Marcos Bets on Mining
by Fernando Penarroyo - November 08, 2022
Philippine President Ferdinand R. Marcos, Jr. is barely in his first year of his office and already is facing a myriad of challenges from soaring inflation and public debt to a devaluating peso against the dollar. While trying to sustain economic recovery following stagnation from the COVID-19 pandemic, Marcos is hard put to tame the increasing costs of consumer goods and services, and manage public debt which places the economy in a tight fiscal position. Rising inflation will also result not only in the lost of jobs but also declining pay for workers driven by higher costs of living. Conditions will deteriorate further with a devaluing peso against the dollar making it more expensive to import fuel for transport and power, and raw materials needed for local manufacturing.
Amidst the rising public liability, more taxpayers’ money will be utilized for debt servicing that will leave little for the provision of government services and the upgrade of infrastructure. Government must focus on improving transport facilities, power transmission, and energy utilities to attract foreign investment. Among the major risks hampering recovery are external factors like the prolonged conflict between Ukraine and Russia and a weaker peso against the dollar brought about by US Federal Reserve moves to hike interest rates to tame inflation in their country. These make it more expensive for businesses and consumers to borrow money and discourages demand for goods and services causing the surge in prices especially of fuel and food, which can stunt economic growth not only in the US but also globally.
Government Turns to Mining
Heeding the call of business groups, the Marcos administration is turning to mining that could help ensure a sustainable recovery of the Philippine economy from the disruptions of the COVID-19 pandemic and the threat of a global economic slowdown. The benefit of mobilizing investments for mine development has been underscored by Department of Finance (DOF) Secretary Benjamin E. Diokno, who assured the Marcos administration’s commitment to continue creating an enabling environment for mining activities. However, Diokno also pointed out that the government expects the mining industry to strictly adhere to responsible and sustainable practices. He further said that the industry should strike a balance between protecting the environment, uplifting local communities, and supporting the government’s socioeconomic agenda.
Diokno reported that the Marcos economic team presented the medium-term fiscal framework and for targets to succeed under the two-part framework, the mining industry would have to perform well. During the Philippine Economic Briefing in New York where President Marcos delivered a keynote message to American investors, Diokno emphasized the administration’s commitment to help maximize the mining sector’s potential in attracting more foreign investments.
Playing Catch Up
The mining industry considered the Duterte administration as another wasted era for realizing the full economic potential of the sector. The Marcos government inherited a mining industry reeling from the anti-mining stance of the previous administration with the appointment of the late Regina Paz Lopez, a staunch anti-mining advocate, to head the Department of Environment and Natural Resources (DENR). The appointment was bitterly opposed by the industry resulting in Lopez’s rejection by the powerful bicameral Commission on Appointments.
During her term, Lopez ordered the closure of mining operations and initiated a national mine audit conducted on behalf of the Mining Industry Coordinating Council. Mining stakeholders described the three years of closure of these companies as “arbitrary” and claim that at that time, the industry practically “gasped for breath.”
With COVID-19 bringing down the economy on its knees and a worsening economic fallout becoming inevitable, Duterte issued Executive Order No. 130 in April 2021, lifting the nine-year moratorium on the granting of new mining permits. Finally in December 2021, the Duterte administration succumbing to economic pressure, lifted the ban on open-pit mining.
It is well to note that at the height of the pandemic in 2021, the mining sector’s contribution to the gross domestic product (GDP) improved to 5.2% from 5.1% in 2020 driven mainly by nickel demand overseas and high gold prices. This was in stark contrast to other sectors which suffered a decline due to the lockdowns that were imposed because of COVID-19.
Early in the term of Duterte, then Senator Marcos lamented that the Duterte administration has failed to put up a vision for the mining industry. Worse, he said the government's anti-mining stance has slowed down the development of the mining industry, citing among others, the "use-it-or-lose-it" policy the DENR implemented in 2010 in a bid to open to new investors mines that have not been operated on.
At that time, Marcos noted that the DENR has not issued any new mining agreements. He also criticized the then proposed expansion of the "no-go" zones for mining and the proposed increase in the government's share of 10 percent of gross output or 55 percent of adjusted mining revenue. Marcos said that if the government’s reason is only to receive more taxes out of the mining industry, such move would only deter investments in that sector.
However, Marcos said the mining industry must also address other valid issues raised against it, apart from environmental concerns. He reminded the industry to ensure that affected local communities should derive more tangible benefits from mining and assure that necessary safeguards are in place for the protection of their environment and ecology.
Marcos Mining Policy Pronouncements
Now that he is at the helm of the presidency, Marcos said that he would push for "clean mining" and want to see some value added to mineral exports by selling processed materials rather than ores. Instead of increasing taxes on mining, Marcos is eyeing the collection of value-added taxes from the export of partially-processed ore.
The Marcos administration demonstrated its commitment to pursue transparency in natural resource governance by rejoining the Extractive Industry Transparency Initiative (EITI) following the Duterte administration's withdrawal in June 2022 over concerns on metrics and procedures used for assessing the country’s compliance with transparency requirements.
In 23 August 2022, EITI invited the Philippines to re-state its commitment to the EITI and build on the progress that the country has achieved in the past nine years. By returning to the EITI fold, the Marcos administration cited the value of good governance and anti-corruption measures in maximizing the extractive sector’s contribution to resource mobilization and sustainable economic growth. The government hopes that its return to EITI will complement the Marcos administration’s agenda on transparency and accountability.
The government implemented the PH-EITI, a multi-stakeholder group chaired by the DOF and composed of representatives from government, industry, and civil society in 2013 pursuant to Section 14 of Executive Order No. 79, s. 2012 and Executive Order No. 147, s. 2013. Annual disclosure of contracts, financial, economic, social and environmental data is mandatory for extractive industries pursuant to the DENR Administrative Order No. 2017-07.
