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Cagayan River Rehabilitation: Initiatives from Ridge to Reef

by Abe Almirol - June 23, 2021

The headwaters of Rio Grande de Cagayan. The Kalanguya ethnic community in the mountainous town of Ambaguio in Nueva Vizcaya Province call the rivers "wangwang" in their dialect. Rapid population growth caused the rampant conversion of mountain slopes into agricultural production. Also known as the Cagayan River, it is the longest river and the largest river in terms of volume of discharge in the Philippines. It has a total length of approximately 505 kilometres (314 mi) and a drainage basin covering 27,753 square kilometres (10,715 sq mi). Drone photo by Mike Del Rosario

After two severe weather disturbances that took place in the first half of November 2020 heavily hit eight regions in the Philippines, Pres. Rodrigo Duterte immediately signed Executive Order No. 120 creating the Task Force Build Back Better (TF-BBB) to initiate a comprehensive and integrated recovery.

Cagayan and Marikina valleys suffered the heaviest damage and human casualties as floods and its aftermath landslides placed many parts of the country in a state of calamity for weeks. Typhoon Rolly (international name: Goni) made its landfall on 1 November 2020 and several days after its onslaught and in almost the same path, Typhoon Ulysses (international name: Vamco) carried with it heavy rains as it reached the Philippine shorelines on 11 November 2020.

Tuguegarao and Marikina cities were in deep floods as Ulysses traversed the Philippine area of responsibility. The National Disaster Risk Reduction Management Council reported over 2.3 million people affected across eight regions in the country. Reports indicated that 23,089 individuals displaced were moved to evacuation centres while 46,987 individuals displaced stayed outside evacuation centres. The death toll from Ulysses has reached more than 70. It has severely damaged property and infrastructure in some areas. Videos circulating in social media showed floods reaching the roofs in some parts of Cagayan and Marikina City.

Two agencies, the Department of Environment and Natural Resources (DENR) and the Department of Public Works and Highways (DPWH), were given the lead role in a task force working on an operational mode adopting the “whole-of-society approach”. All government agencies and instrumentalities were mandated by EO 120 to take part.

After eight months of work, the TF-BBB has made significant gains in pursuing rehabilitation and post-recovery initiatives. DENR has realised that problems such as this needs to consider all factors affecting the whole watershed catchment basin where floods occur. Environmental advocates and experts often refer to this approach as the ridge-to-reef initiative.

"In the months since we set out to work in November last year, we have now set into motion significant post-disaster recovery initiatives in three priority geographic areas involving the restoration of Cagayan, Marikina, and Bicol River basins," DENR Secretary and TF-BBB chair Roy A. Cimatu said.

Cagayan River Dredging: Agencies in Action

Cimatu and TF-BBB co-chairperson Secretary Mark A. Villar of the Department of Public Works and Highways (DPWH) led the ceremonial dredging of sandbars along Cagayan River’s constricted midstream and planting of Bamboo seedlings on the riverbank of Barangay Bangag in the town of Lal-lo, Cagayan last 2 February 2021. After removing the sandbar obstacles that impede water from flowing freely, the roots of planted Bamboos should serve as a soil binder to keep the riverbank intact in the future.

There are three priority sandbars to remove near the Magapit bridge, measuring about 235 hectares with an estimated volume of seven million cubic meters, according to TF-BBB statements captured by the media. The first phase of DPWH dredging operations targeted this choke point which a past study identified as the cause of flooding in Tuguegarao City and other settlements near the riverbanks.

TF-BBB in Region 2 is chaired by Regional Executive Director Gwendolyn Bambalan of the DENR and co-chaired by Regional Director Loreta Malaluan of the DPWH. In her message during one of the virtual sessions of the task force, Director Bambalan lauded the different government agencies for their support to the Build Back Better initiatives in the region.

