Manny Pangilinan: Mining is not the enemy, poverty is

FACE-OFF. Business tycoon Manny V. Pangilinan and environmental advocate Gina Lopez exchange sharp words on mining issues during the open forum of the Conference on Mining’s Impact on the Philippine Economy and Ecology at the Hotel Intercontinental in Makati City on Friday. A visibly peeved Pangilinan takes his seat as Lopez asks for more time to answer him. MVP retorts: I didn’t say that. Now, you’re lying. LYN RILLON

The Philippines can’t live without mining which could be its big ticket out of poverty if done in a responsible way, industry leaders said at the much-awaited mining forum Friday.

The face-off did turn out to be as explosive as promised, with mining proponents clashing with environmentalists at the jam-packed forum.

“In the end, it should be mining that significantly contributes to economic growth in a manner that mitigates impact on environment and improves the lives of people, or [there should be] no mining at all,” said the Mines & Geosciences Bureau Director Leo Jasareno, setting the tone for the forum that was jointly organized by the Philippine Chamber of Commerce and Industry, the Financial Executives of the Philippines and the Management Association of the Philippines.

Mining advocates, led by Philex Mining chairman Manuel V. Pangilinan, Chamber of Mines director Gerard Brimo and Wallace Business Forum’s Peter Wallace, pointed out that responsible mining was the way to go although the government must also boost its institutional capacity to regulate the industry, particularly the small-scale miners.

Pangilinan started his presentation by asking who in the forum did not have a cell phone, noting that an average cell phone contains about 24 milligrams of gold, 250 mg of silver, 3,800 mg of cobalt and nine mg of palladium.

“As with cell phones, mining touches most aspects of our daily life—when you build your home, use your laptops, take your car to work or even protest against mining. Clearly, we cannot live without mining,” he said.

Wallace said the Philippines cannot be a great country without mining. This industry, he said, could boost the country’s economic growth to 7 to 8 percent, the pace of growth needed to break the poverty trend.

Solution is to control

“The solution is not to ban mining but to control it,” he said.

“We must have mining. It’s just impossible to live without mines and you can’t say do it somewhere else. It’s un-Christian,” Wallace said.

Wallace, an Australian expatriate and longtime Philippine resident, said that if the Philippines were to harness mining, it would create hundreds of thousands more jobs, build more roads and bring basic utilities like water and electricity to the communities.

But if the government were to ban mining, illegal mining would still exist, he said.

Brimo said mining, tourism and agriculture were not mutually exclusive and these industries could co-exist with each other.

Brimo also shrugged off concerns on the environmental footprint of mining, noting that it’s very difficult to find viable mining sites anywhere in the world. He noted that only 62,000 hectares, or 0.2 percent of the land mass in the country was covered by mining claims.

Out of every 25,000 mining prospects in the world, only 500 will be seriously explored and only one will become a live mining project, he said.

Very strict parameters

Lawyer Christian Monsod, a consultant for the Manila Electric Co., said he was in favor of mining but under very strict parameters.

He said mining could benefit the country if four conditions are met: that environmental and social costs are accounted for; that the country gets full share of value of extracted minerals; the institutional capacity of government must be put in place; and money for mining must be used to create new capital, including human capital and boost infrastructure in the countryside.

At a press briefing after the forum, Chamber of Mines president Philip Romualdez said small-scale mining must be subjected to the same regulatory net as large-scale miners and it would take political will to do so.

Although tourism is another potential growth driver for the Philippines as cited by environmentalists, Pangilinan said most mining sites were not ideal for tourism.

“Our mines in Padcal and Surigao are hardly suitable for tourism, simply because they don’t have the features of an attractive tourist site. And even if tourism were possible, we must ask: Are the expected returns from tourism comparable to the benefits which mining can provide?” Pangilinan said.

“Mining is not the enemy, poverty is,” he said.

Pangilinan also said a government plan to introduce the concept of “total economic value,” or TEV, in assessing mining opportunities was “intangible, elusive and extremely subjective.”

“How does one quantify and test the value attached to the beauty of a sunset, the feel of early morning mist or the music of water rippling through a stream?” he said.

Industry not perfect

In his presentation, Pangilinan admitted that the mining industry was not perfect, which sometimes leads to perception that mining is dangerous and destructive. He suggested the following:

That national and local policies on mining need to be harmonized and the cooperation of local government units must be procured in order to subject small-scale miners to the same regulation as large-scale miners;

That the capacity and competence of state regulators be improved, particularly in regard to equipment and quantity and quality of regulatory staff;

That there must be an independent environmental commission responsible for supervising and enforcing environmental concerns;

That the private sector be open to a profit-sharing scheme which will assure the government of a more appropriate share in the benefits derived from resources; and

That mining benefits between host local government units and the national government be shared more equitably.

It was during his discussion of the Padcal mine in Benguet that Pangilinan inadvertently brought the face-off to a climax when he figured in a heated exchange with environmentalist Regina Lopez, managing director of the ABS-CBN Foundation.

Government for mining

Government representatives at the forum indicated that government was not against mining but that the industry should be made to cough up more money, mainly because of its bad track record in the Philippines and the country’s need for more revenues.

In a speech at the conference, Jasareno said the extractive industry should not run away from its responsibility to the environment and the people.

Environment Secretary Ramon Paje said the provision imposing a 5 percent royalty fee on top of the 2 percent excise tax that mining companies are already paying would not be changed in the executive order on the new mining policy that is  being drafted by Malacañang.

Those who want to amend this should bring their case to the President, said Paje as he stressed that the mining industry is getting finite resources from the Philippines.

According to Jasareno, the government recognizes the value of the country’s abundant mineral resources like gold, copper, iron and nickel, and the need to work with the mining industry.

“The government is aware that left on the ground, these minerals cannot generate wealth for the Filipino people. And the country needs wealth,” he said.

300K small-scale mines

Jasareno said there are 31 mining companies operating in the Philippines. Small-scale miners number between 200,000 and 300,000. Permits and mining claims cover 1.14 million hectares, or 3.8 percent, of the country’s total land area.

He said there are eight projects in the pipeline that will significantly contribute to the country’s mineral output in the next two to three years.

The country’s mining sector has been experiencing a boom in the past year owing to the high prices of precious metals, particularly gold.

In 2011, the metallic mining sector posted a gross production value of P122 billion, a 9-percent increase from the P112 billion posted in 2010.

GDP contribution

Despite the mining industry’s improved earnings over the years, however, its contribution to the gross domestic product has not increased. According to Jasareno, the contribution of mining to GDP “has not been able to breach the 1.5-percent barrier for a long time now.”

“Mining’s contribution to total exports is also similarly situated,” he said.

Paje said the government loses P5 billion every year from not collecting royalty fees from mining companies.

Jasareno said the mining industry’s presence in the Philippines over the years has left communities with a “nightmare” in their backyard, giving the entire industry the bad image of a despoiler of the environment.

“Mining operations in the past have left behind legacy mines, or mines that were simply abandoned by the mining operators without doing rehabilitation work. They are not just gaping holes, but also sources or causes of acid mine drainage, siltation, ghost towns and other nightmares to the host communities,” he said.

“They have become the rallying point of people who oppose new mining projects on the simple understanding that such new mining projects will end up as new legacy mines,” Jasareno said.

First posted 12:48 am | Saturday, March 3rd, 2012