Marcos in his first State of the Nation Address (SONA) declared that infrastructure development will remain “a very high priority” with emphasis placed on enabling private sector contracts and investment incentives in the energy sector. Several experts in their post-SONA analysis, however, agreed that Marcos failed to mention issues arising from mining. There were plans to look for additional energy sources like natural gas reserves, build new nuclear power plants and invest in the renewable energy sector. This was unwelcome news for environmental and climate activists.
Civil society groups criticized Marcos for paying lip service to climate action in his SONA. They urged Marcos to revoke his predecessor’s mining policies that relaxed restrictions on mining. They also asked Marcos to convene an environmental summit that involves the Mines and Geosciences Bureau, the mining industry, and communities affected by mining operations to discuss current mining issues, stressing a need to prioritize environmental concerns. The purpose of the summit according to civil society groups is to craft the government’s environmental program, instruct lawmakers to prioritize the legislation of environmental bills, and launch a review on the categorization of mining as an “essential industry.”
Marcos assured that the country’s resiliency and adaptation to the challenges pose by climate change will be on top of his administration’s national agenda. Speaking at the 2022 DENR Multi-Stakeholder Forum on Oct. 5, Marcos vowed to ensure environmental initiatives to combat climate change will be undertaken under his watch.
Industry groups continue to call for legislation to allow 100% ownership of certain businesses by foreigners. They emphasized that full foreign ownership would create massive incentives for foreign investment and entice a lot of successful foreign businesses to expand their operations in the Philippines.
Marcos is expected to be in favor of policies that will promote exports, and expand new and established businesses. He will focus on the most lucrative industries which include mining and mineral processing, which are poised to make the fastest and largest increases in revenues and productivity.
Despite the administration’s assurance of a conducive investment climate for the industry, the House of Representatives' Committee on Ways and Means approved a bill proposing a new fiscal regime for the Philippine mining industry in August 2022. Representative Jose Ma. Clemente Salceda, Chair of the House Ways and Means Committee, filed House Bill 5022, which proposes an imposition of royalty on mining operations within and outside mineral reservations.
Under the committee-approved measure, a royalty tax of 5% will be imposed on the market value of the gross output of large-scale mining operations. The present law requires payment of 5% royalty based on gross output only in mining sites declared as mineral reservations. The bill also seeks to impose a windfall profit tax on a mining company if its total tax payments fail to meet the specified minimum government share from mining contracts. Under the bill, the minimum government share from all mining contracts would be 60% of net mining revenues. Mining companies operating under Mineral Production Sharing Agreements are not subject to windfall profit tax.
The bill seeks to impose a 10% export tax based on the market value of mineral ore exports. A mining company will be treated as a separate taxpayer with respect to each of its mining contracts, which seeks to increase the tax base by ensuring that losses from other mining projects will not be deducted from the more profitable ones. Likewise, to institutionalize transparency standards, the government will implement a mechanism for the public disclosure and scrutiny of all mining tax and revenue data in the extractives value chain.
While Salceda said the bill will raise additional P37.5 billion revenues in just the first full year of its implementation, the Chamber of Mines of the Philippines (COMP) said a law raising taxes on mining will once again set back the revitalization of the industry. COMP described the consolidated bill as onerous, raising the effective tax rate on mining to 51 percent from the current 38 percent. Initially withdrawn by the sponsor, the bill has been reportedly resubmitted to the Committee for further discussion including the possibility of being watered down.
Perhaps the greatest challenge for Marcos is how to balance diplomatic and economic relations between the United States and China. He acknowledged that the Philippines and the US have strong and enduring ties in trade and commerce with the US as the Philippines’ third largest trading partner and second major source of foreign direct investments in 2021. Marcos and US President Joe Biden during a meeting in September 2022 also underscored the freedom of navigation in the South China Sea.
On the other hand, Marcos is keen in renewing talks with China on joint oil and gas exploration in the disputed West Philippine Sea to seek a compromise with China as long as any agreement do not violate Philippine laws. While pledging to foster closer ties with China, and describing Beijing as Manila’s “strongest partner” in the pandemic recovery, the Marcos administration has been stepping up diplomatic protests against China’s alleged “incursions” in the disputed territory.
The real test for Marcos, however, is his government’s willingness to assert the country’s economic rights over the Reed (Recto) Bank and lift the moratorium on exploration and drilling activities in the area. Petroleum exploration companies with service contracts awarded by the Philippine government have been unable to conduct seismic surveys in the area because of harassment by Chinese coast guards. There is an urgency on this matter as the Malampaya natural gas field is being rapidly depleted and imported liquefied natural gas may not be enough to fuel the power plants in the short term, which may then have to resort to diesel fuel, a more expensive alternative.
Another issue that needs to be resolved by the Marcos administration is the controversial open-pit mine in Tampakan, South Cotabato. Taking the cue from the Duterte government’s lifting of the open pit mining ban, the previous members of the Sangguniang Panlalawigan of South Cotabato lifted its 12-year-old provincial ban last May 16, despite strong opposition from civil society, the church, and some traditional landowners. However, on June 3, Gov. Reynaldo Tamayo, Jr. vetoed the measure paving the way for the resumption of the ban on open-pit mining.
During the presidential campaign, Marcos said that he is open to allow "sustainable" mining while expressing wariness toward open-pit mining operations. He believed that even if such mines are closed, harmful chemicals could leak out of the former sites. It remains to be seen how Marcos is going to handle the US$5.9 billion Tampakan Copper-Gold Project, touted as the largest undeveloped copper-gold mine in Southeast Asia and among the biggest of its kind in the world.
The good news is that if there are any indications of the Marcos administration’s seriousness in attracting foreign investments, then we can consider the reforms currently being implemented in renewable energy sector as an encouraging sign.
