and consequently intensified large-scale mining in the country.

Two decades since the country officially acknowledged the challenge of climate change, there is no indication that government is willing or capable to promote development programs that are truly sustainable and responsive to the country’s environmental and social concerns and economic needs. #