Sustainable Development in The Philippine Minerals Industry: A Baseline Study

This is an information note on mining in the Phillippines, and the actions that have been taken to promote its sustainable development.

The Philippines is a country well endowed with metallic and non-metallic mineral resources. A long, well-established tradition of mining, pre-dating the arrival of the Spaniards in the 15th century, gave the country a place of prominence in the global minerals industry and was, for many years, among the world’s Top Ten producers of gold, copper, nickel, and chromite – the four major metallic mineral produced in the country. The last two decades, however, have seen a serious decline in the industry’s leadership role as the industry grappled with a host of internal and external problems. In the past two decades, the growth of the industry has been seriously impeded by low foreign investments owing to political instability and the 60:40 limitations on foreign ownership; excessive taxation; high operating and production costs; labor, energy and peace and order problems; a period of soft metal prices and a series of natural calamities, among others. Of recent, the challenge to the constitutionality of the Mining Act, filed by a non-governmental organization (NGO) in 1997 and still undecided in the Supreme Court after five years, created a climate of uncertainty unacceptable to most prospective foreign investors in the highly capital intensive mining industry. Production expansion in the Asia-Pacific (Australia, Papua New Guinea and Indonesia) also contributed to the situation. The approval of the long-awaited new Mining Act in 1995, meant to resuscitate the ailing industry, breathed hopes of the industry’s impending resurgence and was met with enthusiasm by both local and foreign mining investors – at least twenty (20) foreign mining companies established offices in the country to explore for minerals and/or to jointly develop known mineral deposits with Filipino mining companies. The Mining Act and its implementing rules and regulations addressed the gaps in previous mining laws by transforming the environmental and social responsibilities of mining companies as major cost centers. Minimum expenditures of : at least ten (10%) percent of a mining project’s capital costs for environment-related expenses during the development/construction stage; 3 to 5% for progressive/annual rehabilitation programs and at least one (1%) percent of the annual direct mining and milling costs during the operating life of the mine for social/community development; and the final mine rehabilitation and social management plans as part of the mine closure process. Mining projects within ancestral domain lands must also shell out a minimum of one (1%) percent of the gross revenue as royalty to indigenous peoples (IPs). Exploration companies, on the other hand, are encouraged to allocate at least 10% of the total project cost for environmental management, community assistance and public information and education. Yet, not long after, the Act became a magnet for NGOs and the central focus of opposition in view of provisions allowing wholly-owned foreign mining companies to operate mines in the country, notwithstanding, the benefit sharing scheme where 60% accrues to the Philippines and the strong environmental and social provisions. Critics of the industry fostered the perception that the Act is a tacit permission for foreign companies to plunder the national patrimony at the expense of the environment and the Filipino people. Past and recent environmental incidents (e.g., Marcopper and Manila Mining) and reports of displacement or resistance by communities and indigenous peoples somehow gave credence to these perceptions and resulted in repeated calls by civil society organizations, nongovernment organizations and the Catholic Church for the repeal of the Mining Act, including a ban on large-scale mining, especially, open pit mining. Ironically, industry critics are silent on the issue of environmentally damaging and hazardous mining practices of illegal small scale miners. The local mining industry, for its part, has been hard pressed in exerting maximum efforts to meet current regulations as well as societal expectations. Given the industry’s precarious situation, however, progress toward this end has been slow. The Government, on the other hand, is itself faced with the accusations that it is in collusion with the industry and is not doing enough to punish erring mining companies. On the other side, the Government is being accused by the industry of being an “antimining NGO” for the excessively prescriptive and complex nature of current mining regulations as well as the lengthy and tedious period needed to perfect a mining contract. Overcoming these artificial hindrances to the future of mining in the Philippines demands the integration of new paradigms, a culture of change, on how mineral resources development should proceed – one that equally considers the varying aspirations of the government, the communities, the mining industry, the NGO/civil society sector and other stakeholders. A recent initiative by the government is the drafting of a National Minerals Policy to define sustainable development in the context of the Philippine minerals industry, taking in consideration the unique economic, socio-cultural and environmental concerns of the various stakeholders. The underlying objective is to prove: that mining can be a desirable development option for the country and in the empowerment of communities as it has been a cornerstone in the economic success and development of many industrialized nations; that reputable mining companies want to do the right thing for society and the environment; and that the so-called third sector can be factual and reasonable than emotional.