The Department of Energy (DOE) announced that a legal opinion provided by the Department of Justice (DOJ) paved the way for the opening of foreign investments in renewable energy. The DOJ said that exploration, development, and utilization of “inexhaustible” renewable energy source are not subject to the 60:40 foreign equity limitation as provided under Section 2, Article XII of the Constitution.
The DOJ further opined that in order to implement the full ownership of RE resources by foreigners, the implementing rules and regulations of Republic Act 9513 or the “Renewable Energy Act of 2008” particularly Rule 6, Section 19 must be amended to amend the 40-percent equity limit for foreign investors.
The DOE has also made all qualified and registered renewable energy generating plants as preferential dispatch in the wholesale electricity spot market (WESM), used for centralized trading of electricity. This will encourage investments for additional capacities in geothermal, biomass, and impounding hydroelectric power plants. The guaranteed dispatch in the grid at the power plant’s full available capacities under merchant pricing, will allow recovery of investments by renewable energy developers.
Finally, the DOE has also raised the percentage of the utilization of renewable energy for on-grid areas from one percent to 2.52 percent. The Renewable Portfolio Standard, a policy mechanism which aims to increase the use of renewable energy sources for electricity generation, requires electricity suppliers, particularly the distribution utilities, to source or produce a specified fraction of their power supply from eligible renewable energy resources.
If the Marcos government is indeed serious to walk the talk, then now is the right time to take advantage of the current upswing of global spending in support of post-pandemic reconstruction, creating a resurgence of demand for mineral and energy commodities. Inviting investors to put their money in our mining industry only to welcome them with the imposition of new taxes is always a zero sum proposition. Hopefully this time, our regulators will not cause the mining industry to miss the boat again.
Fernando “Ronnie” S. Penarroyo specializes in Energy and Resources Law, Project Finance and Business Development. He is also currently the Chair of the Professional Regulatory Board of Geology. He may be contacted at firstname.lastname@example.org for any matters or inquiries in relation to the Philippine resources industry and suggested topics for commentaries. Atty. Penarroyo’s commentaries are also archived at his professional blogsite at www.penarroyo.com
Abarro, Mico, Marcos Jr. Open to 'Sustainable' Mining, Wary of Open-pit Mining” ABS-CBN News, 25 January 2022, https://news.abs-cbn.com/business/01/25/22/marcos-jr-open-to-sustainable-mining
Marcos Admin Commits to Transparency and Good Governance in the Extractive Industries, 09 September 2022, https://www.dof.gov.ph/marcos-admin-commits-to-transparency-and-good-governance-in-the-extractive-industries/
Next Admin Must Have a Vision to Realize Potential of the Country’s Mining Industry - Sen. Marcos, 18 September 2015, https://legacy.senate.gov.ph/press_release/2015/0918_marcos1.asp
Parrocha, Azer, Marcos Eyes VAT from Partially-Processed Ore Exports, 20 June 2022, https://www.pna.gov.ph/articles/1177137
Sayson, ByIan C., Calonzo, Andreo, and Ahn, Shery, Philippines’ Marcos Eyes China Compromise on South China Sea, Bloomberg, 24 September 2022, https://www.bloomberg.com/news/articles/2022-09-24/philippines-marcos-seeks-china-compromise-on-south-china-sea-oil
Sewell, Jared M., What We Should Expect from the Marcos Administration? 29 May 2022, ,https://www.kea-mining-and-quarrying-services.com/philippine-mining-prospects-under-marcos/
Zablan, Clarist, Green Group Urges Marcos to Reverse Duterte’s Mining Policy, Seeks Dialogue, 21 July 2022, https://news.tv5.com.ph/breaking/read/mining-policy-green-group-urges-marcos-to-reverse-dutertes-mining-policy-seeks-dialogue
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Marcelle P. Villegas - March 17, 2021
The Aftermath of the Carmen Copper Mine Landslide
After the tragic landslide that occurred at the open pit’s north wall at around 4:15 p.m. on Monday, 21 Dec. 2020, Mines and Geosciences Bureau (MGB) 7 ordered the immediate suspension of the mine operations in Carmen Copper Corporation (CCC). According to MGB’s report last 22 Dec. 2020 on their official website, they stated “Initial investigations revealed there was no mining activity in the area on that day.”  On that day, landslide debris fell on the water at the pit bottom. This has an elevation of 41m above sea level. The landslide created a tsunami-like wave that reached an elevation of 105m in the southern portion of the pit where the workers were located. On 22 Dec. 2020, four fatalities were recorded along with six missing.  Further on, an assessment of the area was conducted by Director Pacquito Melicor Jr. (DENR Central Visayas Regional Executive Director), Director Armando Malicse (MGB 7 Regional Director), MGB Region 7 team, and Mine Safety, Environment and Social Development Division. CCC and Toledo City Disaster Risk Reduction and Management team continued their search and retrieval operations on a limited scale due to unstable condition. MGB 7 technical personnel continues its on-site inspection and investigation in accordance with R.A. 7942 (Philippine Mining Act of 1995) and the DENR Administrative Order Nos. 2010-21 (Consolidated IRR of RA 7942) and 2000-98 (Mine Safety and Health Standards).  A list of names of workers who died was given by CCC to the Toledo Police Station Chief, Lt. Col. Junnel Caadlawon. The second list contains the names of those who are still missing.  Those who died from the landslide are the following: Junil S. Lagola, age 44, from Barangay Don Andres Soriano, leadman Ernesto G. Caspe, age 54, from Dasmamac, Lutopan, checker Juan M. Tapang, age 44, from Don Andres Soriano Village, heavy equipment operator Dionisio Labang, from barangay Uling, Naga, backhoe operator/Anseca Contractor Those who are still missing are the following: Jose B. Carpentero, age 31, from Barangay Biga, heavy equipment operator from Mine Services Department Jonwel S. Herediano, age 33, from Barangay Don Andres Soriano, pump operator Simeon B. Laconas, age 33, from Barangay Biga, leadman - mine services department John Paul L. Resuelo, age 27, from Barangay Biga, heavy equipment operator Renante F. Sepada, age 35, from Barangay Bagakay, pump operator Alfred C. Tautho, age 33, from Barangay Mainggit, welder Carmen Copper Corp. (CCC) expressed their support and commitment to provide free education until college and allowances to all the children of its employees who died or are still missing after the tragedy last December. Based on a press statement of the company last 27 Dec. 2020, they have provided various forms of financial and other assistance to the immediate families of its deceased workers.  