In this age of climate change awareness, it’s hard to be in the business of extracting natural resources, from fossil fuels to forest products and minerals.
It’s even harder when your company is operating in a country that has been traumatized by the practices of previous industry players.
Even for Filipinos with short memories, 13 years is not long enough to forget the environmental disaster in Marinduque that resulted from the mining operations of Marcopper and its parent firm, Canada’s Placer Dome (now controlled by Barrick Gold Corp.). The Boac River is dead, and Marinduque residents continue to suffer from illnesses that they believe were caused by exposure to toxic waste from the mine.
Over in Albay, environmental activists continue to protest against the open-pit mining operations of Lafayette Philippines, an Australian company that was sold to Korean and Malaysian firms last year, for polluting rivers and Albay Gulf and causing health problems for residents.
If it’s not an environmental controversy, it’s a corruption scandal. Chinese companies in particular, including ZTE of the broadband network notoriety, have been suspected or accused of resorting to bribes to win mining concessions in the Philippines.
Such problems make operating in the Philippines doubly hard for the mining companies that are trying to improve public perception of the industry through best practices.
Despite the difficulties, foreign mining companies have been encouraged by the enactment of the Philippine Mining Act of 1995 or Republic Act 7942, and the Supreme Court’s upholding of its constitutionality a decade later.
Mining investments, actual and committed, account for a significant chunk of the country’s economic growth figures.
What Filipinos must do is make sure that mining firms comply with the country’s environmental laws. When they see that a government means business and is prepared to enforce the law, they do comply. That’s what the chief executive of the Chamber of Minerals and Energy (CME) in Western Australia, Reg Howard-Smith, told me during my recent visit to the state capital Perth.
At CME headquarters, the industry buzzwords are “responsible, sustainable, engaged, relevant, smart and significant.” The chamber wants the government and the public to understand the importance of the resources sector to the state and support its growth and sustainability.
Australia allows 100 percent foreign ownership of mining operations in the country. Howard-Smith told me that they’ve had no problems with any Chinese company in terms of compliance with Australian mining and environmental rules.
Mining disasters around the world have led to a sea change in Australian mining operations, he said, with rules now covering even environmental and community rehabilitation including reforestation after mining operations are over. Those changes started only about three or four decades ago.
Among the recent innovations is the use of microorganisms to consume tailings, which can be used for the cement industry.
The best practices and adherence to rules rub off on foreign companies doing business in Australia.
Jocot de Dios, who must be the only Filipino CEO of a publicly listed company in Australia, Nido Petroleum Ltd., told me in Perth that the company’s offshore oil exploration activities are accompanied by marine impact assessments and measures to prevent environmental degradation.
Nido, in partnership with the Philippine National Oil Co., is developing oil and natural gas sites offshore of Palawan.
Mike Norton, president of the Western Australian Farmers Federation, told me that the green bloc is “very influential” in Australian politics, and swing voters are typically “very green,” putting pressure on their government to ensure that companies pursue environment-friendly practices.
“We operate with some of the best standards,” Howard-Smith told me.
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An Australian company, Red5 Limited, is showing those standards in the Siana gold project in Surigao del Norte.
The mineral production sharing agreement for the site, held by Greenstone Resources Co., was granted in 2002. Since then Red5, a publicly listed company in Australia with over 1,700 shareholders, and its partners Merrill Crowe Corp. and Surigao Holdings & Investment Co. have spent some A$24 million to bring development to the mining site that covers 33 square kilometers. The company expects to directly employ 700 workers once actual operation starts, with 6,000 additional jobs downstream. It estimates taxes, fees and duties over the life of the mine to amount to P6.8 billion.
Geologist Allen Lance Govey, Red5 and Greenstone technical director, has been shuttling between Manila and Perth for several years now to lay the foundations not just for the mining operations in Siana but also for obtaining community support for the project.
“You must have good community relations from the very beginning,” Govey told me in Perth. “It has to be a partnership between the community and the company.”
That partnership is grounded on transparency. Residents in the mining area, where open-pit and underground mining will be conducted, are regularly briefed on exploration activities and how the actual mining operations will be carried out, what will be done with mine tailings, and rehabilitation plans once the mining operations — estimated to last 12 years — are over.
Govey told me that a dam would be constructed to contain an estimated three million tons of tailings from the open pit, which can later be covered with topsoil and used for grazing or similar purposes.
Tailings from the underground mine will be buried in cement enclosures.
As part of confidence-building measures, the mining company has virtually taken on the functions of government in the affected villages.
It has built and repaired roads, installed a water treatment facility that has brought piped fresh water to households, set up schools and an emergency clinic with an ambulance, donated service vehicles to the local government, provided clothing to children, and conducted civic missions such as school feeding and de-worming. It built playgrounds on three sites, repaired a church and sponsored activities such as tree planting and sporting events.
Govey estimates that their expenditures would run up to $80 million before actual mining starts early next year. The company received its environmental compliance certificate last April. The operations are expected to yield approximately 850,000 ounces of gold, he said.
In the next 10 years, the company plans to invest P128.3 million on a “social development management plan” that includes programs for human resource development and institution building, respect for cultural values, solid waste management, peace and order, health, infrastructure and livelihood.
The underlying idea is that prosperity allows for effective environmental stewardship. After those mining disasters, we wait for the Australians to surprise us with their avowed best practices.