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Commentary

Philippine Resources - November 06, 2019

Adding value to mining by driving the UN sustainable development goals

In 2015 the UN adopted a new set of aspirations for the next 15 years; the Sustainable Development Goals (SDGs). The UN defines 17 SDGs, which are broken down into 169 targets, for outlining an agenda for nations, NGOs and business leaders. These goals are intended to end poverty, protect the planet, and ensure prosperity. It is good to see some mining companies are already driving SDGs. However, others are still considering this. Most of the mining companies start to map these 17 SDGs to mining content in order to cover social, economic and environmental sustainability. Other mining companies use corporate social responsibility (CSR) reports as an item to check on their compliance checklist. Generally most mining companies unfortunately wouldn’t gain much value added in running social, economic and environmental initiatives in support of the SDGs for the following reasons:The lack of a clearly articulated sustainability strategy; no idea where to start Complexity, and a lack of priority, focus, and deliverable milestones Limited ambition, and a limited budget A lack of leaders in the organization, who are not brave enough to go the extra mile The lack of talented or motivated people in the organization A lack of cross-business activity and communication The absence of business and senior leadership in sustainability strategies, formulation, and execution Poor change control and lag A lack of skills and expertise to realize the sustainability strategiesTwo initiatives that help to drive the UN SDGs in mining are now further discussed. Circular economy in mining Apple has installed Liam, a line of robots that can quickly disassemble iPhone 6. Apple claims that with two Liam lines up and running, they can take apart up to 2.4 million phones a year. These types of recycling mechanisms can be used in other industries such as manufacturing, automotive, building and construction, chemicals and plastics. However, you need to modify your plant infrastructure to enable these capabilities. Even though there are upfront costs involved with building these capabilities, it pays off in the end. This raises the question; what would happen if other giant companies similar to Apple were to prioritize recycling and stop buying minerals from mining companies? Apple is one business model which could be followed by mining companies to drive concepts of circular economy, and to use secondary materials by re-smelting them. This would help to protect our environment by preventing the stacking of unwanted waste in waste yards. Figure 1 shows the mining value chain of a mining company that is driven by linear economy and circular economy. Having a recycling plant in a mine site would help to manage day to day waste that is generated in mining operations. Here are some of the quick wins that help to make an impact as a result of driving the circular economy in mining; recycling old tires from mining trucks & dozers, recycling waste lubricants, using mine waste for backfilling, refurbishing and recycling mining equipment. In the future, mining companies will be able to leverage 3D printing and additive manufacturing methods to reduce excess waste in production during mining operations. Renewable energy in mining There is a big push from the mining industry towards renewable energy for many reasons. Energy usually accounts for 33% of a mine’s operating costs. Therefore, a rapid fall in the cost of solar and wind power would be highly lucrative if a mining business were to use renewables. Not only that, the stability of renewable energy, which would reduce exposure to volatile diesel prices, is another reason why renewables are becoming popular in the mining sector. Most importantly, powering renewable energy sources in mining would help to reduce CO2 emissions to mitigate against the effects on climate change, reduce emissions from blasting explosive and diesel-powered generators, and help to minimize the carbon footprint and carbon tax payments. Finally, renewable energy predominately helps to drive SDG7 (affordable and clean energy) and SDG13 (climate action) under the UN SDGs. In short, there is a huge demand for renewables in the mining sector due to such things as cost reduction, environmentally friendly considerations and reliable power sources. Energy companies will help and support mining companies to facilitate this huge demand by having lucrative business models, such as investing in co-investor, build-own-operate-transfer and off-take agreement models. Here is what mining CEOs have to say about renewable energy in mining. “We are working on increasing our use of renewables at all of our operations at competitive prices.” (Iván Arriagada, Antofagasta CEO); “The use of solar energy will reduce Essakane’s carbon emissions by 255,000 tonnes over 15 years, will save on energy costs and will be our legacy long after we are gone, as the community will be left with a low-cost power source.” (Stephen Letwin, CEO of IAMGOLD).My prediction is that in the next decade, the mining industry will focus on reaching zero greenhouse gas emissions and will be heavily involved in driving the UN defined sustainable development goals (SDGs).In conclusion, driving concepts of a circular economy and renewable energy would positively impact on the sustainable development goals (SDGs) defined by the UN. Concepts of circular economy and use of renewables can be applied to any organization thinking about how to manage its own waste, how to build a recycling unit, and how to use green-power sources. Driving these concepts would be a step towards a greener economy and a better environment for the next generation. About the author:Kash Sirinanda has a doctorate in mine planning and optimisation from the University of Melbourne, Australia. During his PhD studies and post-doctoral work at the University, Kash developed algorithms for generating designs that maximise the NPV of a mining operation. That work provides the basis for software that assists mine planners to design more profitable mines. Kash was also a visiting scholar at the Colorado School of Mines, USA.He has worked on various mining projects which include due diligence, operation, analytics, optimisation and digital in different commodities around the globe. He is a keynote speaker and provides mining leaders with strategic direction, and visionary leadership.Kash´s vision is to engage, partner, and collaborate with leaders and decision makers to transform a business into a best-in-class, advanced digital and sustainable-enabled competency company.Founder of www.mineconnector.com & www.elitefuturists.comThis article is bought to you by www.secondchanceevents.com Mining Towards 2030, Applying the United Nations SDG’s to MiningReference https://www.ft.com/content/b3b7fe4a-a5fc-11e8-a1b6-f368d365bf0ehttp://worldcongress.energyandmines.com/files/Feature-Article-x-4-v3-ia-opt.pdf