Additionally, CCC also offered employment opportunities for the victims’ next of kin, spouse and children. “CCC has given the same attention to the immediate family of the missing CCC employees and will afford them of the same commitments CCC provided to the family of the deceased,” according to the company’s statement. CCC also extended support to the family of the contractor who was among the victims.  On 8 Feb. 2021, Toledo City Mayor, Hon. Marjorie Piczon-Perales along with Vice-Mayor Jay B. Go met the families of the victims at the open shed of the City Hall Garden to provide them with “ayuda” or financial assistance. This was posted on the Toledo City Public Information Office social media page. The mayor granted the families of deceased workers the amount of Php15 million. For the victims who are injured, they were given Php5 million. Additionally, they were all given food packs.  On 29 Jan. 2021, the Office of Senator Christopher “Bong” Go distributed assistance to the Toledo City residents who were affected by the landslide in CCC mine. This was held at the Carmen Copper Recreation Center, Toledo City, Cebu. During the distribution, 248 families received meals, financial assistance, food packs, vitamins, face masks and face shields. Senator Go also gave bicycles and shoes to selected recipients, and computer tablets for their children to be used for online classes. Health and safety protocols were strictly implemented to avoid the further spread of COVID-19. The Senator was not present during the distribution but he sent them a video message with words of encouragement.  Senator Go also offered assistance to those who needed major medical operations such as heart surgeries. He urged those in need of such medical attention to seek assistance from any of the Malasakit Centers in the province.  While the local and national government along with CCC are busy sending assistance to the families of the victims of the December landslide, mining industry in general received backlashes from various groups who believe that the deaths and injuries could have been prevented. Barely a month before the landslide, there had been reports from residents of Barangay Biga in Toledo City who claim they warned officials of the MGB Central Visayas and CCC as well about large cracks in the village prior to the landslide. However, they said that their appeal was not properly addressed.  Biga Barangay Captian Pedro Sepada Jr. told a local newspaper in Cebu last 29 Dec. 2020 that prior to the landslide, barangay officials called for an emergency consultative meeting on 26 Nov. 2020 with representatives of CCC, MGB 7 and Biga residents to talk about the possible measures to be done after the cracks were discovered. Sepada said that MGB 7 Director Armando Malicse and CCC Vice President for Safety, Ignas Alburo were present. No representative from the Toledo City government was present. Sepada noted that during the meeting, they were not given a concrete response or alternative solution by CCC or MGB to provide assurance to the residents that they will all be safe while mining operations are ongoing. But Sepada said that they were simply told by MGB 7 and CCC officials that their place remained safe.  According to the local news reports in Toledo City, residents now believe the huge cracks caused the fatal landslide. “It was only after the landslide last Dec. 21, that they declared our area to be unsafe within a radius of 600-meter distance from the pipeline of Carmen Copper. They now say it’s unsafe. What happened to their guarantee of safety before?”  Governor Gwendolyn Garcia said last December that they shall leave the investigation to MGB before implementing any course of action. She mentioned that she will leave it up to the MGB 7 to decide whether or not CCC has any liability. Garcia said, “The investigation is not our expertise nor is that our mandate. MGB has already issued a suspension of operations and MGB is going to undertake the investigation. So let’s put things in proper perspective. While the investigation is ongoing, perhaps it is best to wait for the results.”  “I am not taking any sides. I want to be as objective as possible. However, there are some personalities who are not as objective because they have their own interest in Carmen Copper. They want to control so that they can do business with Carmen Copper. This is a warning to those who want to make it difficult.” Garcia also noted that CCC mining operations have given so much to Toledo City in terms of employment and the city’s development. She said that a thorough investigation is needed in order to prevent those with “personal interest” in the mining operations of CCC from ruining the lives of so many people working there.  Garcia assured the Province will provide assistance and support to the families of miners who died and those who remain missing after the landslide.  Renester P. Suraltra, a college professor wrote a commentary last December on SunStar Cebu with the title “Toledo tragedy: The untold story”. He wrote, “Who is always responsible for any mining accident? Is it nature or man? Who is at fault? Is it the bad weather or the safety engineer?” “Accidents may happen in the workplace but it can also be avoided. We can’t discount the fact that accidents can happen because of unsafe supervision, lack of situation awareness, and failure to identify the potential threat. That’s the job of the safety engineer under the direction and supervision of sympathetic and responsible management. If workers are dying frequently then responsible mining is a big issue.” “There is another lesson to be learned in the Toledo mining tragedy. We should never compromise safety and security. We can’t always blame nature out of man’s folly. One should think that the mining industry provides short-term revenue but long-term harmful effect on nature and the environment. Life is much precious than copper and gold.”  Acknowledgement: Ryan Peter Vivo Penaranda for Cebuano to English translation from some news articles Reference:  Mines and Geosciences Bureau Press Release (22 Dec. 2020)."Carmen Copper Mine In-Pit Landslide Incident".  ANV (23 Dec. 2020). SunStar Cebu. "Listahan sa namatay, missing sa Carmen pit gipagawas".  WBS and PR (27 Dec. 2020). SunStar Cebu. "Carmen Copper Corp. commits to help landslide victims' families".  Toledo City Public Information Office Facebook Page (8 Feb. 2021). "Families of the victims of the land in Biga Pit Gitagaan ug ayuda in Toledo".  Office of the Presidential Assistant for the Visayas Facebook Page (31 Jan. 2021). "Hundreds of Toledo City, Cebu residents affected by a copper mine landslide receive assistance from Senator Bong Go".  Sabalo, Wenilyn (30 Dec. 2020). SunStar Cebu. "Biga chief claims please ignored before landslide". Retrieved from - https://www.sunstar.com.ph/article/1881418/Cebu/Local-News/Biga-chief-claims-pleas-ignored-before-landslide  Suralta, Renester P. (27 Dec. 2020). SunStar Cebu. "Tell it to SunStar: Toledo tragedy: The untold story". Retrieved from - https://www.sunstar.com.ph/article/1881194