"The regional TF-BBB is not only addressing the protection and conservation of the environment but also the welfare of barangays and families affected by the restoration of the Cagayan River," Director Bambalan said.

In that meeting, the DPWH discussed the dredging operation and riverbank protections works. The Department of Human Settlement and Urban Development gave an update on the status of resettlement projects while the Office of Civil Defence reviewed the improvement of systems and essential services.

The Department of Trade and Industry also presented its accomplishments on livelihood projects. For its part, the Department of the Interior and Local Government presented its agenda for strengthened governance and mainstreaming of disaster-risk reduction and climate change action.

Representatives of the Land Registration Authority also attended the meeting. The LRA will be the partner agency of the DENR for the easement recovery along the Cagayan River.

The Technical Education and Skills Development Authority (TESDA) has trained residents who were eventually hired as laborers and equipment operators to help carry out the dredging operations. TF-BBB has also engaged the Department of Labour and Employment (DOLE) to provide employment assistance to 120 residents for the planting and nurturing of bamboo trees in Tuguegarao City and the towns of Alcala, Enrile, and Gattaran. This will be implemented through DOLE's "Tulong Panghanapbuhay sa Ating Disadvantaged/Displaced Workers" or TUPAD program.

Magat Dam blamed

In many reports published and echoed in mainstream media and social media, the opening of the Magat Dam floodgates was blamed as the cause of flooding. The National Irrigation Administration (NIA) came out with a fact check to clear its liability. Even the Senate initiated moved to investigate the matter. NIA’s acting department manager of Public Affairs and Information Office, Eden Victoria Selva, came up with a comprehensive technical response, explaining that the Magat river is just one of the many river systems draining to the Cagayan River.

“It is noted that the carrying capacity of the Cagayan River is 25,400 m3/s while the maximum volume of water released from the Magat Dam is only 6,706 m3/s indicating that water discharge of Magat Dam due to Typhoon Ulysses is not the main cause of massive flooding in the provinces of Isabela and Cagayan,” Selva said in an article that appeared in INQUIRER.net on 10 June 2021.

The controversial statements blaming the Magat Dam’s release of water also aroused public perception that points responsibility to the occupants of watershed areas in the upstream of Magat River. Those affected by the floods were quick to call for punitive actions against watershed occupants, including calls to ban mining in the province of Nueva Vizcaya, including those issued with legitimate permits to operate.

Sharing the Burden of Watershed Restoration and Protection

In the watersheds upstream of the Magat River, a 10-year project co-funded by the Republic of the Philippines and the Japan International Cooperation Agency is nearing completion. It is called the Forestland Management Project (FMP), a sequel of the several forestry sector projects implemented by the DENR’s Forest Management Bureau in the last 30 years. FMP is a holistic approach in Community Based Forest Management Agreement (CBFMA) areas in sub-watersheds in the upper areas of the Cagayan River, particular the provinces of Nueva Vizcaya, Ifugao and Quirino. FMP is also present in the Upper Pampanga River in Nueva Ecija and in Jalaur River in Iloilo.

Anselmo Cabrera, an Institutional Development Specialist working at the Central Project Management Office of the FMP at the DENR Central Office, has proposed a cost sharing mechanism that Watershed Management Councils should develop for mainstreaming. He said there must be a system where every citizen or institution using water can pay for environmental services performed by duty-bearers protecting and maintaining watersheds.

Through a cost sharing mechanism, communities living in critical watershed areas will be compensated for their efforts to ensure there is sufficient forest cover. With this scheme, upland farmers could minimize soil erosion by planting permanent crops instead of clearing spots to plant vegetables and other short-term cash crops.