Commentary

Philippine Resources - November 06, 2019

The New Face of Mining

By Fernando PenarroyoGlobal mineral exploration budget saw two consecutive years of growth in 2017 and 2018 despite the uncertainty of economic growth in mature economies and volatility of emerging markets, brought about by the US-China trade dispute. Junior mining companies who survived the previous years’ downtrend increased their exploration budget by thirty-five percent year over year but the majors continue to account for the majority of planned exploration spending. Metals prices were also trending upward and company market capitalization recovered from lows in 2015, resulting in many investors to include the mining sector in their investment portfolio. However, the industry continues to be risk averse though global exploration budget is expected to increase in 2019 particularly for late-stage exploration. Capital market support also financed renewed drilling of promising prospects in areas with stable political and regulatory systems. Drilling programs focused mainly on gold but exploration targeting base metal assets also rebounded in the second half of 2018, indicating a vibrant exploration sector activity not seen since early 2013. The bulk of exploration spending in 2018 went to Latin America which have a high geological prospectivity and relative political stability. Latin American countries accounted for 4 of the top 10 most popular destinations led by Peru, Mexico, and Chile. Meanwhile the Philippines is at number eight of the ten least attractive jurisdictions for mining investment according to the Fraser Institute’s 2017 survey of mining and exploration companies. The survey assessed how mineral endowments and public policy factors such as taxation and regulatory uncertainty affect exploration investment.By virtue of the initial tax reform package implemented by the Duterte administration, mining excise tax has been raised from 2% to 4%. Under the proposed second round of reforms, the Department of Finance wants a “comprehensive mining tax that will give the government a bigger share from miners’ revenues.” There are pending bills filed in both the Senate and House of Representatives that plan to impose 5% mineral royalties on all mining operations on top of the excise tax on minerals and other taxes. President Duterte continues to look at the possibility of imposing a ban on open-pit mining through an executive order (“EO”).The Mining Investment Coordinating Council is reportedly ready to propose the lifting of the open pit mining ban for as long as mining laws are strictly enforced. The Department of Environment and Natural Resources (“DENR”) will recommend the removal of the moratorium on new mining projects imposed under EO 79 and DENR Memorandum Order 2016-01, premised on the passage of a “legislation rationalizing existing revenue sharing schemes and mechanisms.” The DENR is also set to declare high mineral potential areas including all existing operating mines as mineral reservations. Further, the DENR seeks to promote the establishment of mineral processing plants and mandatory mineral processing of all nickel ore. It will finalize the national program and road map for the development of value-adding activities and downstream industries for strategic metallic ores while requiring all operating mines to have ISO certifications. In both houses of Congress there are pending mining bills requiring that mineral ores should be processed within the country and disallowing mining operations from exporting unprocessed mineral ores without a certification of compliance showing presence or lack of rare earth elements.It appears that the Philippine government is now looking at different strategies to extract a greater share of the value from mining operations, employing strategies to include increasing taxes and royalties, and requiring in-country processing or beneficiation prior to export. These are clear manifestations of resource nationalism that makes countries like the Philippines less attractive for mining investment.License to Operate Remains the Top RiskAccording to a 2019 Ernst and Young Report outlining the top ten business risks facing the mining and metals industry based on a survey of over 250 global mining sector participants, “license to operate” topped the list. This has been attributed to the rise of resource nationalism and digital transformation. License to operate has evolved beyond the narrow focus on social and environmental issues. The expectations of society have increased and stakeholder participation has moved beyond the confines of the local host communities. Social media and the internet brought about by the fast pace of progress in technology and digital capabilities, are now able to move information quickly. Resource nationalism has enabled society to examined its role as resources licensor. Society now expects more than just tax and employment opportunities from resource developers. New and strict disclosure laws have caused companies to rethink how value is being created for stakeholder communities including tax contributions, as investors now rely heavily on such disclosures. At the same time legal processes have enabled host communities and civil societies to resort to litigation to enforce environmental laws, enjoined potentially destructive operations, and seek damages for past violations and legacy mines. Any misstep on the part of resource developers can impact their ability to access capital or may even result in a total loss of their license to operate.Under the Mining Act of 1995 and its implementing rules and regulations, the following are the legal requirements for a company to have a license to operate:Technical and financial qualifications to engage in large-scale mining;The area being applied for is open and available for mining activities and is not located within any of the areas where mining is prohibited;An approved environmental compliance certificate, showing that the impacts of mining in the area can be mitigated and/or remediated through proper environmental protection measures;An approved Project Feasibility Study, showing that the mine has enough ore reserves to operate profitability, and can give government a fair share in revenues.The endorsement/approval of the local government units (province, municipality/city, and barangay) that will be impacted by the proposed mining activity; andFree and prior informed consent of the indigenous peoples, if the area being applied for is within their ancestral domains.New Digital TechnologyMiners are now recognizing the use of emerging digital technology to improve productivity. Mobile technology connectivity between workers and management facilitates communication in the mines, ensuring a safe and productive working environment. Mining companies are also revolutionizing data collection in the field with the help of the Internet of Things, which are smart data solutions that help management to relay important data such as water pressure, temperature, concentration of gases and other information. Cloud technology allows management and employees to quickly access and alter essential information, wherever and whenever needed.Robotics allow more autonomous vehicles and machinery to make operations smoother resulting in better safety, greater efficiency and cheaper running costs. In engineering industries which require hard labour intensive tasks, robots will be able to take over and do things faster and more efficiently than humans ever could. Predictive analytics is used currently to reduce maintenance costs and improve equipment availability.New WorkersWhile automation and data analytics technologies may increase efficiency, these will require a workforce that is skilled in data science, analytics, predictive modeling and mechatronics. However, recruiting and retaining this workforce will increase expenses as there is a limited pool of people with these skill sets. Current workforce will also need retraining as knowledge resources and will be required to possess a new set of skills needed to operate new machinery and technology, or work along-side and support automated systems.Universities and data science companies that develop innovations could gain an edge in exploration. Further, exploration innovation will not come only from engineering or geology; it will also emerge from biochemistry, bioengineering, and computer science—disciplines too complex for resources companies to manage in-house. Demand for new jobs such as data scientists, statisticians, and machine-learning specialists is already on the rise among resource developers. Within ten years, mining companies could employ more PhD-level data scientists than geologists. Mining organizations are also employing new tools including cloud-based human resources systems, data analysis of employee performance and real-time digital learning to manage and develop talent.New Energy SourcesFossil fuels are the conventional sources of energy to run mine equipment and electricity for processing, representing a significant part of mine operating costs. Companies are now opting for a mix of energy sources — fossil fuels, hydroelectricity and renewable energy. Mines, seeking to reduce costs and greenhouse gases, will be investigating ways to replace diesel-powered equipment with electric ones, as battery storage technology becomes more reliable and affordable. This will bring a number of benefits including the reduction of underground diesel emissions and ventilation costs.The integration of conventional and renewable sources is critical to ensure reliable and safe power for the mine. Such solutions will enable the mining industry to diversify its energy sources, reduce consumption of fossil fuels and carbon emissions, and cut operating costs.This will ultimately create a new generation of mines that will enhance the industry’s global competitiveness, long-term sustainability, and more importantly, public acceptance.New ThreatsWhile digital technologies will make mines more efficient, mining companies will have to allocate budgets for cybersecurity and devote additional resources to improve their defenses and work harder in embedding security-by-design due to the increasing potential of cyberthreat. As the digital transformation agenda forces organizations to embrace emerging technologies and new business models, cybersecurity is important because there is a heightened exposure to fraud, corruption and other related risks. Increased global connectivity means that anyone with access to company data especially those uploaded to cloud applications, can exploit weaknesses in data security. Companies’ critical digital and physical assets are therefore at a greater risk of theft, damage and manipulation than ever before.New World CommoditiesAt the same time, digital technologies have resulted in a change in commodity demand for critical minerals such as cobalt, lithium and copper. These minerals are required to manufacture energy conversion and storage equipment needed to supply the renewable energy industry which already is beginning to transform and disrupt global demand. The rise of electric vehicles and the production of an ever-growing variety of high tech and green technologies, from batteries, smart phones and laptops to advanced defense systems have also boosted demand and competition for new world commodities. The European Union, South Korea, Japan and US, are defining some minerals as ”critical” to ensure they are available for their supply security and future prosperity. Chinese state-owned enterprises are also already taking a significant proportion of the lithium-ion battery supply chain by purchasing and funding lithium and cobalt mines as well as downstream processing.New MinersWith the advent of digital technology and rising demand for new world commodities, the business of mineral exploration, development and production will not be conducted solely by traditional mining houses and junior companies. The mining and metals companies that will be the winners in the future will ultimately be those who have learned to adjust their business models and collaborate with other industries. Within their organizations, some miners are either using venture capital firms or setting up specialist internal teams to identify more specialized mining prospects as they seek to capture value beyond their core portfolios.The typical profile of a miner will also change. Technology companies may become direct or indirect investors as a way of shoring up and securing supply. With scarce new world commodities supply like cobalt and lithium and other rare earth minerals, cash-rich technology companies will venture into mining to ensure that they can continue to produce their products. Major metal consumers, such as tech giants, are moving to control whole value chains from raw material sourcing up to product delivery. Sovereign funds of rich economies, like Saudi Arabia and Norway will become major stakeholders in the sector as they look for investment opportunities for their petroleum revenue windfalls. On the other hand, state enterprises will wish to secure supply for national industries and protect jobs. Metal traders once again awash with cash because of recent strong commodity prices, are looking for opportunities and will reemerge as prominent players in the sector. Using blockchain technology, new technology entrants can engage in mining without owning any mines or distribution infrastructures in the same way that Uber does with no cars and Airbnb, with no real estate listings.ConclusionChange is the only certainty for today’s global mining industry. While the mining industry is currently benefitting from a positive outlook despite the ongoing trade war, the local industry is still facing a lot of uncertainty because of resource nationalism, regulatory issues, political risk, community relations and social license to operate. Mining companies will increasingly adopt emerging digital technologies to transform their operations in order to gain benefits such as reduced costs, improved health and safety of workers, minimized environmental impacts and a better understanding of the ore body. Innovative technologies will also facilitate the better management of operational costs, improve extraction methods, streamline distribution, and increase worker productivity. Companies will need to attract talents adept at emerging technology and adopt a level of flexibility in their business models by building partnerships with non-traditional, new technology “miners” for future growth.Fernando “Ronnie” S. Penarroyo specializes in Energy and Resources Law, Project Finance and Business Development. He may be contacted at fspenarroyo@gmail.com for any matters or inquiries in relation to the Philippine resources industry. Feel free to follow Atty. Penarroyo on LinkedIn (https://www.linkedin.com/in/fernando-s-penarroyo-2b8a7312/) ReferencesBeroe, Iniyakumar, Global Mining and Exploration Trends, 21 August 2019 https://www.beroeinc.com/article/global-mining-and-exploration-trends/Law, Jonathan, Changing the Face of Mining, Jonathan Law, CSIRO, 23 September 2019 https://www.csiro.au/en/Research/MRF/Areas/Resourceful-magazine/Issue-18/Changing-the-face-of-mining Risks and Opportunities for Mining: Outlook 2019, KPMG International, https://assets.kpmg/content/dam/kpmg/xx/pdf/2019/02/global-mining-risk-survey-2019.pdfTop Ten Business Mining Risks Facing Mining and Metals in 2019-20, Ernst and Young, 2018, https://assets.ey.com/content/dam/ey-sites/ey-com/en_gl/topics/mining-metals/mining-metals-pdfs/ey-top-10-business-risks-facing-mining-and-metals-in-2019-20_v2.pdfWorld Exploration Trends 2018, S&P Global Market Intelligence, March 2019, https://www.spglobal.com/marketintelligence/en/documents/world-exploration-trends-march-2019.pdf

Commentary

Philippine Resources - November 06, 2019

Amb. Delia Domingo Albert named to Order of Rising Sun

By Patricia A. O. BunyeYet another distinction was bestowed upon Diwata’s Chairman, career diplomat and our country’s first woman Foreign Affairs Secretary, Ambassador Delia Domingo Albert, when the Government of Japan conferred on her The Order of the Rising Sun, Gold and Silver Star, in recognition of her contribution to strengthening the economic relations between Japan and the Philippines. It is one of the highest honors conferred by the Japanese Government, following only those given to heads of state and royalty. The actual conferment took place in Tokyo on 23 May 2013, with Ambassador Albert (or “DDA” as she also known) receiving the award from Prime Minister Shinzo Abe, followed by an audience with his Majesty Emperor Naruhito. On 25 September 2019, the Ambassador of Japan to the Philippines, Koji Haneda, hosted a celebration of the conferment at his residence which was attended by DDA’s many friends and admirers, including this writer.In her own remarks at the conferment celebration, DDA recounted her “Japan Story”, which began at the University of the Philippines where a Japan specialist professor inspired her to learn more about that country. Later, still as a student, she had the opportunity to participate in an international students seminar at Tsuda College in Tokyo, followed by a workcamp in Awajishima, where she and other students built a road to link a small fishing village to other places in the island. This experience became the subject of a speech in a competition that she won, leading to tv appearances and magazine covers that allowed her to promote the Philippines in Japan. Even before becoming a diplomat, she was already an ambassador for the Philippines.How she entered the world of diplomacy, she says, was a case of being in the right place, at the right time, with the right people and certainly with the right credentials.” Upon returning to the Philippines from Japan, she was invited to introduce then Secretary of Foreign Affairs Narciso Ramos (the father of President Fidel V. Ramos) at the annual "Soiree Diplomatique" of the University of the Philippines Foreign Service Corps. Because Secretary Ramos’ CV was too short, DDA introduced him in 3 languages: English, French and Japanese, prompting the Secretary to hire her on the spot as his Social and Appointments Secretary because, as he said, she could say "no" in different languages and qualify as his "cordon sanitaire".In my years of working closely with DDA on Diwata and mining industry matters, it is her ability to seize the opportunity to make the most of the “right place, right time, right people” to advance the advocacies that are closest to her heart that has struck me. Because she is single-minded about her objectives and what she would like to achieve for the country, for the mining industry and for women, every encounter is an opportunity to bring people and resources together towards the attainment of the larger goals. Truly, working with her is a master class in diligence, doing your homework, consistency in messaging and so much more.Not only is she passionate about serving the country, her energy for it is inexhaustible. Upon her retirement from the government, she could have opted for a leisurely life, but she continues to be in perpetual motion: speaking, writing, organizing people, creating jobs and businesses, and most of all inspiring others by her example. Diwata, which she founded seven years ago to be, among others, a platform for discussion of the many issues on the mining industry, is just one of the many organizations that look to her for guidance and mentorship. What all these organizations and its members agree on is that we all can’t say no to DDA who never runs out of ideas and constantly challenges us to do better and do more.