Marcelle P. Villegas - March 17, 2021
First Offshore Magnetite Iron Mining in the PH
Last December, Apollo Global Capital’s (PSE: APL) subsidiary, JDVC Resources Corporation, announced that Department of Environment and Natural Resources granted them a permit to start the commercial operations of the country’s first offshore magnetite iron mining project. According to JDVC and APL consultant, Jun Herrera, the mining operations in Cagayan are expected to start by mid or end of February. He said that the first newly-built deep sea mining vessel arrived in Cagayan and needed to take shelter for now due to strong sea currents. In relation to this project, they assured the government that there will be minimal impact on the marine ecosystem as per the studies and survey conducted by a Singapore-based company. Their study shows that there is no coral or aquamarine life within the mining area which is located 150 meters below sea level. Herrera stated that three more vessels are expected to arrive this year. The vessel is capable of commercial extraction, sampling, testing and production of magnetite iron.  With regards to the apprehension of some residents of Ballesteros in Cagayan that this offshore mining operation will destroy the coral ecosystem, APL addressed the issue by stating that such assumption by the locals has no basis. APL stated last January, “We won’t even be mining in their waters. In the first place, our mining operation will be in the waters of Buguey and Gonzaga towns, and at a distance of over 14 kilometers. That’s more than two horizon lengths away from the shoreline.” Lazaro Ramos, a resident of Ballesteros, sent a formal complaint to DENR Secretary Roy Cimatu. Ramos warned them of the possible “catastrophe” that the offshore mining will bring about should it resumes. He mentioned in comparison a study conducted by Craig Smith from the University of Hawaii regarding the ocean seabed in the NE Pacific abyssal waters. APL, however, contradicted this argument by Ramos and said that the study by Craig Smith is applicable to a different part of the ocean and not necessarily comparable with the mining site in Cagayan. “That’s a different part of the Pacific. It looks at the ocean bed more than 200 meters below sea level, whereas we can only go down to 150 meters with current technology. Moreover, the Smith study did not look at magnetite iron reserves. From the experience of countries like Indonesia, Japan and New Zealand, magnetite iron is known to be toxic to corals, fish and other aquamarine life.” Moreover, JDVC emphasised on the study results done by the Singapore-based survey company whom they commissioned to conduct a full “sea bottom profile” of its mining tenements off Cagayan. As mentioned, their study reveals no corals or aquamarine life in the area. APL also reported that they have done their part in coordinating with the locals and providing corporate social responsibility activities for the residents of Buguey and Gonzaga. “We’re proud to say that over 90 percent of the residents support us and are even anxious for us to get started.” According to Herrera, the municipalities of Aparri, Buguey and Gonzaga received funding from the Development Bank of the Philippines. These are the municipalities covered by the mining project. DBP grated JDVC a grant worth $8-million credit line for the magnetite iron mining project. Herrera said, “We have proven to them [DBP] that it’s environmentally safe.” He added, “The DBP loan has zero borrowings yet as of now, hence, our company remains to be zero debts and internally funded by our shareholders. The DBP loan will only kick off once we have the letter of credit presented to the bank for the discounting the letter of credit of export buyers, to obtain a 90-day working capital, to fund the production of the ordered iron ore.” This project is seen as profitable, because magnetite mining has a strong market globally. In China, for example, they consider the steel industry as their “roadmap for their economic recovery”. Herrera mentioned that JVDC is an ISO-certified company. This means that there is an assurance that they shall comply with environmental standards. With all these assurances of a promising mining project ahead, some still have apprehension about it, perhaps rooting down to past incidents. In November 2020, the Cagayan Valley region was greatly affected by the Super Typhoon Rolly and Typhoon Ulysses. The two simultaneous typhoons are classified as category-5 and category-4 tropical cyclones respectively. As an effect, the devastation was great marked by massive flooding in Isabela and Cagayan provinces.  The residents in those areas blame the National Irrigation Association (NIA) for the flood when they opened the floodgates of the nearby Magat Dam on the last minute. The two provinces were submerged in high waters as high as a two-storey building. NIA on the other hand firmly contradicted such claim and explained that the release of water from Magat Dam was not the main cause of flooding. NIA points out that proper and sufficient warnings were given to those communities in low-lying areas. Additionally, they stated that the volume of water released was only 25% of the carrying capacity of the Cagayan River. The river is the longest stream in the Philippines that serves as the catch basin of the nine provinces in three regions.  Aside from the two typhoons, a second issue related with the river was about the illegal magnetite mining at the mouth of the Cagayan River in the municipality of Aparri. The provincial board of Cagayan appealed to President Rodrigo Duterte in 2019 to stop the dredging operations of Pacific Offshore Exploration, Inc. (POEI) due to potential threat to the environment and the livelihood of the locals. The Chinese company Zhong Hai Gravel Group headed by Dong Biao Su is POEI’s partner in that operation. The company was controversial recently after the Bureau of Customs and the Philippine Coast Guard raided its Zhonhai 68 dredging vessel during a maritime security patrol off the Bataan coast. “Bureau of Customs are poised to issue a warrant of seizure and detention against the undocumented vessel.” However, the Chinese Embassy in Manila claimed that the vessel is technically non-Chinese because it is registered under an African flag of convenience.  