The FMP has so far initiated several hundred of hectares planted with coffee, Guyabano, Rambutan, and other fruit bearing trees. About 35 people’s organizations benefitting over 5,000 households, mostly from Kalanguya, Ibaloi, Isinai, Iwak and Ifugao indigenous cultural communities,

LGUs were also called to take a more active role in watershed protection. Cabrera welcomes the favourable result of the Mandanas Ruling, where local governments won in getting their share in revenues collected outside the Bureau of Internal Revenue. The Supreme Court has ruled that LGUs can now get a share from the collection of the Bureau of Customs and other national revenues. Information available from the Department of Budget Management (DBM) revealed LGUs, which include provinces, municipalities, and barangays, could get as much as 37% increase in their internal revenue allotments from the national government in 2022. A DBM advisory directed LGUs to use these additional money to fund the full devolution of services, of which, integrated social forestry is one.

Nueva Vizcaya Governor Carlos M. Padilla made a friendly overture when nasty comments were posted over social media by angry residents of Tuguegarao City who wallowed in deep floods for several days after Typhoon Ulysses. Some people accused people in Nueva Vizcaya of denuding the watersheds. Relief goods from Nueva Vizcaya were immediately sent in flood-stricken areas, a gesture that Cagayan Governor Manuel Mamba deeply appreciated publicly. He also called for collaboration between people downstream and upstream of the Cagayan River to understand and take actions together.

During the last Watershed Management Council meeting, Gov. Padilla reiterated the importance of collaboration and networking to save watershed commons. He recalled a 2018 agreement with stakeholders which includes big water users such as SN Aboitiz and NIA, the two institutions managing the Magat hydropower and irrigation dam in Ramon, Isabela. Also included in the public pledge of support to the 2018 Nueva Vizcaya Declaration on Water are thousands of farmer’s organizations using water resources for irrigation and water utilities, like Solano Water and other entities providing services to majority of urban households.

Watershed Management Councils were potent avenues for collaboration in watershed protection and maintenance. In Davao, a bulk water project implemented by Apo Agua Infrastructura, Inc. mentioned in a webinar that the Watershed Management Council has played a crucial role in mobilising communities and people.

The TF-BBB in Cagayan Valley experience could be one of the best in the current administration’s whole-of-society approach in big projects. By mobilising both government agencies and communities, it has covered all areas of concern from the top of mountain ridges to the reefs in the sea. It would be exciting to measure if the impacts are indeed better ten years from now.