Commentary

Philippine Resources - November 05, 2019

Stock Market Expert on PH Mining Club’s Early Days

By Marcelle P. VillegasStock Market speaker, Mr Alexander "Sandy" N. Gilles, CFA, has been involved with the Philippine Mining Club Luncheon since April of 2011. It is a professional networking forum and event that provides a venue for mining industry executives, professionals, students and stakeholders. The club is affiliated with the Melbourne Mining Club and luncheon meetings are held every other month. Last August, Philippine Mining Club (PMC) celebrated their 50th Luncheon Anniversary. On our previous edition, we featured an interview of its founder and Managing Director, Mr Kevin Lewis. This time, Mr Gilles shares his story about PMC’s early days and the team’s life behind the scenes. Mr GIlles is a regular speaker and presenter at PMC for for five minutes of “Stock Watch” where he explains how to gain from stock market moves, whether of a mining company who is presenting its operations, or how to profit from any good economic news. He is a Chartered Financial Analyst (he has passed three exams that are globally-recognized as the board exam for investment analysts) and lecturer on Philippine Stock Exchange seminars. He is a Consultant for Market Education at First Metro Securities where he educates retail investors (mostly beginners) in the stock market and in mutual funds. Mr Gilles is a graduate of the University of the Philippines, with a cum laude degree in BA Communication Arts in Journalism. He has a Masters Degree in Applied Business Economics in University of Asia and the Pacific. He has been writing about the stock market since 1990.He used to teach at the graduate school of business at De La Salle University. Every month, Mr Gilles is interviewed on ABS-CBN News Channel (ANC) and One World TV (formerly Bloomberg TV 5).PRJ: How long have you been part of the PH Mining Club?Mr Gilles: “From the beginning. Kevin Lewis approached me about setting up the first ever mining luncheon. We brainstormed and we helped one another find the first speakers.”“The first-ever speaker was Mr Fernando Moya of Vale Exploration Phils. He spoke about the work done by this Brazilian mining company. That took place five in 2011 or 50 meetings ago.”“I was privileged to be invited to speak on the Stock Watch. I describe the behavior of listed stocks in mining. I show the pros and cons of the Philippine stock market, and whether the audience can make or lose money by buying the shares. Why not do something practical and make a bet that the share prices might go up, assuming the future is bright for the mining company? PRJ: What is it like being part of the Phililippine Mining Club events? What are the challenges behind the scenes?Mr Gilles: “Organisationally, the event requires a lot of planning to make it happen. Hard work. We thank the Platinum, Bronze and Gold sponsors for giving their support and making the event possible. They contribute to the good of the industry, the community and society. They also get some advertising value. I wish that their sales go up, as a reward for their efforts.” “And then the good part is that people are very nice and they have a very good networking and community discussion about the challenges facing the country and the industry.” “The difficulties or challenges are in the details: sound system, lights, the projector, the food and the service. But we try to improve on these organisational details as we go along.”PRJ: In the past, do you have any encounter with anti-mining activists?Mr Gilles: “No, in fact this has been a venue for bringing to light all of the hurts of the mining industry in the hands of other parties and whether the local mining industry can indeed play a part in nation-building. People here tend, for the most part, to be responsible miners who are thinking in terms of working with integrity and also how to do their share in nation-building and improving the exports of the country.” PRJ: Could you share with us your thoughts about the Philippine mining industry in general and how it is doing in the stock market?Mr Gilles: “We have about 11 mining stocks listed. I think Nickel Asia Corp. is one of the bigger ones, and Semirara also. There are 8 or 9 relatively inactive stocks. They're in mining and oil index. I think that the more that profits go up, then the more that they can have more attention from stock market investors. The mining companies have to focus on steady, rising growth in net profits and that's how they will be able to promise higher cash dividends and be able to see higher share prices and greater participation.” “These days, mining stocks are doing poorly in the stock market, just a mirror of their lethargy at the mine sites. Generally, mining company shares are weaker than, say infrastructure stocks, or consumer stocks, or property stocks, or shares of stock of banks. Those other ones are doing fine. They are experiencing strong demand and good sales. The mining industry is facing declining sales and net losses.”“Everyone seems to be against mining and sometimes for the wrong reasons because of misconceptions. So the mining industry is dealing with misconceptions, trying to wipe them aside, but along comes a new misconception.”“Mining industry does not have many friends. You could argue that maybe it deserves it reputation, maybe half of it is true. There have been environmental problems in the past, but the other part, that is also true that there are responsible mining companies.”“So if you give them the chance to prove themselves, they will not only dig the minerals out of the ground but rehabilitate and reforest afterwards.” “I understand there are many places where you can mine where the land is no good for agriculture because there are so many rocks in the ground where the plants won’t grow. So when you remove the rocks from the ground and you replace it with topsoil, it does a favor to the environment.”“A lot more people need to see the many good things mining does so that they don't keep on harping on all the negative things that may have happened to a few of the mining companies in the past.” PRJ: Do you have a message to the readers of Philippine Resources Journal that you would like to impart to them about supporting further the Philippine Mining Club events?Mr Gilles: “Dear readers, please keep inviting your influential friends and contacts to the Mining Luncheon. Refer also more sponsors. With better luncheons come better understanding between the mining executives and regulators, between the mining executives and the greater community, meaning all affected parties. I trust that the Luncheon does its share in promoting peace and understanding… removing prejudices and misconceptions.”“May there be a fair and free exchange of ideas so we can have some nice economic progress and strong mineral exports.” “Also, I would like the readers to contribute scholarships or provide contacts to help the college students of Geology and Mining Engineering. For the meantime, they might all have to apply for jobs abroad. But one day, when the business environment becomes more than 51% pro-mining in the Philippines, then they might all be able to come back from overseas jobs, and start working in local mines.”“It might take many years for the local business, opinion-leaders to be pro-mining. I think that due to resistance, not much exploration is being done. If there are explorations being done, they are stuck there. There is not much production. And where there is production being done, there is not much potential for export or refining. Not yet. ”“So a lot of things have to happen for the mining (and oil) industry to “find its feet” and start running. Lucky for other industries like banking and real estate, they don’t have to suffer public-relations attacks. Their role in the national economy is now respected beyond question. I wish the same for the Mining and Oil industries.”

Commentary

Philippine Resources - November 05, 2019

How Sci-Fi Films and Novels Affect Our Perception of Mining

By Marcelle P. VillegasPop culture, movies, novels, literature, comic books and even video games often catch our attention and sometimes become our momentary bliss as we try to escape the real world... to find entertainment or to relax our minds. These modes in media are quite influential in ways that most of us are unaware of. For young minds or lay people who have no background in the field of Geology or Mining Engineering, their perception of the mining might be influenced by movies and books. Is this helpful in promoting proper information? Is it somehow injecting a negative impression towards mining where lay people believe what is fiction rather than true science?In the film industry, mining is a popular topic in science fiction movies. In the Star Wars movie trilogy, prequels and sequels (in films and novels), it seems evident that storylines show the importance of mining. There are many parts of Star Wars films or books where pro-mining sentiments are projected.Without mining in the Star Wars universe, there are no lightsabers, laser blasters, Star Destroyers, Imperial Fleets or Death Stars. For example, the lightsaber (a fictional and signature weapons of the Jedi Order and Sith Lords) are dependent on kyber crystals (a fictional precious gemstone) for its source of power. In the story, young Jedi apprentices are sent to the Crystal Caves of an ice planet to mine crystals. From there, they can build their own lightsaber. [1]Darth Vader’s success as a leader is marked by the completion of two Death Stars. Mining of minerals made the creation of these battle stations possible.Moreover, In the 2016 film, “Rogue One: A Star Wars Story”, an ancient Jedi Temple (Temple of the Whills) was looted by the Imperials for their kyber crystals which were used for the first Death Star that they were building.Story plots of Star Wars films and novels often show the life of miners and how communities are affected by mining. For example, back in 1977, a Star Wars novel was published titled “Splinter of the Mind's Eye” by Alan Dean Foster. In this novel, Luke Skywalker and Princess Leia were stranded in a swamp-like planet. In order to escape from the Imperials, they concealed their identity by pretending to be miners. The story somehow reflected the life in a planetary mine site.The 1992 novel “Star Wars: Dark Force Rising” by Timothy Zahn also had chapters were mining and its effect on a planet were discussed.Mine sites also made its mark in significant scenes in Star Wars films. In “Star Wars: Episode III - Revenge of the Sith” in 2005, two fictional mine sites were mentioned.At the mine site of Planet Utapau, Jedi Knight Obi-wan Kenobi had a fierce duel with the strange cyborg leader of the Separatist Army, General Grievous. With all the noise, sarcastic lines and blinking lights in the scene, perhaps it is hard to notice that the background resembles an open pit mine. Utapau is a planet with many sinkholes wherein alien cities are found and mining is their main occupation. This is also the hideout of the Separatist Army.Later in the film, we are taken into another mine site. Do you remember how Anakin became Darth Vader? He had a fatal duel with his teacher, Obi-wan while they were at the Mustafarian mining complex in Planet Mustafar. This mining complex is an ore-collection complex in a volcanic planet. The mining facility was also used as a secret hideout of a battle droid factory.Although Star Wars films and novels seem to project a pro-mining picture, these two fictional mine sites in SW Ep III have a negative connotation. First, mine sites are used as secret hideouts of criminals and their illegal activities like manufacturing weapons and aggressive use of military technology. Second, mine sites are dangerous. A young hero can be badly injured and end up being the villainous Darth Vader. Aside from Star Wars in 1977, there was also Battlestar Galactica in 1978 by Glen A. Larson. The movie had a TV series in 1980 and 2009, plus a miniseries in 2003. Mining was rarely mentioned in the film or TV series but the Galactica star fleet does have a Mining Ship designed to gather ores and water from asteroids. Mining became more prominent in Battlestar Galactica on its online gameplay. Therefore the concept of asteroid mining is depicted where mining titanium and water are needed to upgrade spaceships and provide fuel. If “Star Wars” and “Battlestar Galactica” present pro-mining messages, do you think films like “Avatar” and “Man of Steel” are doing the opposite? In 2009, James Cameron’s “Avatar” brought us into the world of Pandora, a habitable moon in the Alpha Centauri star system, which is inhabited by a local tribe of Na’vi (blue-skinned humanoid species of Pandora). The humans inhabited Pandora primarily for the mining of a rare mineral called Unobtanium, a fictional superconductor element not found on Earth. This mineral is needed to save Earth from an energy crisis. Eventually the mining colony expanded and it threatened the existence of the local tribe. The movie presented how mining affects the lives of indigenous people and the environment. Is the problem here mining or is it greed and misuse of technology?In the 2013 film “Man of Steel” (by David Goyer and Christopher Nolan) anti-mining sentiments were not presented directly. However, there was a scene when a holographic recording of Jor-el (Superman’s father), explained how Planet Krypton exploded. He said, “We exhausted our natural resources. As a result, our planet's core became unstable. Eventually, our military leader, General Zod, attempted a coup, but by then it was too late.” [2]Jor-el did not directly say that mining destroyed Planet Krypton, but the concept of “exhausting natural resources” and “planet’s core became unstable” could be hints of irresponsible mining. That part is left for audiences to think about. Looking at classic literature novels, mining and the life of miners were the main topics in Jules Verne’s “The Underground City” (1877) and “The Call of the Wild” (1903) by Jack London.The French sci-fi writer, Jules Verne wrote “Les Indes noires” (The Black Indies) which had English titles like “The Child of the Cavern”, or “Strange Doings Underground”. Other English titles for the novel were “Black Diamonds” and “The Underground City”. The novel is about coal miners in the mining community of Aberfoyle near Stirling, Scotland back in the 1800s. The mysterious setting showed how mining can bring a community together or perhaps how it can bring danger to some in an underground mine site. “The Call of the Wild” is an adventure novel by Jack London that tells a story of a dog named Buck. The story took place in 1890 in Yukon, Canada during the height of the Klondike Gold Rush. In those times, strong and reliable sled dogs were in high demand due to their ability to survive the harsh winter climate. Buck was stolen from his home in Santa Clara Valley and sold as a sled dog in Alaska. The book is not science fiction but is a fictional novel based on real-life events about gold mining. It tells us about the historic Klondike Gold Rush in 1896 - 1899. Gold was discovered there by local miners on 16 August 1896. When news reached Seattle and San Francisco the following year, around 100,000 prospectors migrated to Klondike region of Yukon (north-western Canada). Some became wealthy while others failed. The Klondike Gold Rush became a part of popular culture at that time. In summary, no matter how mining is presented by pop culture or media, it brings awareness on how mining plays a vital role in nation-building through infrastructure. Mining also determines the success or failure of a nation at war. The portrayal of miners, engineers and scientists in films or novels gives its audience or readers an awareness of the difficulties of working in a mine site. The Star Wars Universe for example may be science fiction, but the concept behind mining for minerals, industrialisation, political conflicts, economic issues and wars are reflective of real life struggles. For professionals in the mining industry, the challenge is to help young people and lay people find the balance between facts and fiction. Let us help them understand the scientific facts versus science fiction with regards to mining. Was there a good movie or book that inspired you towards a career in mining or infrastructure? Can you think of a good movie or novel where mining was a center of the plot or narrative?Reference:[1] https://starwars.fandom.com/wiki/Kyber_crystalOther reference - https://www.starwars.com/[2] https://www.quotes.net/movies/man_of_steel_132084* “The Call of the Wild” by Jake London, book cover by Paul Bransom and Charles Bull (1890)

