SINGAPORE — Filipinos who were at the Asian Mining Congress listened to several speeches on countries in the region with great mining potential. But the Philippines was hardly mentioned. As far as investors were concerned it was nowhere in the world mining map. The irony is that its mineral wealth had long been talked about with a potential that is the envy of other countries with less.
It was finally mentioned when it came under the topic of political risk.
* * *
It seemed to me that Mark Williams, the general manager for external affairs of the Tampakan Copper-Gold project and Leo Jasareno, director of the Bureau of Mines spoke at cross purposes. Williams spoke of the benefits of developing what could be one of the largest copper-gold project while Director Jasareno assured foreign investors that the Philippines would be a hub for mining despite challenges.
Both were polite and remained optimistic that a solution would be found to get the project going but words are one thing and what actually happens is another. To those who know more about the project other than statements from self-appointed “environmentalists” it is puzzling why an unprecedented opportunity for sustainable development in the Philippines is being blocked.
He cited that China and developing Asia are projected to account for approximately 60 percent of copper demand by 2020, representing 90 percent of demand growth from 2011 to 2020.
“A project of this size has the potential to be a key driver of economic prosperity, industrial growth and social development in Mindanao and the country as a whole. The magnitude of these economic benefits would be unprecedented in the Philippines and potentially life changing for many Filipinos, enabling a better future,” Williams said.
* * *
But last January after following all the requirements, SMI’s ECC application was denied by the Department of Environment and Natural Resources. It was denied because of the South Cotabato Environment Code that bans open pit mining in the province.
This was contrary to an assurance from the national government that “local government endorsement would remain separate from the ECC application process.”
Therefore, the decision was not based on the merits of the application. SMI complied with the national environmental guidelines and regulations required by the ECC process.
Williams did not mince words to express his disappointment. “We believe this decision sets a precedent that contradicts the publicly stated views of the Aquino Administration — namely that national laws which permit open-pit mining methods should have precedence over conflicting provincial ordinances.”
He deplored the lack of consistency by the national government. This poses a very real threat to investment confidence in the Philippines and introduces significant uncertainty to national government approval processes.
“It also hampers the Project’s potential to make what would be a significant contribution to the economic and social development of Southern Mindanao and the Philippines.”
For the moment, SMI has filed a motion for reconsideration to the DENR Secretary for a reversal of the decision.
“We believe we should be successful if the procedures and regulations for the appeal process that have been established by the government are followed. SMI would need to consider its options further if its appeal was rejected,” Williams added. He did not specify what those options were.
“The project is managed and majority-owned by one of the world’s largest copper mining companies, Xstrata Copper – a business unit of the global diversified mining group. Xstrata plc has a strong track record of responsible operations around the world,” he said. Too few Filipinos are awared that XStrata operates four open-pit mines around the world and has received approval to construct a further two in Peru and one in Chile – two countries that have since developed their mining industries and advanced their economies. “Globally, more than 50 percent of the world’s mines are open-pit operations. It operates all their open-pit and underground activities in an environmentally responsible manner and in partnership with communities and local authorities to deliver significant benefits for communities,” the SMI general manage said. It remains to be seen how the government will act to reverse the continuing slide of investor confidence in the Philippines. The government itself “has acknowledged that the development of the mining industry has fallen short of its own expectations.”
“The mining industry is at a crossroad with the current mining policy review, adding uncertainty to the future of the mining industry in the Philippines,” Williams warned. He enumerated fundamental discrepancies between national law and policy and local government ordinances; proposed changes to law that would unilaterally amend existing agreements; mistrust of the industry and its regulators by the general public.
SMI welcomed the announcement that the Aquino government will continue to develop a national mining policy.
“We hope the mining policy is one that will truly maximize the opportunity presented by the Philippines’ natural resource endowment through the creation of a policy environment that encourages investment, like that of the Tampakan Project, required to develop the nation’s economy.”
* * *
A number of visitors were disappointed that DENR Secretary Ramon Paje did not come to the mining conference this year. It would have been better if he had come personally to explain what had happened since then. He had given a speech on “Philippine Minerals: Beckoning the World’s Responsible Miners/ Investors” last year. He also promised that the government will help Tampakan’s implementation even if advances its timetable from 2016 to 2013.
He promised also then that the Philippines under the administration of President Benigno S. Aquino lll would address the issues confronting the Philippine mining industry.
Director Leo Jasareno who came in his stead, said the same thing about “developing the Philippines as a key mining destination.” But he was frank enough to admit there were challenges. Among them were the perception of mining as an environmental despoiler; lapses and delinquencies of miners; the lack of monitoring capability of government and an insufficient national mineral resources inventory.
With what is happening to SMI, it will be a hard sell to future investors. No wonder there was little enthusiasm in the Asian Mining Congress about the Philippines despite its mineral wealth. Too risky.