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Mining

Philippine Resources - August 03, 2021

OceanaGold Provides Didipio Update and Q2 2021 Financial Results

OceanaGold Corporation reported its financial and operational results for the quarter ended June 30, 2021. Michael Holmes, President and CEO of OceanaGold said, “I am very pleased with the operational and financial performance of the business in the second quarter 2021. Haile delivered a record quarter of gold production and is well on-track to deliver on the full year production guidance. Waihi plant upgrades were completed, and we 2 commenced continuous milling late in the second quarter which is a tremendous outcome as we continue to ramp-up underground operations.” “Based on year-to-date performance we have refined our expectations for the full year. We currently expect consolidated production of 350,000 to 370,000 gold ounces at AISC of $1,200 to $1,250 per gold ounce sold at cash costs of $825 to $875 per ounce sold. Strong first half performance at Haile has put us firmly on track to deliver ahead of 160,000 gold ounces for the full year at moderately higher AISC, largely driven by an increased proportion of mining costs capitalised as pre-strip plus higher than expected mining costs incurred. On the other hand, a softer first half at Macraes is driving production to the lower end of guidance of 155,000 to 165,000 gold ounces for the full year at consequently higher AISC. Waihi is firmly on-track and production guidance remains unchanged but at improved costs. We expect to provide updated consolidated guidance in-line with the staged restart of Didipio over the coming weeks.” “Renewal of the FTAA at Didipio was one of our key priorities this year, and I’m extremely proud to say we delivered. The staged restart of the asset is underway with the current focus on the rehire and training of our skilled Philippine workforce. We expect to restart processing well prior to year-end, initially sourcing mill feed from existing stockpiles at site. Our expectation is to also transport and sell approximately 18,500 gold ounces and 3,500 tonnes of copper in concentrate on site by early fourth quarter. The rehire and retraining of the workforce, as well as the ongoing risks associated with the COVID-19 pandemic, could impact the timeline associated with returning to full underground production of 1.6Mtpa, which could take up to 12 months. Operations In the first half of the year, the Company produced 177,039 ounces of gold, a 27% increase over the same period in 2020 due to record production at Haile in the second quarter, resumption of campaign processing at Waihi, and limited impacts from COVID-19. Second quarter gold production of 93,848 ounces of gold reflects record production at Haile of 57,240 ounces. Consolidated AISC of $1,227 per ounce sold YTD and $1,226 per ounce sold in the second quarter were relatively flat over the prior year and previous quarter. Cash costs for the first half of the year of $734 per gold ounce and $764 per ounce in the second quarter, decreased 22% and 11%, respectively. The improvement in cash costs primarily reflects lower operating costs at Haile from productivity improvements made year-over-year Haile, USA Haile delivered a record second quarter of 57,240 gold ounces resulting in 101,581 gold ounces produced in the first half of the year. AISC and cash costs improved significantly, benefitting from higher gold sales and lower overall cash costs from productivity improvements. AISC and cash costs for the second quarter were $922 and $615 per ounce, a decrease of 7% and 22%, respectively, quarter-on-quarter. YTD AISC and cash costs were $953 per ounce and $684 per ounce, respectively, down approximately 36% over the prior year period. Unit mining and milling cost decreased quarter-on-quarter, and increased 9% and 36%, respectively, YTD over the prior year period. Second quarter decreases reflect lower maintenance activities on the mining fleet and higher mill feed following milling disruptions from the first quarter; YTD increases are attributable to higher maintenance costs and an unplanned mill disruption from blocked crusher chutes in the first quarter that have since been resolved. The decrease in site G&A quarter-on-quarter reflects the increase mill feed and lower costs during the period. Confirmed COVID-19 cases at site increased from 111 at the end of the first quarter to 120 by the end of the second quarter, a decrease in positive cases from 48 in the first quarter to nine in the second quarter. 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Unit mining costs were 6% and 28% higher quarter-on-quarter and YTD over the prior year period, respectively, as a result of reduced trucking productivity from inclement weather which saturated haul roads, flooded active open pit mining areas, and rendered the underground inaccessible for a two-week period in the first quarter. Mining efforts were subsequently re-directed to increased waste mining and pre-stripping at Deepdell North open pit through the first half. Processing unit costs also increased over comparable periods, reflecting the one-off mill motor outage in the first quarter and extended mill shutdown during the second quarter. Due to the lower-than-expected production in the first half, the Company expects Macraes full year production to be in the lower end of the guidance range of 155,000 to 165,000 gold ounces at cash costs of $800 to $850 per ounce and increased site AISC to $1,200 to $1,250 per ounce sold over the full year, primarily driven by increased sustaining capital spend related to pre-stripping at Deepdell North and additional underground development. Production is still expected to increase in the third quarter and be higher overall in the fourth quarter of 2021. Didipio, Philippines There was no production from Didipio in the second quarter and first half due to the suspension of operations. The Company expensed $5.5 million in the second quarter and $10.0 million YTD of holding costs as part of consolidated Corporate General and Administration, which relates to maintaining Didipio in a state of operational standby. 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The Company experienced a significant increase in COVID-19-positive cases early in the second quarter, consistent with the spread of COVID-19 in the local and surrounding communities. The site continues to follow strict health and safety protocols to prevent the ongoing transmission of the virus at site. Financial In the first half of the year, the Company generated $331.5 million in revenue, a 42% increase from the prior year period due to record production at Haile, improved average gold price and early production at Waihi with the development of Martha Underground. Quarter-on-quarter revenue increased 23% with record production from Haile, partly offset by lower sales from Macraes where production was impacted by geotechnical issues that rendered higher grade ore zones of the open pit inaccessible. 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Mining