Commentary

Philippine Resources - August 20, 2019

Chinese Investments - Quid Pro Quo and Debt Traps

When President Rodrigo Duterte was elected in 2016, he made a complete turn-around in the Philippines’ relation with China. He cultivated friendship with Beijing in contrast to former President Benigno Aquino's hard-line approach particularly on the South China Sea maritime dispute. In exchange for Duterte’s offer of the olive branch, he was able to secure China’s commitments in the form of official development assistance (“ODA”) and private investments to his infrastructure projects under his Build Build Build (“BBB”) initiative. Duterte was also able to create a Chinese market for the country’s fruit exports and lift China’s travel ban paving the way for the influx of Chinese tourists. Chinese foreign direct investments (“FDI”) were also sought for real estate projects and Philippine offshore gaming operations (“POGO”). Developments in the Philippines bode well for China’s belt and road initiative (“BRI”), an ambitious global development strategy involving infrastructure development and investments spanning 152 countries to improve connectivity and cooperation on a transcontinental scale.The rosy relations with China did not sit well with some sectors however. Manila's arbitration victory against China over the maritime dispute was set aside. Critics lambast Chinese development assistance as nothing more than massive foreign borrowings, which the country pays back at usurious contract rates at the expense of giving away sovereignty but creating jobs for Chinese workers. At the same time, China’s aggressive stance in the South China Sea, now considered as Asia’s most complex territorial dispute involving land reclamation and militarization, have increased tensions and undermined peace, security and stability in the region.InvestmentsDuterte's BBB initiative plans to inject USD160 billion to USD180 billion in new infrastructure improvements during his administration, which saw an infrastructure spending increase from 2.7 percent of gross domestic product (“GDP”) between 2011 and 2015 to 6.3 percent of GDP at the start of 2018. Duterte’s BBB program has a combined price tag of USD171 billion required to complete the 75 projects, half of which is expected to be funded by money from China. Data from the Bangko Sentral ng Pilipinas reveal that FDIs from China more than doubled to USD28.79 million in 2017 from USD10.77 million in 2016. In 2018, Chinese investments have ballooned to USD198.68 million, a whopping 590% increase from 2017.This means that in under three years, Chinese FDIs already amounted to USD232.24 million, greatly exceeding the inflows in the Arroyo and Aquino administrations combined.Five Key Areas of Cooperation1) Policy Coordination:Beijing and Manila signed a Six-Year Development Program for Trade and Economic Cooperation in March 2017, which aims to gradually harmonize mutual development goals and interests within the BRI framework. Complementing the program is the agreement of the Board of Investments and the Bank of China on the 2017-2019 Investment Priorities Plan for Chinese Companies, which is meant to facilitate business-matching activities and industrial linkages.2) Infrastructure development and connectivity:China has pledged $7.34 billion in soft loans or official development assistance and grants for large-scale Philippine infrastructure projects and flagship programs. This amount forms part of $24 billion worth of agreements Beijing committed to President Rodrigo Duterte on his first visit to China in 2016. The basket of loans through official development assistance programs in two tranches ($7.19 billion) includes dam and irrigation, railways, expressways and bridge projects, among others.3) Trade and investment:China became the Philippines’ largest trading partner in early 2017, marking an increase of $15.04 billion (16 percent) from 2016. Furthermore, investments approved by the Philippine Economic Zone Authority and the Board of Investments more than tripled for the first three quarters of 2017 to around $40 million (from $10.9 million in 2016). Private Chinese firms are also making headways in penetrating the Philippine consumer market through mobile firms such as Huawei, Xiaomi, Oppo, and Vivo. Even Alibaba Group is making its presence felt in promoting financial inclusion and digital payment services through strategic partnerships with local firms, such as Globe Fintech Innovations Inc. or Mint. Moreover, Alibaba’s Alipay and Tencent’s WeChat Pay have also signed licensing agreements with Asia United Bank, which favorably enables Chinese tourists to drive the growth of cashless payment systems in the Philippines.4) Financial integration and connectivity: The Bangko Central ng Pilipinas officially added the renminbi as part of its international reserves. It also approved the Peso-Yuan spot market, which will lower the transaction costs for Philippine and Chinese banks and businesses by reducing reliance on the dollar as the intermediate peg. The issuance of “panda bonds” or renminbi-denominated bonds worth $200 million began, which could pave the way for more access to Chinese assistance in Philippine financial requirements.5) People–to–people exchanges and connectivity: China has become the Philippines’ second-largest tourism market. As of November 2017, 14 new flights connect China and the Philippines, and the Philippine Bureau of Immigration initiated a Visa Upon Arrival scheme for Chinese tourists. In the area of media and communications, China Central Television and the Presidential Communications Operations Office have signed an MOU for the rebroadcasting of China Global Television Network programs.Source: Aaron Rabena, The Complex Interdependence of China’s BRI in the PhilippinesAccording to Trade Secretary Ramon Lopez, of the $24-billion investment and credit line pledges that the Philippine government secured from China, $15 billion worth of investment projects were signed and allocated as follows:Itemized list of PH projects covered by China’s $15-B investment pledges to DuterteSource: Amy R. Remo, Philippine Daily InquirerTourismWith the lifting of the travel ban to the Philippines by the Chinese government, 1.26 million Chinese visitors were recorded last year, nearly triple the number in 2015. There is aggressive development of two and three-star hotels in the Manila Bay area and the fringes of the Makati central business district mostly catering to Chinese tourists. Property developer Double Dragon is planning to build more Jinjiang hotels, a chain popular among Chinese tourists and business executives given its brand recall and convenient booking platform. Double Dragon intends to more than double its room count to about 2,000 by 2020 in the country’s capital and other urban areas. It also helped that the Philippine government implemented the visa-upon-arrival scheme for Chinese nationals. Justice Secretary Menardo I. Guevarra however said that his department and the Bureau of Immigration will tighten up the rules since the scheme was reportedly being abused by overstaying Chinese who ended up working in the Philippines. Development of Industrial ParksMemoranda of Understanding between the Philippine and Chinese governments on industrial park development were also signed as Chinese industrial park developers are aware of the rising demand for industrial space in the Philippines given the country’s expanding manufacturing and export base. Among the investment pledges signed worth USD9.5 billion that is seen benefitting the property sector are the following:USD3.46 billion project with Shanghai GeoHarbour Group that involves land reclamation and development projects;Development of large tourism projects and electronic industry parks with Zhongfa Group;Construction of China-Philippines International Techno-Industrial Zone with China National Heavy Machinery Corp; andDevelopment of infrastructure and construction projects with Haocheng Group.Philippine Offshore Gaming OperationsFifty-four (54) POGO licenses offered by the Philippine government that allow companies to set up internet-based casinos for overseas gamblers were bagged by China-linked companies, bringing with them dozens of companies providing information technology support and call center services manned by Mandarin-speaking mainlanders. POGOs have overtaken the Information Technology and Business Process Management (“IT-BPM”) industry in terms of office demand. Demand from Chinese-run firms in the first half of the year already exceeded 2018’s full-year take-up by 37%. In 2018, POGOs took up 229,000 square meters (sq. m.) of office space, while take-up as at June 30 this year was at 315,000 sq. m.Much of the growth in demand could be attributed to the growing acceptance of POGOs among Philippine landlords. From only three (3) local government units giving Letters of No Objection (“LONO”) to POGOs in 2016, there are now seven (7) cities in Metro Manila issuing this document required by the Philippine Amusement and Gaming Corporation for POGOs to operate in their areas. These cities include Makati, Pasay, Parañaque, Mandaluyong, Las Piñas, Muntinlupa, and recently Quezon City by way of Special Use Permits. To date, Taguig City has yet to issue LONOs to POGOs, but hosts the largest IT-BPM locators in the country and remains to be the preferred district.Higher demand from offshore gambling firms filled up the slack brought about by the decline in the IT-BPM sector, whose continued development are further dampened with the government-issued moratorium on economic zone proclamations in Metro Manila, as well as looming fears regarding the second package of the Duterte administration’s Comprehensive Tax Reform Program.POGOs are also driving residential condominium sales especially in the Manila Bay area where office buildings are developed alongside residential towers. The online gaming industry's revenue ballooned to PHP7.35 billion in 2018 from PHP657 million in 2016.Will the Philippines Fall into a Debt Trap?Chinese-funded infrastructure development associated with BRI in developing countries particularly in Asia and Africa has been hounded by fears of “debt traps”. Reports have highlighted that these Chinese investment and financing deals have in some cases involved predatory policies of high interest rates and unsustainable payment schemes for projects mostly identified as white elephants. These resulted in the debtor government unable to pay the loan and the project being acquired by the Chinese funder by virtue of debt-for-equity swaps. The same debt trap scenario has been hounding Chinese ODA in the Philippines with critics comparing China’s interest rates to that of Japan, which supplies a majority of the country’s overseas development aid. Even some officials in government are alarmed at Chinese investments considering their security implications that threatens our sovereignty not only because future debt burdens will result in an “economic invasion” but also at the proliferation of Chinese workers and their access to sensitive strategic