Indigenous

The wonder of this so-called Pax Silica project being considered for the New Clark City is how little information has been made available to the public. We could not have a meaningful public discussion about this unless all the details are known.

What we have are general descriptions of what might be built in the designated high technology zone in Tarlac. No one seems to be sure if this will be predominantly a data center concentration or an assembly of factories using our mineral resources to make computer chips.

If it is intended to be a concentration of data centers, the area will require huge volumes of power and water for cooling – both of which are evidently not present in the zone. Data centers have a huge appetite for power – which, in this country, remains scarce. The country, in the main, confronts a looming water shortage.

Data centers are notoriously capital intensive enterprises. After the initial construction phase, the proposed zone will employ very few people.

Groups opposing the Pax Silica project focus on the power and water requirements the undertaking entails. They fear the already strained water resources in Central Luzon will worsen.

Presumably, new power generating capacity will have to be built to support this project. At present, we have a negligible power surplus. This is the reason power is expensive and supply always tenuous. Building new generating capacity will require at least a decade of gestation.

Those supporting this project argue that it is a chance for the country to leapfrog its development – although very little downstream linkages are indicated. At first glance, this resembles the old “special economic zones” model that failed us in the past.

If the project is intended principally as a chip manufacturing zone, the considerations seem to be principally geopolitical. It will be a backup production zone to guard against the loss to China of Taiwan’s chip production powerhouse. Luzon, prone to earthquakes and other natural calamities, seems to be an unlikely candidate for highly sensitive technological production.

Lately, some information has been offered that the project will require relocation of indigenous communities and the loss of agricultural farmland. This should raise red flags.

The dominant development paradigm emphasizes measurable increases in output while giving little weight to the concerns of traditional communities. This should not be the case.

If the Pax Silica project requires the eradication of traditional communities and lifestyle, its positive impact on the nation’s development must be proven to be overwhelming. Indigenous peoples must be given a weightier voice in shaping the nation’s development.

Empty bag

The Maharlika Fund, which took money away from otherwise productive financial institutions, has made very few investments to date. One of those few investments is in a mining project located in Pasil, Kalinga.

The Maalinao-Caigutan-Biyog (MCB) Copper Gold Project was made possible by a Memorandum of Understanding between the mining companies and the Balatoc indigenous community. Under the agreed framework, the IP community is to receive royalties and other financial benefits, employment, livelihood opportunities, infrastructure, social development programs and other commitments linked the progress of the project.

Unfortunately for the Balatoc indigenous community, the project has been delayed due to a legal squabble among the companies partnered for this undertaking. The community had hoped this project would be their chance to break from the margins and rewrite their destiny.

The legal squabble involves the usual fight for control of the project. It involves Celsius Resources, Makilala Mining Company Inc. (MMCI), Sodor, PMR, Kiri Industries and former Celsius executive chairman Julito Sarmiento.

Ironically, it seems the Maharlika Fund’s decision to fund the project heightened the infighting among the venture partners. The infighting involves complex legal issues about who controls what in this large project.

Celsius initiated legal and arbitration actions over its objections to an MMCI-Kiri off-take arrangement. The company likewise raised concerns over the assignment of Maharlika’s loan position to Equinnaire Holdings, which is a Kiri subsidiary. There are a host of other legal issues that threaten the viability of this mining project.

Until all these issues are resolved, it is not clear who actually controls the company responsible for the MCB project, the company that will honor the commitments made to the indigenous community.

The promises to the indigenous community are all suddenly in question. If the project is discontinued, the commitments will not be fulfilled. It is not just a mining venture that is at stake here. A community’s rare chance to redefine its destiny is on the line.

Maharlika is exposed to this project to the tune of $76.4 million. This is understood as a bridge loan to support feasibility work, engineering and early development activities. The money will be repaid over the mine’s projected 35-year lifeline. Should the project dissemble, the money cannot be repaid.

The conversation among the squabbling parties has now definitely shifted from development to arbitration, corporate control, financing rights and competing claims. It seems Maharlika unwittingly walked into a corporate minefield. This is not flattering for an entity described as a “sovereign fund.”

The Balatoc community, although not a party to the corporate dispute, stands to lose the most. This mining project represented the only way out for the community to recast its destiny, bring its young out of the margins.

Now they could be left holding an empty bag.