Currently, JDVC Resources Corp. is the first and only company that was granted a declaration of mining project feasibility by Department of Environment and Natural Resources (DENR) to extract magnetite sand and other minerals in Cagayan. In response to Cagayan’s decade-old black sand mining problem, the launching of Cagayan River Rehabilitation Project last February 2 is seen to solve the problem. DENR stated early in February that mining regulations will strictly monitor the extraction of magnetite or black sand in the coastal waters and rivers of Cagayan province.  With regards to APL’s/JDVC Resources Corp.’s offshore magnetite iron mining, MGB Director Wilfredo Monaco stated the project has gone through an environmental impact assessment system processes and the company has secured an environmental clearance certificate (ECC) from the Environmental Management Bureau (EMB).  “JDVC has undergone environmental impact assessment and the company was issued an ECC, which means environmental issues have been considered by the EMB,” Moncano stated. Magnetite or black sand mining is supposed to be banned in the Philippines, but Moncano explained that the extraction of the said mineral offshore is allowed. He said, “Mining in shoreline is prohibited but offshore mining is allowed. If it is at least 1,500 meters from the shoreline going out to the sea, it is allowed.” He also assured that the company’s operation will be monitored by the MGB and EMB, that in case of any destruction or damage to the coastal or marine ecosystem by JDVC Resources Corp., there will be a corresponding penalty under the mining law. “What is important is that the JDVC will not cause damage to the coastal or marine ecosystem,” he said. As for mining in rivers like in the Cagayan River, it is also allowed as long as the primary purpose of the project is river rehabilitation or restoration. One example is their plan to extract some 7 million metric tons of sand to remove three of the 19 sandbars along is stretch. Moncano said that the DENR-MGB will also monitor the dredging operations because while the activity is primarily flood mitigation, the minerals to be extracted include magnetite sand.  Moncano stated, “Black sand mining is also part of the purposes that’s why we will assess the mineral content of the river channel. If the magnetite sand contained surpasses the threshold of 6 percent, we will charge the company of 4-percent excise tax.” He said that every shipment will undergo mineral assessment. (--Marcelle P. Villegas, PRJ) References:  Flores, Alena Mae S. (31 Jan. 2021). Manila Standard. "Apollo Global announces subsidiary’s start of magnetite mining operations in Cagayan".  Gamboa, J. Albert (5 Feb. 2021). Business World. "Building back better in Cagayan Valley".  Mayuga, Jonathan L. (4 Feb. 2021). Business Mirror. "MGB exec vows to keep tabs of Cagayan River magnetite quarry operations set to start in February".
Marcelle P. Villegas - March 12, 2019
How wars and historical events affected the mining industry
By Marcelle P. Villegas For the past centuries, the mining industry in the Philippines was greatly affected by the changes of government or colonisers, events around the world and more. It seems that whenever there is war, there is also a rise in the demand in certain mineral resources or a fall in the production rate of some minerals. August is History Month in the Philippines as promoted by Government and Education sectors. The Philippines is rich in natural resources, cultural heritage and more noticeably, we are rich in history which brought progress or hindrance in economic growth through the years. Last August, during the Philippine Mining and Exploration Association (PMEA) Monthly Membership Meeting, one of the keynote speakers is Mr Hernulfo “Nonoy” Ruelo, Geologist Consultant. The title of his presentation is “Copper-Gold Discoveries and Mine in the Philippines - Understanding the Past, in order to make sense of the Current, and the Future”. It was a well-researched report and analysis on how historical events, like wars or change in leaders, affected the mining sector and the socio-economic status of the country. The presentation takes us back in time with some rare vintage photos from the past. During the pre-Spanish Period, the earliest use of metal in the Philippines by our Filipino ancestors was the use of copper for ornamentation, not for tools or currency. Other metals used were gold and tumbaga (copper alloyed with gold). “Gold was the major form of ‘currency’ among the early Filipinos and one of the first things they [ancestors] taught their children was the knowledge of gold and the weights with which they measured.” (From the book by Evelyn J. Caballero, 1996. “Gold from the Gods: Traditional small-scale miners in the Philippines”. Giraffe Books, Quezon City.( p 196 and 263) On note, the pre-colonial mining methods had no environmental impact on land, water, air and people. Pre-Spanish Period Mining in the Philippines started in the 3rd century when gold was traded with China and the Javanese empire where the height of this trade was during 12th to 14th century. The Chinese were the first foreign miners. Gold is both a commodity and a medium of exchange. When the Spaniards arrived in the 1521, gold was already being mined, traded and used as jewelry or ornamentation by the native Filipinos. In fact, 16th century Filipino noblemen were decked in gold. Colonial Period Under Spain 1500s - 1898: Paracale and Cordillera were the oldest goldfields. From 1500s - 1700s, gold was one of the tributes collected by the Spanish government and given to the King of Spain. In 1583 and 1595, an expedition was sent to mine in Cordillera but was a failure due to the resistance of the Igorots. “Gold mining before the coming of the Americans was primarily in the hands of enterprises organized in the Philippines by Spaniards and Chinese mestizos and Filipinos, with a few other companies trying, without success, to produce commercially.” (Ref. - Wirkus 1974) In 1600 to 1700, about 10,000 ounces of gold per annum were shipped to Spain, and the gold shipments to Spain increased from 1800 to 1895. For copper, the Spaniards opened the first copper mine in the country in 1842, called the Carawisan copper mine in Antique province. From 1864 to 1874, the Contrabro-Filipino Company operated Mankayan Copper Mine. Gold mining made its comeback in commerce in 1892 where concessions to foreigners were first granted. The British explorer, Frank Karuth of Philippine Mineral Syndicate, led the commercial-scale hard-rock and alluvial gold operations in Paracale District until 1895. (Ref. - Chaput 1987) Philippine Revolution 1896 – 1902: With