Philippine Resources - August 02, 2021

Lawmaker Renews Call for Mining Tax Regime, Trust Fund During National Confab of Mining Stakeholders

Albay Rep. Joey Sarte Salceda has called for the passage of the proposed fiscal regime for the mining industry, saying the industry is a potential job creator in the post-COVID future. Salceda, chairman of the House committee on ways and means, emphasized the natural wealth potential of the Philippines, but observed "key deficiencies in the country’s extractive industry governance framework," some of which can be resolved by a “coherent tax regime.” “The country is the fifth most mineral-rich country in the world for gold, nickel, copper, and chromite. It is also home to the largest copper-gold deposit in the world. Estimates suggest that up to 840 billion dollars of untapped mineral wealth is in Philippine soil,” Salceda said in his keynote speech during the Extractive Industry Transparency Initiative (PH-EITI) National Conference on Thursday. “This is not to mention the 17.1 billion barrels of oil deposits that China’s Ministry of Geology and Mineral Resources estimates to be in the Spratlys, or the 190 trillion cubic feet of natural gas that the US Energy Information Administration believes to be in the area. “These resources, if extracted and managed properly, could make the Philippines one of the richest countries in the world,” Salceda added. Salceda noted that although the issuance of Executive Order 130, amending Section 4 of Executive Order No. 79 s. 2012, lifted the moratorium imposed by the latter on new mining agreements, the Executive Order still has areas for improvement. “First, neither Congress nor the Department of Finance, the country’s fiscal policymakers and fiscal administrators respectively, are given a specific role in this process by the new EO,” Salceda said. Salceda also observed that the EO delegates some powers that are not supported by law, including the power of the Department of Environment and Natural Resources (DENR) to negotiate tax agreements with miners. Salceda also said it is the DOF that has the experience in financial management and should therefore negotiate revenue sharing agreements on the government’s behalf. Salceda, however, emphasized the high potential of the mining sector post-pandemic. “As the world shifts towards electric-powered transport, and as the digital economy continues its ascent, the global economy will require more minerals, especially nickel and copper, which we abound in. Nickel prices are once again in 5-year high levels. So is copper and cobalt, elements needed for e-vehicle batteries,” Salceda said. “Regardless of the grade of minerals we produce, demand is high across the board. It can only mean well for our mining industry’s bottom lines in the medium-term,” Salceda added. Salceda stressed the revenue-generating potential of the industry if a tax regime is enacted. “The tax revenues are also crucial for economic recovery. The proposed regime will generate P7.2 billion in incremental revenues on the first year and P37.9 billion over the next 5 years. These are closed-group estimates. “They are probably conservative, as more mining agreements are made and as mineral prices continue to boom. So, these revenues will play an important role in helping stabilize our fiscal situation,” Salceda said. The industry could create well-paying jobs post-pandemic but stressed the need for a mining trust fund supported by tax revenues from mining as a “rainy day fund” for when mineral prices are low. “Of course, that’s [high prices] not forever. Manufacturers will find ways to reduce metallic content when the metals get too expensive. When that happens, prices will inevitably fall. We must be ready. The tax regime is not everything, but it’s a necessary step we cannot skip,” Salceda said.

Mining

Philippine Resources - August 02, 2021

Philex Delivers PHP1.149B Core Net Income in 1H2021, An Increase of 186% Compared with 1H2020