geographic areas in our territory.There has been counter arguments that the Philippines will not fall into a Chinese debt trap. A debt trap usually occurs when debt obligations reach an unsustainable threshold of a country’s GDP creating a high debt-to-GDP ratio. Debt service will eventually lead to low growth because most economic output will be used to cover debt payments. However, the country’s economic managers maintain that the country possesses economic fundamentals that mitigate against the danger of excessive indebtedness. They noted that while Philippine debt increased, external debt-to-GDP ratio (in percentage) has actually decreased, indicating that less of the country’s GDP has been used for servicing debt. To avoid being debt trapped, Budget Secretary Benjamin Diokno highlighted that the current administration has pushed for a 75:25 debt mix, with the larger bulk falling on local financing.The government also banks on the successful implementation of the Tax Reform for Acceleration and Inclusion Act to pay off necessary finances related to the BBB plan.Critics warned that Chinese-funded infrastructure projects might end up like the Hambantota International Port in Sri Lanka that was doomed to fail because the port has seen very low levels of shipping traffic but at a high financing cost. The project was referred to by the New York Times as “one of the most vivid examples of China’s ambitious use of loans and aid to gain influence around the world — and of its willingness to play hardball to collect.”The government however believes that unlike the Sri Lankan port project, the local transportation projects lined up for Chinese financing generate internal demand and can successfully contribute to economic growth. The Philippine economy relies on domestic consumption, and there is a huge internal demand for transportation services. In addition, government economic managers argue that the BBB initiative taps a diverse range of development lenders making a debt trap and domination by a single lender highly unlikely, citing that more than half of developmental infrastructure projects in the country are funded by the Japanese International Corporation Agency and the Asian Development Bank. The National Economic Development Authority further clarified that the government will make use of an optimal mix of government domestic financing, aid, and private capital in funding infrastructure projects. Fear of Chinese WorkersAnother major cause of concern is the influx of Chinese workers brought about by offshore gaming operations and infrastructure construction activities. The number of Chinese nationals arriving in the country has nearly tripled since 2016. POGO workers filled hotel rooms and office towers previously intended for IT-BPM operations, snapped up residential condominiums and boosted retail sales. Despite the economic benefits, there has been a mounting opposition from locals who fear Chinese workers are taking away jobs from Filipinos and evading taxes aside from their unruly behavior.From 2016 to 2018, around 335,800 working visas and special work permits were issued to Chinese, representing over half the total number of permits issued to foreigners. More than half of them were for online gaming-related jobs, and the rest for sectors including construction, information, and communications. However many Chinese tourists who entered the Philippines reportedly ended up overstaying to find jobs while others bribed immigration officials to get working visas.To address the situation, the labor, finance and trade secretaries have joined the heads of the tax, immigration and gaming bureaus to form an "interagency committee on the influx of foreign nationals.” The committee seeks to stop tax avoidance by Chinese workers. Finance Secretary Carlos Dominguez estimated that the Bureau of Internal Revenue could collect at least PHP2 billion per month from an estimated 100,000 offshore gaming workers. The government is also planning to transfer Chinese POGO workers to “self-contained” communities or hubs that will limit their interaction with Filipinos. While clamping down on Chinese workers could appease local critics, the government was cautioned that the move would mar relations with China as harsh treatment of foreign workers could backfire on the roughly 30,000 Filipinos working in China excluding the more than 200,000 workers in Macao and Hong Kong.As the Philippine government embarks to tighten the regulation on POGOs, the Chinese embassy in Manila is asking the Philippines to stop hiring Chinese citizens in casinos and other gaming facilities in its efforts to stop the proliferation of cross-border gambling. China will also crack down on “underground banks” and online payment platforms that provide financial settlements for cross-border gambling, and wipe out domestic network operators and companies that provide technical support for such operations. China blames offshore gaming operations for increased crimes and other social problems in China.The Controversy Behind the Kaliwa River Dam ProjectThe Philippine government is seeking funding for a dam project which seeks to address the water crisis brought about by the unexpected demand from the construction industry, shortages in the primary water source, and delays to infrastructure projects designed to bring additional supply onstream. The New Centennial Water Source-Kaliwa Dam Project (“Kaliwa Dam”) comprises a series of three (3) dams in the nearby Sierra Madre mountains, which have been originally planned as a solution to Metro Manila’s water requirements since the Marcos administration.The Kaliwa Dam will add 2,400 million liters per day (“MLD”) to the existing 4,000 MLD supply that serves the 20 million people in Metro Manila and its surrounding regions. According to the Metropolitan Waterwork and Sewerage System (“MWSS”), the initial phase is slated to begin with a 60-meter concrete dam at Kaliwa, which straddles the boundary of Rizal and Quezon provinces, a 25-kilometer conveyance tunnel, and two water treatment plants. If built, the Kaliwa Dam will secure Manila’s water supply for the next 10 to 15 years. The conveyance tunnel, meant to serve the Kaliwa and Laiban dams will have a capacity of 2,400 MLD. The third dam in the series, at Kanan, will dwarf the first two with a potential capacity on its own of 3,720 MLD.Government officials have come out in support of the Kaliwa project, as the MWSS is working on the Environmental Impact Assessment. The road right of way has been secured while the Department of Public Works and Highways is reviewing the design of the dam. The target date for completion of the project is 2023. China Energy Engineering Corp, the company responsible for building the Three Gorges dam in China, has been contracted for construction utilizing Chinese workers. The Kaliwa Dam will be funded through a loan finance agreement signed on 20 November 2018 by the Export-Import Bank of China and the MWSS. The bank will make available a loan facility of up to USD 211.2 million, equivalent to 85 percent of the contracted cost of the dams, at an interest rate of 2 percent.Kaliwa Dam has been opposed on grounds it will lead to environmental destruction and the displacement of indigenous peoples in Sierra Madre. Previously, a Japanese contractor, Global Utility Development Corp. (“GUDC”) made an unsolicited bid to finance and build a far less environmentally impactful seven-meter dam at Kaliwa, only to have their proposal rejected by the Philippine government. The project was also criticized for the use of highly concessional ODA financing instead of the Public-Private Partnership (“PPP”) unsolicited proposal of GUDC.To answer the criticisms, the Department of Finance (“DOF”) explained that the use of ODA financing will benefit Filipino consumers more with cheaper project and financing costs rather than if the project were to go through the PPP route, which would entail additional charges to be passed on to water users by the private proponent to recoup its investments. The project cost went down from PHP 18.7 billion under a PPP scheme to PHP 12.2 billion under ODA. The DOF further explained that even if fees and interest payments were taken into account in completing the project through ODA, the cost would still be significantly lower at PHP 14.5 billion compared to the estimated price tag of PHP 18.7 billion under a PPP scheme.The DOF also clarified that the unsolicited proposal of GUDC only involved the construction of the 7-meter high weir, which is just a portion of the whole project. GUDC has been pushing its unsolicited proposal for a mere intake weir as early as 2008, but the government has, since 2013, opted for the construction of a complete dam. Unlike dams, weirs are dependent on the water flowing from the river source, and susceptible to the effects of both droughts and flooding. In contrast, the 60 meter-high Kaliwa Dam can provide adequate water even during low-flow seasons because it can store water. Unlike a weir where water has the possibility to overflow, a dam’s overflow is channeled into a spillway to prevent flooding.Moreover, the proposed Kaliwa Dam conforms to international safety standards, with its design able to withstand an earthquake of “probable maximum magnitude.”The loan finance agreement for the Kaliwa Dam, among other loan agreements with China, has also been heavily criticized for containing certain contractual provisions onerous to the Philippine government. The DOF addressed the issues as follows:There are no collaterals in any of the loan agreements signed by the Philippine governmentA waiver of immunity is standard across loan agreements the Philippines has signed, whether explicitly stated or implied via an agreement to arbitral proceedings. A waiver of immunity only allows the Philippines' counterparty in an agreement to take the country to arbitration, in the unlikely event that the Philippines defaults on its loans;Arbitral rulings are still subject to the Philippine Constitution, court system and public policy; andThe Philippine government is managing its debt responsibly.US-China Trade War and Geopolitical Risks in the South China SeaDiplomatic relations between the United States and China are on pins and needles as both countries are currently engaged in a trade war, which may lead to an economic slowdown in China and tilt the world towards a global recession. At the same time, the United States is concerned by reports of China's actions in the disputed waters of the South China Sea involving its interference with Vietnamese oil and gas drilling activities and a reported Chinese vessel colliding with a Philippine fishing trawler in the Reed Bank area. US State Department spokesperson Morgan Ortagus said in a statement that China's "repeated provocative actions aimed at the offshore oil and gas development of other claimant states threaten regional energy security and undermine the free and open Indo-Pacific energy market.” Chinese territorial claims over the South China Sea based on its nine-dash line boundary is its justification for