the rise of the Philippine revolt against Spain, in 1896, mining operations at Paracale dwindled until 1902 when the Filipino-American War ended. The Organic Act of 1902 was created which organized companies, issued patents, and established the Geological & Mining Science Department. By 1927, gold was the third best export commodity and initiated by the Philippine (Manila) Stock Exchange. In the following years, the Mining Act of 1935 was released (Commonwealth Act 137) which introduced the Regalian Doctrine, the concept of Mining Lease, and the establishment of Bureau of Mines. The Americans invested US$ 34.2M in gold production. Mining for copper was reopened in 1936, the same time when the Japanese savvy for copper was high and led to the ‘discovery’ of the first large porphyry copper deposit in the country. Commonwealth Period 1937 - 1941: This period in Philippine history was considered a golden era when Manila was highly modernised and was one of the most beautiful cities in Southeast Asia. In fact, in 1937, we had the best and well-equipped airport in the Southeast Asia, the Nielson Airport. (This is now Ayala Triangle Park in Makati City, and the original Nielson Tower is now “Blackbird” Restaurant.) Although this elegant airport was primary used as an aviation school, it also paved the way for trade and commerce for foreign investors. Philippine Airline made its first commercial flight in 1941, from Nielson Airport to Baguio. The Philippines was the largest gold producer in Asia and second only to California in world production. During the American period, 9 million oz of gold was produced from 1906 – 1941. Japanese Occupation 1942 – 1945: Being a colony of United States of America, the Philippines got itself involved in war against the Japanese who invaded Manila in 1942. The Japanese took over Lepanto and the Hixbar mines (Rapu-rapu) and was able to mine and extract 11,000 tonnes of copper. No gold production was recorded. With the aggressive strategies of conquering their neighboring countries, Japan was unstoppable that time in their collection of natural resources that were needed to fuel their warships and planes and the production of weapons. Battleships Musashi and Yamato where the two giants in naval power that made Japan feared by other nations. The two battleships were defeated though in the Philippines during the Battle in Leyte Gulf in October 1945 which paved the way to the Liberation of Manila and eventually the whole country. Post-war Reconstruction 1946 – 1954: Those post-war years were hard times for all war-torn countries. However, with the need for repairs infrastructure after WWII, there was an increase in the global demand for copper. Some gold mines in the Philippines were rehabilitated but the problems were lack of capital and low market demand. Copper production re-started in 1947. Since Manila was the ground zero and battlefield of the war that ended WWII in the Pacific (Battle of Manila in 1945), there were serious damages in the country’s economy and on the mining industry. Korean War 1954 – 1960: For the Filipino soldiers who fought the Japanese during WWII, the Korean War was the first time for them to fight a battle in a foreign land. Although this war affected Southeast Asia directly, the gold prices maintained. However, in mid 1950s, the gold mines collapsed due to a recession period. The copper price rose slight due to high world demand. More Philippine copper mines opened. Vietnam War 1960-1975: In 1972, U.S. President Nixon took dollar off the gold standard. It was fixed at $35 since 1934, but gold prices are allowed to float free which devalued dollar to $38. In 1973, world gold price jumped from $38 to $120. World copper rate hit high at $0.90 in 1974. World copper mine production was at its peak. Martial Law 1972 - 1986: During Martial Law in the Philippines, copper price trended upward where the country’s copper production continued and boomed in 1980 where it reached its peak. It was in 1980 when Philippine copper production was recorded the highest at 306 Kt. However, the World Oil Crisis in 1973 - 1980 brought about a decline in copper demand. World Recession in 1982 – 1984 pulled down the copper prices. Philippine inflation devalued the Philippine peso and there was an increase in production costs, materials and equipment. The Global recession resulted in a decline in copper demand. The Philippine gold production was sustained and gold prices surged from 1978 to 1980. The modern Gold Bloom in 1980s brought about the rise of unregulated Small Scale Mining. In summary, the explanatory variables of growth and decline in PH copper industry in the 1950s-1980s are: - For Copper resources: risk capital or investments, development in the world’s copper market, technology, human capital in mining, domestic social, legal, and political environment . - For the gold industry: gold resources, competition, commodity price, production costs, technology (bulk mining, milling, treatment), damages – natural & man-made disasters (Reference). T.M. Santos 2001 . Growth of Copper Production: Determinants and Empirical Evidence. Social Science Diliman, July-December 2001. 2:2, 1-49.) There were other historical events in the Philippines that followed like: EDSA Revolution: 1986-1992 - gold averaged $381, copper $1.02 – There was investment uncertainty and several mines closed. New mining laws were crafted like the 1991 RA 7076 (Small Scale Mining Act). The 1987 Constitution replaced Leasehold into Agreements system. From 1990s – 2004, there was collapse of the local mining industry. However from 2004 – 2009, there was a revitalization of the mining industry with EO 270 National Policy Agenda – Mineral Action Plan. Gold price surged from $410 to $873. Copper production hit lowest in 2004 at 16 Kt since 1957. The year 2005 brought global gold boom where Philippine gold-copper mines had expansion and reopening. The Aquino Administration from 2010-2016 was within the Global Mining Boom period (2010 - 2013). It was a successful period for Philippine mine exploration, prospect drill-testing, and resource evaluation drilling. In conclusion, Mr Ruelo presented a list of challenges that miners will need to face at the present time, namely: - Fewer outcropping “easy-to-find” deposits are now left except in high-risk and “inaccessible” areas. - Current mining operations will encounter increasing real costs (labor, materials, energy, environmental, community impact) that will affect production. - The next generation of lower-grade copper/gold projects require significantly higher metal prices to justify development. - We need to discover high-quality or better gold/copper resources, even deeper ones that can be economically mined – e.g. in greenfields and brownfields.
