Mining here and in other countries

I attended the annual mining conference of the Chamber of Mines held in Sofitel from Monday to Thursday and listened to speakers from government and private sector. As they spoke I realized that although their rhetoric was about differences, they were really saying the same thing.  

Both were for responsible mining. But they were trapped in the rhetoric of their positions with those from government bent on regulation (unfair and officious to the miners) and the miners seeking the space for progress (reckless and unmindful of environment according to government and anti-mining advocates).

As I walked out I met some of the delegates and had a chat with them. They said they preferred to talk to each other rather than listen to the speeches that amount to nothing. Words, words, words. 

There was no over-all vision through which they could work together like in other countries.

For my part and many others the overarching purpose of the industry that was missing in the conference was how to lift up the masses from grinding poverty in the Philippines. That should be the priority. With all our mineral riches and the potential to bring down poverty in the country this is not happening.

Yet the Grant group reports that in terms of resources the Philippines beats most countries hands down. “The potential for the Philippine mining industry — often overlooked — is in fact beyond imagination. Out of the 30 million hectares of the Philippines, 9 million hectares or 30 percent of the entire country is identified to have high potential for mineral deposits. Yet only about 420,000 hectares or a mere 1.4 percent of the 30 million hectares are covered with existing mining rights. We have identified 24 major mining projects that will require $8.0 billion in investments for the next five to six years. They are primarily gold, copper and nickel projects.”

Moreover it has a long mining heritage even before the Spanish colonizers came. To those who wonder how Jose Rizal could have been for mining this is the answer. He knew about this untapped wealth.

“This contributed to the development of several established mining centers in the country and the enhancement of the mining competence of Filipinos. Our geologists, miners and mining professionals are in demand not only locally but also overseas,” says the report.

Therefore any decision to drive the industry full throttle will have to lure back Filipinos who go abroad because there is nothing for them here.” We have Filipino diamond drillers in Australia and Mongolia, Filipino mining engineers opening up mines in Laos and Vietnam, and Filipino technicians and operators being employed from Angola to Mozambique and Namibia.

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There is also a flawed misunderstanding of mining by some government bureaucrats and NGOs. It is the state that owns the natural resources. Investors and private claimants are merely there to lend their expertise, technology and funds so the state can use the resources for the citizens’ benefit. It is essentially a joint venture. As a joint venture “the state undertakes the exploration, development and utilization of natural resources or it can enter into agreements with private parties or contractors under revenue-sharing or production-sharing arrangements.

This principle is based on Article XII, Section 2 of the 1987 Philippine Constitution, which provides: The government is the end-user of the mining project, the foreign investor offers the technology and expertise so it can make money for the government and themselves.”

It is important to disabuse the misconception that it is a you-and-us dynamics that, seemed to me, animated the discussions in the conference.

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It was good that the Chamber invited the Chilean Ambassador about how it developed its mining industry. It accounts now for 25 percent of the government income. “It is mining that provides for a strong social program that has reduced extreme poverty to a mere 8 percent.”

Like the Philippines, Chile has a long mining tradition for around 180 years, Ambassador Mayorga said. So what did they do to make the tradition profitable and in the service of its people?

“In the last 40 years Chile opened its economy allowing the participation of foreign capital and now we are the first producer of copper and nitrates of the world.” He adds that the public sector also participates in activity with around 40 percent.

The world saw and marveled how Chile mobilized its resources to save 33 miners trapped in an underground tunnel just recently. Accidents happen. But it is what you do when they happen that is the measure of responsibility. “By the way,” the Chilean ambassador adds, “the best salaries in the country are paid in mining.”

The Chileans are just as keen about environment, but it is not to the exclusion of one against the other. “To protect the environment companies must present a mitigation plan in order to repair environmental impact.” This is also a requirement in the Philippines.

Foreign investments are strongly protected with investor companies signing up for an insurance investment contract with the State of Chile. The investor chooses a model for a contract without dealing with the authorities and it is free of charge.

The setup of a company and the subscription of the foreign investment contract take not more than 45 days. Companies must pay taxes prior to remittances of profit abroad.

Mining export represents around 65 percent of total exports and constitutes the principal wealth of Chile.

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Because China is a big if not the biggest buyer of minerals around the world, it was good to hear from Ambassador Liu Jianchao that mining was in the agenda of President Aquino’s visit to China.

“As I’ve said many times, if the Philippines is to take off economically, China would add strength to its wings.”

 Mineral trade is an important part of the Philippine-Chinese cooperation. “Nickel ore import from the Philippines accounts for more than one third of China’s total import.”

He repeated what most mining analysts have said. “The Philippines is home to a massive reserve of minerals, especially in nickel, copper, gold and chrome. It’s a huge wealth endowed by nature, but gold is of no value if it lies under the earth.”

With abundant capital, advanced technology and rich experience in management, Chinese mining enterprises would be natural partners for the Philippines, he adds. “Chinese companies are willing to cooperate not only in mining exploration, but also in minerals processing.”

What I can promise here today is that, on this road (of development) the Philippines would never be alone. China would be always by your side.