Photo Credit: Redjie Melvic Cawis Philex Mining Corporation announced that the Company achieved another new high in its revenues and core net income for 2Q2021. Philex recorded a Core Net Income of Php610 million for the 2nd quarter. In addition to the Php540 million core net income it already recorded in 1Q2021, Philex registered a new high core net income for the first half of the year at Php1.149 billion. Satisfactory execution of the mining plan resulted in sustained level of metal output, and optimum operating cost and expenses delivered the higher core net income for the quarter and year-todate ended June 30, 2021. The Company reported a Net Income of Php600 million for 2Q2021 versus the reported Net Income of Php322 million for the same period in 2020, an 86% increase. Production and Revenues The Company milled slightly lower tonnage than the first quarter of 2021 resulting in slightly lower copper output for 2Q2021. Despite the slightly lower copper output, the Company generated higher revenues for 2Q2021 at Php2.377 billion, higher by 21% over the same period in 2020. This brings 1H2021 revenues to Php4.747 billion, ahead by 29% over the same period in 2020, with revenues only at Php3.680 billion. The higher revenues are due mainly to the sustained higher realized metal prices for both Gold and Copper at $1,807 per ounce and $4.21 per pound, respectively. The satisfactory execution of the mining plan and mill operations resulted in the production of 13,612 ounces of Gold and 6.435 million pounds of Copper for 2Q2021, bringing the 1H2021 total metal output at 27,025 ounces of Gold and 13.205 million pounds of Copper. Operating Costs and Expenses Core and Net Income Operating costs and expenses for 2Q2021 at Php1.593 billion are higher than those of 2Q2020 at Php1.552 billion due to slightly higher production expenses and higher excise taxes and royalties attributable to higher revenues. The slight increase was tempered by lower non-cash production costs in 2Q2021 amounting to Php271 million compared with non-cash production costs in 2Q2020 amounting to Php330 million. This brings the 1H2021 operating costs and expenses to P3.240 billion, higher by Php136 million compared with 1H2020. The increase is attributable to increasing production cost brought about by the effects of the pandemic to the supply chain, including logistics and Covid-19 response undertaken by the Company. Reported Net Income for 2Q2021 increased by 86% to Php600 million from Php322 million in 2Q2020 This brings the Company’s 1H2021 reported Net Income to Php1.159 billion from Php425 million of 1H2020. Core Net Income for 2Q2021 reached Php610 million to close the 1H2021 Core Net Income at Php1.149 billion, higher by 186% versus the Core Net Income of Php402 million in 1H2020. The Company generated EBITDA of Php1.016 billion for the 2Q2021 versus Php708 million in 2Q2020, a 44% increase. This brings the 1H2021 EBITDA to Php2.027 billion versus Php1.127 billion in 1H2020, an increase of 80% COVID 2019 Despite our strict implementation of the IATF-DOH mandated health protocols, the Company was not spared by the spread of the Covid19 virus. Several employees and their dependents were infected by the virus but the infection was immediately contained, preventing widespread transmission, and ensuring the continued operation of both the mine and mill plant. The Company adopted and implemented regular surveillance and contact tracing activities to further strengthen its defense against any transmission to its employees and their dependents. Silangan Project The Board of Directors of Philex has approved the In-Phase development of Silangan and the Company will be appointing a financial advisor to assist in the fund raising that will commence as soon as practicable. With the In-Phase development of Silangan, the capital expenditure requirement will be made in stages, and can be funded from a variety of potential resources including internally-generated cash and potentially through equity and debt from investors and creditors. The Company is confident that Silangan development will start by Q22022 with the target of commencing commercial operations in January 2025. “We will be working with our financial advisor to immediately implement the fund raising activity for the InPhase development of Silangan. We believe that the recent government pronouncements related to the mining industry will increase the level of interest and confidence of investors and lenders to mining companies. The launch of Silangan will be very timely.”, emphasized Eulalio B Austin, Jr, Philex President and CEO. “The global outlook for metal prices continue to be positive and Philex is poised to benefit as we emphasize on excellent execution of plans in light of the current volatile environment brought about by this pandemic. In the next couple of months, we set to launch our Silangan Project under an In-Phase Development approach. Silangan will be an exciting project for Philex.”, concluded Manuel V. Pangilinan, Philex Chairman.   Article Courtesy of The Philippine Stock Exchange

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