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Philippine Resources - March 23, 2023
20 Years of Integral: Celebrating Growth and Transformation
Integral, a purveyor of market-leading process control solutions in the Philippines, celebrates its 20th anniversary this 2023. The event, held in EDSA Shangri-La, was attended by the company’s employees, clients, and supply chain partners. The celebration was a showcase of Integral’s history. But more importantly, it highlighted lessons the company learned as keys to success over the past two decades. As told from the perspective of the founders and employees, the event delivered a playful yet heart-warming glimpse into Integral's journey.
Philippine Resources - March 23, 2023
PH, Australia partner for technical cooperation for PPP
Photo: Australian Ambassador to the Philippines Hae Kyong Yu PSM. Credit: AusAmbPH Twitter Page As the Marcos administration becomes bullish in utilizing a public-private partnership (PPP) model in infrastructure projects, the Australian government will be providing its technical expertise in rolling out infrastructure projects under the PPP. Australian Ambassador to the Philippines Hae Kyong Yu PSM told the Philippine News Agency in an interview at her residence Wednesday that the embassy will be launching the Partnerships for Infrastructure (P4I) on March 24. “Infrastructure is a big area that the Philippines is focusing on, and I know President (Ferdinand R.) Marcos (Jr.) has announced that he wants to utilize PPP more where it’s possible. So we are working closely with the Philippine government to share with them how Australia has done it,” Yu said. P4I is an Australian government initiative that brings together experts from the public and private sectors as well as the academe to help Philippine government agencies involved in infrastructure development in the preparation stage of projects that would be under a PPP model. “We can help them with all the project preparation stage. How you do actual cost-benefit analysis of potential projects, and then how you prepare documents for possible procurement, tender processes, and things like that,” the envoy cited. She said that aside from the PPP Center, the P4I also aims to closely work with other agencies including the Department of Transportation, the Department of Energy, the Department of Finance, and the National Economic and Development Authority (NEDA), among others. Yu added that the Australian government will be closely working with the administration through the P4I in meeting its diverse infrastructure requirements, including roads, transport, energy, and public investment management. The Australian envoy said a number of Australian companies have been involved in infrastructure projects in the country. Early this month, NEDA Secretary Arsenio Balisacan announced that the NEDA Board approved PHP9 trillion worth of flagship infrastructure projects, with 45 of these projects possibly being funded through PPPs. “The government shall harness the financial and technical resources of the private sector, which allows the public sector to allocate its funds for greater investment in human capital development, especially to address the scarring in health and education due to the pandemic, and provided targeted assistance that protects vulnerable sectors from economic shocks,” Balisacan had said. By Kris Crismundo Article courtesy of the Philippine News Agency
Philippine Resources - March 21, 2023
PBBM boosts transport sector thru big-ticket projects
Photo credit: Department of Transportation Several big-ticket infrastructure projects in the transportation sector have been approved or are already being implemented by the administration of President Ferdinand R. Marcos Jr., the Department of Transportation (DOTr) reported Monday. In a statement, the DOTr said the Cebu Bus Rapid Transit Project, Davao Public Transport Modernization Project, EDSA Greenways, the Light Rail Transit Line 2 (LRT-2) West Extension, and the Light Rail Transit Line 1 (LRT-1) Cavite Extension are all ongoing as of March 9 according to the National Economic and Development Authority (NEDA). These projects are among the 67 infrastructure flagship projects (IFP) that have been greenlit or are already underway out of the 194 high-impact projects under Marcos’ "Build Better More" program. In the rail sector, these approved and ongoing projects include the Metro Manila Subway Phase 1, Mindanao Rail Phase 1, Metro Rail Transit Line 3 (MRT-3) rehabilitation, Metro Rail Transit Line 4 (MRT-4), Metro Rail Transit Line 7 (MRT-7), New Cebu International Container Port, New Manila International Airport (Bulacan International Airport), North-South Commuter Railway (NSCR), Philippine National Railways (PNR) South Long Haul, and the Subic Clark Railway. The New Dumaguete Airport Development Project (Bacong International Airport) and the Integrated Flood Resilience and Adaptation (InFRA) Phase 1 have also both been approved by NEDA, with six projects awaiting approval. Last week, the NEDA Board, led by Marcos, approved 194 high-impact priority projects with a total cost of around PHP9 trillion. The board also approved amendments to the 2013 Joint Venture guidelines to support the government’s push for more investments in the country’s infrastructure. PNR suspension Meanwhile, Senate President Pro Tempore Loren Legarda has expressed alarm over an impending suspension of select PNR routes due to the NSCR, saying it will affect thousands of commuters, mostly students and workers. “The welfare of the riding public should always be prioritized yet it remains to be seen whether such proposed solutions would effectively and sufficiently address the riding public's urgent demands in time for the imminent suspension of the operations of the PNR,“ Legarda said in her explanatory note on Senate Resolution No. 546. The PNR plans to suspend operations of certain routes for up to five years to facilitate the faster construction of the 55-kilometer NSCR. The construction will start in May and PNR may suspend the routes between Governor Pascual in Malabon City and Calamba City in Laguna, and well as Alabang, Muntinlupa City to Calamba. The Tutuban, Manila-Alabang route will be suspended in October and will affect between 20,000 and 25-000 passengers daily. Legarda urged the Committee on Public Order, chaired by Senator Grace Poe, to look into the impending suspension and come up with alternative solutions. Article courtesy of the Philippine News Agency
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