its large-scale land reclamation activities on seven reefs (Fiery Cross Reef, Johnson South Reef, Cuarteron Reef, Gaven Reef, Hughes Reef, Mischief Reef and Subi Reef) in the disputed waters that are fully-equipped with military runways and outposts.In June, the People’s Liberation Army (“PLA”) Rocket Force conducted anti-ship ballistic missile tests in a disputed part of the South China Sea. Chinese state media also reported that pilots of the PLA Air Force tested the sea warfare capabilities of their advanced fighter jets over the South China Sea. Tensions in the area further increased as the US Navy carried out what Washington calls “freedom of navigation exercises” close to islands and reefs Beijing claims as its own.While analysts believe that President Donald Trump appeared uninterested in Southeast Asia compared with his predecessor Barack Obama whose “pivot to Asia”, meant to be a centerpiece of his foreign-policy legacy, was nonetheless never fully realized. The Trump administration however has increased the number of military operations in the South China Sea in its efforts to push back on China’s combativeness in the contested waters.The weapon of choice for the US is trade. The Trump administration criticizing the World Trade Organization regime and China’s trade practices, vowed to take action to ensure fair and equal market access for US products. Trump then investigated and issued tariffs targeting China’s industrial policies as a response to the alleged unfair trade practices of China over the years including theft of U.S. intellectual property. China responded by imposing tariffs on certain products it imports from America. Following China’s devaluation of the yuan after the Trump administration threatened to impose additional tariffs on just about every Chinese export, the US labeled China a "currency manipulator.” China has also stopped buying American crops and was reportedly considering more aggressive retaliatory options, including cutting off key parts of the global supply chain in rare earth minerals and flooding the financial system with US Treasury Bills.At home, while some of Philippine business group’s members are feeling pain from the prolonged trade battle, their greater worry is that the conflict will spill over into the volatile South China Sea where tensions are already high because of the maritime dispute between China and the Philippines. Existing companies are more concerned about keeping the sea lanes open and how it plays out in the context of Philippine politics. Though the Philippine government filed and won a case against China’s “nine-dash line” claims in an international tribunal in 2016, it still is reluctant to invoke the arbitral ruling as Duterte temporarily set it aside in pursuit of warmer economic relations with China. Nevertheless, he is expected to make the Hague ruling a central component of his administration’s foreign policy. Duterte said that he would not accept China’s claim on the whole of the South China Sea and would push for the completion of a Code of Conduct in the area. How this will fan out with existing Philippine-China trade relations remains to be seen.Joint development of the petroleum resources within the disputed of the West Philippine Sea is also on top of President Duterte’s agenda as he reportedly amenable to the 60-40 joint exploration deal with China in the West Philippine Sea. The ongoing dispute has certainly dampen the interest in petroleum exploration even as the Department of Energy is embarking on another contracting round for petroleum service contracts. In the meantime, in the absence of exploration activities in offshore Northwest Palawan and Reed Bank, there seems to be no viable upstream petroleum resource alternative to replace the near depleting Malampaya Gas field, a vital energy supply for the highly-industrialized Luzon island power grid.Meanwhile, Philippine military officials and the political opposition expressed grave concerns on the possible strategic maritime and security implications over reported plans of Chinese investors to develop three strategic islands into economic hubs. The islands — Fuga in Cagayan Province and adjacent Grande and Chiquita Islands in Subic Bay, Gambles province — play strategic roles in the country’s national security. Fuga Island is near where the country’s telecommunications cables pass, making it theoretically possible for someone based on this island to tap into these cables. Grande and Chiquita Islands, on the other hand, provide a strategic location to monitor activities in Subic, which is being eyed as a base for the Philippine Navy. There were also reports of Chinese warships passing through Philippine waters and oceanographic survey ships conducting research within the Philippine EEZ without permission from the government.Clearly, the Duterte administration is balancing the country’s economic interest by de-securitizing its approach to the South China Sea conflict in its cordial relations with China but at the same time recognizing the US as the only superpower in the world and sole defense treaty ally of the Philippines, as manifested in the Philippine National Security Policy 2017-2022. The Philippines will maintain the Visiting Forces Agreement and the Enhanced Defense Cooperation Agreement with the US. At the same time, Defense Secretary Delfin Lorenzana calls for the need to review the reassurance of mutual defense under the 1951 Mutual Defense Treaty with the US. ConclusionThe BRI has stoked fears that participating countries engaging China in large infrastructure projects and investments exposes these countries to debt risks giving China the legal cover to gain access to resources, forfeit assets, and impinge on sovereignty in pursuit of its geopolitical interests and world dominance. Chinese investments offer much potential to Philippine infrastructure projects ,which is playing catch up to our Asian peers, and failure to tap these would again cause the Philippines to miss the boat. The main concerns are both political and financial. By opening up to Chinese investments, is the Philippines opening itself not only to risks on commercial and operational viability, but most importantly to geopolitical risks and sovereignty issues? To address financial issues for Chinese-funded projects, government regulators must conduct thorough risk planning and feasibility studies, and for greater transparency involve the private sector, local government units, and other stakeholders. On the side of China, it must ensure that proposed projects are transparent, commercially viable, and participating Chinese contractors are of good standing and Chinese workers follow Philippine labor and immigration laws. So much is at stake because should these Chinese-funded projects fail, there are risks of legal action and nationalist backlash against the Duterte administration. These will damage China’s BRI program and standing in the international community. It will also not help in mending the reputation of Chinese firms operating abroad which are perceived as exploiters of natural resources and destroyers of the environment particularly in developing countries. More importantly, China must assure that its infrastructure loans will not violate the sovereignty of debtor countries lest it will only give credence to the “Yellow Peril” conspiracy theory that China intends to take over the world.Fernando “Ronnie” S. Penarroyo specializes in Energy and Resources Law, Project Finance and Business Development. He may be contacted at fspenarroyo@gmail.com for any matters or inquiries in relation to the Philippine resources industry. Feel free to follow Atty. Penarroyo on LinkedIn (https://www.linkedin.com/in/fernando-s-penarroyo-2b8a7312/) References:Beltran, Bjorn Biel M., “Offshore Gaming Firms’ Growth Drives Demand for Office Space”, BusinessWorld, 30 July 2019, https://www.bworldonline.com/offshore-gaming-firms-growth-drives-demand-for-office-space/ Camba, Alvin,“Inside Belt and Road 'Debt Trap' Projects in the Philippines”, The Jamestown Foundation’s China Brief, 01 February 2019, https://international.thenewslens.com/article/112937“China’s ‘One Belt One Road’ to Benefit Philippine Property”, Colliers Radar, 11 April 2018, https://www.colliers.com/en-gb/philippines/about/media/chinas_one_belt_one_road_to_benefit_philippine_property“China’s One Belt One Road: The Dragon Spreads Its Wings over Asia”, Colliers Radar, 06 March 2018, https://www.colliers.com/-/media/files/apac/asia/colliers-dragon-asia-obor.pdfEstrada, Darlene V., “China’s Belt and Road Initiative: Implications for the Philippines”, Foreign Service Institute, Vol. V, No. 3, March 2018, http://www.fsi.gov.ph/chinas-belt-and-road-initiative-implications-for-the-philippines/ Green, David, “The Philippines’ China Dam Controversy”, The Diplomat, 27 March 2019, https://thediplomat.com/2019/03/the-philippines-china-dam-controversy/ Katigbak, Jovito Jose P., “Bridging the Infrastructure Investment Gap Through Foreign Aid: A Briefer on Chinese ODA”, Center for International Relations and Strategic Studies of the Foreign Service Institute, Vol. V., No. 11, June 2018, http://www.fsi.gov.ph/bridging-the-infrastructure-investment-gap-through-foreign-aid-a-briefer-on-chinese-oda/ “National Security Policy for Change and Well Being of the Filipino People 2017-2022”, National Security Council, April 2017, http://www.nsc.gov.ph/attachments/article/NSP/NSP-2017-2022.pdf “ODA Financing on Kaliwa Dam Project to Benefit Consumers with Cheaper Project, Financing Costs”, Department of Finance, 26 March 2019, https://www.dof.gov.ph/index.php/oda-financing-on-kaliwa-dam-project-to-benefit-consumers-with-cheaper-project-financing-costs/Rabena, Aaron, “The Complex Interdependence of China’s BRI in the Philippines”, Brinknews, 30 October 2018, https://www.brinknews.com/the-complex-interdependence-of-chinas-bri-in-the-philippines/ Remo, Amy R., “Itemized List of PH Projects Covered by China’s $15-B Investment Pledges to Duterte", Philippine Daily Inquirer, October 23, 2016 https://business.inquirer.net/217269/itemized-list-ph-projects-covered-chinas-15-b-investment-pledges-duterteSalvador, Alma Maria O., “The New Cold War in the US-China Trade Wars: Application to the Philippine Foreign Policy”, Blueboard, http://ateneo.edu/ls/soss/political-science/news/research/‘new-cold-war’-us-china-trade-wars-application-philippineUy, Weslene, Rise of Chinese investments in Duterte’s Philippines: Some Consequences, 19 March 2019, https://www.philstar.com/other-sections/news-feature/2019/03/19/1902800/rise-chinese-investments-dutertes-philippines-some-consequencesVenzon, Cliff, “Duterte Under the Gun Over Chinese Influx into Philippines”, Nikkei Asia, 05 March 2019, https://asia.nikkei.com/Spotlight/Asia-Insight/Duterte-under-the-gun-over-Chinese-influx-into-PhilippinesZheng, Sarah, “Risk of US-China Clash in South China Sea Worries Philippine Firms More Than Trade War”, South China Morning Post, 23 Dec. 2018, https://www.scmp.com/news/china/diplomacy/article/2176793/us-china-clash-south-china-sea-not-trade-war-worries

Commentary

Philippine Resources - August 20, 2019

Meeting the Sustainable Development Goals in Mining

Patricia A. O. Bunye In September 2015, the United Nations member states adopted the 2030 Agenda for Sustainable Development, which includes a set of Sustainable Development Goals (SDGs) for 2015-2030 and represents a comprehensive plan of action for social inclusion, environmental sustainability and economic development. Mining, as an industry employing millions of people, often in the remotest and least developed countries, is viewed as having the opportunity and potential to positively contribute to all 17 SDGs. Conversely, it is also seen as the culprit for many of the challenges that the SDGs are precisely trying to address – environmental degradation, displacement of populations, worsening economic and social inequality, armed conflicts, gender-based violence, tax evasion and corruption, increased risk for many health problems, and the violation of human rights. What are the 17 SDGs and how are they relevant to mining and metals? SDG 1: No PovertyMining can help reduce poverty through direct employment, sourcing goods and services locally and the payment of taxes and royalties which enable the development of essential social and economic infrastructure. Where companies operate in remote areas, poverty levels can be significant. Mining’s presence can either alleviate poverty through job creation and skills development, or exacerbate poverty if traditional livelihoods and ways of life are adversely affected.SDG 2: Zero HungerWhere mining companies operate in traditionally agricultural areas, the impact of mining on water, land and biodiversity resources can be a concern to farmers and local communities and can become a potential source of social conflict. Mining companies may also operate in areas with chronic malnutrition, especially among children. Companies can manage their impacts on natural resources, through limiting the amount of land they use and enabling access by communities to lands they manage which may provide important sources of food. They can also collaborate with development agencies to help eliminate hunger.SDG 3: Good Health and Well-beingMine workers may be exposed to increased occupational health risks such as cardiovascular and respiratory diseases, as well as communicable diseases like tuberculosis and HIV/AIDS. Certain working arrangements such as fly-in/fly-out have been linked to mental illness, substance abuse and domestic violence. Community health can also be of concern where mining takes place in poorer areas with limited healthcare facilities, making communities more vulnerable to disease. SDG 4: Quality EducationInvestments of mining companies in education improve local capacity, build the future workforce and strengthen relationships with host communities.SDG 5: Gender EqualityMining companies have a responsibility to build inclusive access to jobs and economic opportunities.SDG 6: Clean Water and SanitationWater is essential at every stage in a mine’s life cycle. Mining and metals operations are significant users of water and can also negatively impact water access and quality if sound water management practices are not applied.SDG 7: Affordable and Clean EnergyMining is energy intensive and accounts for almost 2% of global energy use. As a major energy user, the industry can cut carbon emissions through accelerating energy efficiency measures and deploying renewable technologies.SDG 8: Decent Work and Economic GrowthWhere mining is significant in the economic life of a country, it can boost GDP by a number of percentage points. For growth to be fully inclusive, it requires government to effectively manage revenues from mining and encourage linkages to the broader economy.SDG 9: Industry, Innovation, and InfrastructureMining requires significant infrastructure investments in order to develop, operate and export mined products. SDG 10 Reducing InequalityWhile governments are primarily responsible for reducing inequality through policies and redistributive mechanisms, mining companies can actively promote inclusion through local employment and procurement and through supporting livelihood diversification. They can also embrace an inclusive approach to community consultation and participation in decision-making.SDG 11 Sustainable Cities and CommunitiesThe products of mining such as steel, copper and aluminum play a vital role in the construction of cities. They also help connect cities physically and virtually by supporting road, rail and air transport networks as well as ICT infrastructure. SDG 12 Responsible Consumption and ProductionWhile mining produces the materials essential for modern society, it also generates large quantities of waste. Concerted collaborative action is required to increase recycling rates. SDG 13 Climate ActionMining companies can contribute to addressing climate change by reducing their carbon footprint and by engaging in dialogue with stakeholders to enhance adaptive capacities and integrate climate change measures into policies and strategies. SDG 14 Life Below WaterMining companies can contribute to ocean sustainability by identifying marine-related impacts and mitigation strategies, understanding the dependence of local communities on marine resources that may be adversely impacted by mining and contributing to the protection and conservation of the oceans and seas.SDG 15 Life On LandMining companies have a potentially important role to play in biodiversity and conservation management.SDG 16 Peace, Justice, and Strong InstitutionsMining companies can contribute to peaceful societies by respecting human rights, providing access to information, supporting representative decision-making, working to avoid company-community conflict and carefully managing their security approaches to ensure they decrease rather than increase the likelihood of conflict. Companies can also commit to transparency across the scope of their activities that impact society, from transparency of mineral revenues and payments to transparency in commitments made to local communities. SDG 17 Partnerships for the Goals.The 2030 Agenda, particularly SDG17 (Partnerships for the Goals) emphasizes that building a sustainable world is a multi-stakeholder endeavor.First, governments are responsible for the laws, rules and policies on mineral extraction and all areas covered by the SDGs, including social services, public health, education, public infrastructure, economic policies and setting environmental performance standards. Second, companies are responsible for undertaking their core business operations in a responsible manner that respects human rights, complies with government regulations, maximizes positive contributions to society, and avoids or minimizes negative economic, social, cultural and environmental impacts. Companies also pay taxes and royalties, engage in responsible policy dialogue and can collaborate to leverage resources and make social investments, ensuring that these are aligned with local development priorities.Third, non-government organizations are responsible for working alongside governments and companies to address gaps and ensure governments and companies are fulfilling their responsibilities to society. Fourth, development partners including multilateral institutions and bilateral donors can support in many ways: from providing project finance conditioned on adherence to sustainability standards to providing technical expertise and capacity-building support to governments, communities and local enterprises. They can also contribute to sharing cross-country best practices and promoting greater alignment between mining sector policies, practices and sustainable development. In ensuring the attainment of the SDGs in the Philippines, the National Economic and Development Authority (“NEDA”) performs oversight and monitoring to ensure coordination among the various stakeholders. Specifically, it is NEDA which chairs the Multi-Sectoral Committee on International Human Development Commitments (“MC-IHDC”), which is composed of national government agencies and non-government organizations, and ensures the mainstreaming of the SDGs into policies of the government. On the other hand, the Department of Interior and Local Government is in charge of the localization of SDGs within local government units.Other government agencies involved in mapping mining into the attainment of SDGs in the Philippines include the Department of Environment and Natural Resources, specifically the Mines and Geosciences Bureau (“MGB”) and the Environmental Management Bureau, the Department of Energy, the Climate Change Commission, the Department of Labor and Employment, the Department of Health and the National Commission on Indigenous Peoples. The SDGs have been integrated into the Philippine Development Plan (“PDP”) 2017-2022 and in our various sectoral development plans, and are measured and reported annually through the Socioeconomic Report. To support the monitoring of the SDGs and the PDP, NEDA introduced the SDG Annex in the formulation of the 2018 Socioeconomic Report. Since the PDP is the de facto implementation mechanism of the SDGs and the PDP is assessed through the SER, each chapter of the PDP and SER is used to assess the contributions and consistency of the Philippines’ actions with the global commitments of the SDGs. The SDG Annex of the SER identifies the Philippine policies, programs, activities, and projects (“PPAPs”) that are implemented to meet our SDG targets. The MGB’s role in implementing SDG 13 on Climate Action, for example, is covered by the PPAPs for “Geological Assessment for Risk Reduction and Resiliency”.While each of the SDGs sounds lofty and difficult to achieve, there are concrete ways for these to be integrated by mining companies into their core business. Further, it is imperative for these companies, along with the mining industry as a whole, to collaborate with other stakeholders – particularly the government, civil society, and communities - to leverage their resources to achieve the SDGs.Patricia A. O. Bunye is a Senior Partner at Cruz Marcelo & Tenefrancia where she heads its Mining & Natural Resources Department and Energy practice group. She is also an intellectual property lawyer and has served as President of the Licensing Executives Society International (www.lesi.org), the first Filipino and Southeast Asian to hold this position.

Commentary

Philippine Resources - August 20, 2019

Hitting A Hole in One at the 4th Rocks and Forests Golf

By Marcelle P. Villegas5 July 2019, Villamor Air Base Golf Course, Pasay City: The 4th Rocks and Forests Invitational Golf Tournament was held, organised by the UP Geology Alumni Association (UPGAA) and the Society of Filipino Foresters Inc. (SFFI). This annual golf tournament is one UPGAA’s major projects which aims to generate funds for the different projects of the group. Part of the proceeds of the tournament this year will be used to purchase equipment for National Institute for Geological Sciences (NIGS). UPGAA is a non-stock, non-profit organisation. Its main objective is to provide a forum for the members of the UP Geology Alumni Association. Here, there can interact through mutually beneficial contacts and “to provide avenues for drawing upon the knowledge and expertise of the alumni for furthering the cause of UP NIGS as a School of Excellence”. UPGAA is headed by its Chairman, Joey Nelson Ayson while SFFI is headed by its President, Tom Valdez.Both UPGAA and NIGS work together to further develop the geological profession. SFFI is an independent, democratic, non-profit, non-political and non-partisan professional organisation of the foresters in the Philippines. They actively promote and support sustainable management of forest resources. Their vision is to be “committed professionals for the advancement of forest technologies, practice and biodiversity in the country essentially contributing to the sound environmental management, social justice and economic development”. With UPGAA working for the advancement of the geological profession and SFFI is doing the same for the advancement of the forestry profession, their partnership further led in addressing the climate change problem. In 2016, UPGAA and SFFI started a collaboration and worked together on the Carbon Neutral Program (CNP). This program “joins the global call for climate change mitigation in view of the dreadful impacts that can change the world’s landscape as we know it today”.For more information:UP Geology Alumni Association (UPGAA) - https://upgaa.com/Society of Filipino Foresters Inc. (SFFI) - https://sffi.org.ph/_ _ _ _ _Acknowledgement:UP Geology Alumni Association (UPGAA) for the photos and golf tournament updates

Commentary

Philippine Resources - August 20, 2019

Green Solutions at the 7th PH Electric Vehicle Summit 2019

By Marcelle P. VillegasIs the Philippines coping with the global trend for green solutions in transportation? A lot of electric vehicles are out now in the international market. With this wave in green technology, the Electric Vehicle Association of the Philippines (eVAP) organised and hosted the 7th Philippine Electric Vehicle Summit 2019. This was held last 17 - 18 July 2019 at the SMX Convention Center, Pasay City.The eVAP is the Philippines’ main voice of the electric vehicle industry and for the past 7 years, they had been hosting the Philippine Electric Vehicle Summit. This year’s theme is “Modernizing the Transport Landscape: Driving Sustainable Growth”. [1]“Infrastructure and government support to sustain the growth of the EV industry are now being set up. The 3,000 Bemac eTrikes of the Department of Energy (DOE) [which are] now being deployed nationwide are becoming more visible in various LGUs,” according to Mr Edmund Araga, EVAP President. He stated that the e-vehicle industry has become mainstream in the Philippines. He also said that more e-Jeepneys are being deployed in Metro Manila, Visayas and Mindanao regions as part of the PUV Modernization Program. Mr Agara also noted that the program is planning to upgrade some 200,000 public utility jeepneys for the next six years with modern public utility vehicles powered by either a Euro 4-diesel engine or an electric motor. He also stated that retail financing is available for PUVMP via Landbank of the Philippines and the Development Bank of the Philippines (DBP) [1]The summit featured car manufacturers like Nissan, Mitsubishi and Hyundai to showcase their electric vehicles. The summit also had technical sessions where transport officials, local government representatives, members of the academe and electric vehicle and automotive industry players were present. During the summit, Atty. Dante Bravo, President of the Philippine Nickel Industry Association (PNIA) emphasised the role of nickel in the growing e-vehicle industry. He said that the nickel industry is poised to supply the growing demand for nickel in lithium ion batteries that are used to provide power to electric vehicles. [2]Mr Bravo said, “We want the nickel industry to be able to rise to the challenge of globalization, and in the process we would need a long-term strategic approach. This can be embodied through collaboration with our partner industries as well as the private, public and academic sectors. Thus, I would like to enjoin our friends in the EV sector to join us in the pursuit of an industrialised and sustainable economy.” [3]References:[1] Manahan IV, Ruben. (5 June 2019). “‘Green Light’ for PH EV Summit 2019”. Retrived from - Carmudi Philippines - www.carmudi.com.ph/journal/green-light-for-ph-ev-summit-2019/amp/[2] {18 July 2019). “Briefs: Nickel, EVS moving forward together”. Daily Tribune.[3] (19 July 2019) “Nickel Industry’s Role in Growing The EV Industry”. Philippine Nickel Industry Association website. Retrieved from - https://www.philippinenickel.org/news-and-updates/press-release/nickel-industrys-role-in-growing-the-ev-industry/

Commentary

Philippine Resources - August 20, 2019

Oil and Gas PH 2019 and PhilMarine 2019

By Marcelle P. Villegas18 - 20 June 2019 - Oil and Gas Philippines is co-located with PhilMarine 2019 at the SMX Convention Center, Pasay City. This is an annual three-day event that features products in the oil and gas sector, fire protection systems and materials, flare systems and equipment, electromechanical equipment, ships, boats, vessel equipment and services, and more! Maritime Industry Authority (MARINA) hosted the PhilMarine 2019 and their theme is “Continuous Quality and Productivity Improvement in the Shipbuilding and Ship Repair Sector.”On day 1 at the 6th PhilMarine 2019 International Maritime Exhibition, the Maritime Industry Authority Technical Conference was held. Also on this day, the MARINA signed an agreement with a Japanese association to adopt Japanese technology in the manufacturing of resources for the Philippine shipbuilding and ship repair industry (SBSR). The cooperation agreement was signed by Vice Admiral Narciso Vingson, Jr (MARINA Officer in Charge) and Chairman Shinzo Yamada of Japan Ship Machinery and Equipment Association (JSMEA). [1] “With Japan’s latest technologies and expert strategies, it has sufficient machinery and technical skills to discover and provide solutions to challenges. We hope that this cooperation agreement between the MARINA and JSMEA will aid us in building a solid ancillary industry for SBSR sector, which will generate jobs for millions of Filipinos... Together, let us achieve a mutual progress of having a flourishing Philippine maritime industry.” he stated. [1] Vice Admiral Vingson said that this agreement will open new opportunities for partnership in investments between the Japanese and Filipino businesses. This will give local shipbuilders an easy access to good quality shipbuilding and ship repair materials.He also stated that the objective of the Maritime Industry Development Plan (MIDP) will be more feasible now since locally manufactured resources are already within reach. “So, in 10 year, hopefully, the programs under the MIDP are no longer plans, but tangible results.”Mr Yamada said, “We believe that with the MoU (memorandum of understanding), it would bring a solid relationship between MARINA and JSMEA and a good relationship between the Philippines and Japan.” He noted that the Southeast Asian maritime market is important to JSMEA. Thus, he hopes that his company will be able to provide progress in the maritime industry in the Philippines. [1]PhilMarine 2019 is the only specialised event in the Philippines that brings together an international array of maritime, shipbuilding, offshore, oil and gas naval defense, and other supporting industries to showcase the latest developments in the maritime industry. The objective is to improve the current shipbuilding, technology and equipment and to maintain the Philippines’ ranking as the world’s 5th largest shipbuilding nation.On day 2, “The Philippine’s Domestic Shipping Modernization Forum and SONAME General Assembly and Election” was held. This was hosted by the Society of Naval Architects and Marine Engineers, Inc. (SONAME). Welcome Remarks were given by Engr. Sammuel T. Lim, Chairman of SONAME. Some of the topics presented were:- “Philippine Domestic Shipping & Shipbuilding Situation: by Engr. Ramon C. Hernandez (Director, Shipyard Regulations Service, Maritime Industry Authority)- “High-Speed Craft Technologies for Philippine Shipping” by Ms Julie Zhu, General Manager, Pio-Ship Design & System Integrate and Harbin Engineering University Ship Equipment & Technology Co. Ltd.- “Probabilistic Damage Stability - Case Studies for Philippine Ferries” by Engr. Jerome M. Manuel (Pres., PRS Tech)- “The Shipbuilding Cooperation between Philippines and China” by Mr Wang Xiaohal (Vice General Manager, China Shipbuilding Trading, Co. Ltd. - Shanghai)On day 3, the 146th Maritime Forum and Exhibitors Night were held. The PhilMarine 2019 had attendees from 20 countries. There were 152 companies/exhibitors who participated at the 6,500 square meter exhibition space. Of note, 60% of the companies in the exhibit have already renewed their participation for 2020.The event was organised by Fireworks Trade Exhibitions and Conferences Philippines, Inc. This company is a part of Fireworks Trade Media Group, one of Asia’s largest independently owned trade media companies. Reference:[1] Factao, Genevi. (19 June 2019). “Pro-ship sector agreement signed”. The Manila Times.

Commentary

Philippine Resources - May 29, 2019

Innovation in Mining

Patricia A. O. BunyeIn the last few months, I’ve had the pleasure of attending presentations of the Philippine Council for Industry Energy and Emerging Technology Research and Development (PCIEERD) of the Department of Science and Technology (DOST) before the mining industry. In March, at the 1st quarter mining lecture series which it co-hosted with the Chamber of Mines of the Philippines, PCIEERD presented “A Roadmap for Value-Adding in the Mining Industry”. In April, at the 1st Philippine Natural Resources Development Forum, PCIEERD presented its Mining & Minerals Program, where it highlighted programs for value-adding of both metallic and non-metallic minerals, as well as programs for the rehabilitation of mined-out areas. In particular, PCIEERD discussed a technical and economic pre-feasibility study to determine the most ironmaking technology for the value adding of Philippine magnetite resources.PCIEERD is one of the three sectoral planning councils of the DOST and is mandated to serve as the central agency in the formulation of policies, plans, and programs, as well as in the implementation of strategies in the industry, energy, and emerging technology sectors through the following science and technology programs: (1) support for research and development; (2) human resource and institution development; (3) science and technology (S&T) information dissemination and promotion; (4) support for technology transfer and commercialization; and (4) policy development and advocacy.It covers the following industries: electronics and semiconductors; mining and minerals; metals and engineering; and food processing. Under emerging technologies, it covers: materials science/nanotechnology; genomics/biotechnology; information and communications technology; space technology applications; photonics; artificial intelligence; data science and creative industries.PCIEERD’s mandate has always fascinated me as I see it as the intersection of two of my main practice areas: mining and intellectual property. Ordinarily, there would be very few instances when I would be able to apply both mining and intellectual property law to the same matter or assignment. Further, given that the local mining industry is often more focused on regulatory (and often existential) challenges, technological innovation is often not at the forefront of the operations of local mining companies. Nevertheless, as PCIEERRD’s recent presentations have shown, there are a number of opportunities, including to fund projects that have commercial potential and to push further research that will benefit the mining industry.In more advanced mining jurisdictions like Australia, for example, mining and engineering companies are using intellectual property rights to create new revenue streams, maintain a competitive edge, boost their assets and secure new finance. For these companies, intellectual property is not just about preventing others from copying their products, but also leveraging or exploiting intellectual property to create new revenue streams. We typically think of intellectual property in terms of trademarks or protecting names or brands, or literary or artistic works which are copyrightable. Certainly, industry leaders should safeguard their ability to assert and protect their fairly won competitive edge.Patent protection for their innovations, whether it be a new type of machine, a new way of doing something, or a new chemical composition, should also be considered. While much of the research and development may be occurring outside the Philippines, it is inevitable that certain improvements are made locally owing to our unique conditions and the innate ingenuity of Pinoys. The mining, energy, and engineering sectors are highly competitive so even small improvements in efficiency or reliability can yield significant returns. Whether the improvements result in a greater output or time efficiency, or simply improve health and safety, it is worth considering protecting the intellectual property underlying those improvements. Codelco, Chile’s state owned mining company, is an example of a mining company with a well-developed IP strategy, which involves transferring and adapting existing technologies and developing new ones to address the challenges confronting each of the company’s eight mining and processing operations (Andina, Chuquicamata, El Teniente, Gabriela Mistral, Ministro Hales, Radomiro Tomic, Salvador and Ventanas). In recent years, Codelco has been focusing on developing smart mining technologies for use at every stage of the production process, from extraction at the mine site to the production of cathodes used in a wide variety of electrical and electronic goods and systems. These technologies are helping Codelco to improve productivity and operational efficiency and to make significant cost savings. Tele-robotic mining, for example, using remote-controlled robotic machinery to extract minerals, is reducing the risks for miners. The company’s intellectual property strategy is applied in three main areas: (1) intellectual property plays a role in the development of prototype mining equipment. Codelco establishes agreements with commercial suppliers to build prototypes which, once validated, are incorporated into its production processes. Within the framework of these agreements, Codelco transfers its intellectual property to its commercial partner(s) to optimize product development.(2) Codelco protects the technologies that it develops with patents. It has filed at least 250 patent applications, of which 134 have been granted in Chile and 21 in other countries. The company is among the top Chilean mining companies in its use of the patent system. Codelco’s first patent, granted in 1978, was for the Teniente Converter, an energy-efficient furnace that is capable of melting and converting copper concentrate. It also holds patents on many mining processes, including for bioleaching, where micro-organisms are used for low-cost and efficient extraction of copper from low-grade sulfide minerals.(3) Intellectual property plays an important role in the context of the network of alliances Codelco is building with different companies, research centers and universities to develop innovative, high-performance solutions in line with its strategic goals. While Codelco has led the way, studies conducted by firms such as Deloitte on innovation in the mining industry tend to show that, in most other companies, the innovation that is occurring remains focused on achieving short-term returns rather than creating long-term sustainable benefits. Many mining companies are still struggling to drive organization-wide change by setting a clear vision for, or adopting a culture of, innovation. Most initiatives remain funded by operating or capital budgets, leaving innovation to be pursued rather haphazardly, rather than as an integral part of the employees’ day-to-day jobs. Nevertheless, there are bright spots. Africa is one of the regions trying to lead the way as a hub for mining technology by building an ecosystem that includes not just the mining companies, but also the government, universities, incubators, IT companies and community leaders to provide an environment that supports and encourages collaboration and the development of new mining technologies and networks. As PCIEERD and the Chamber of Mines regularly bring together experts from different disciplines through the “Digging Deeper” series, it is hoped that their ongoing interaction on science and policy-related issues affecting the industry bears similar fruit.Patricia A. O. Bunye is a Senior Partner at Cruz Marcelo & Tenefrancia where she heads its Mining & Natural Resources Department and Energy practice group. She is also an intellectual property lawyer and has served as President of the Licensing Executives Society International (www.lesi.org), the first Filipino and Southeast Asian to hold this position.

Commentary

Philippine Resources - May 29, 2019

Mining and Sexual Identity - Is Our Industry Ready for Gay Workers?

By Fernando “Ronnie” S. Penarroyo The Philippines prides itself as a gay-friendly nation where consensual homosexual relations, homosexuality, and transgenderism are not illegal. The country’s legislative history reached a milestone when Geraldine Roman from Bataan was elected as the first transwoman member of Congress. Meanwhile, seventy-three countries still criminalize consensual same sex relationships while only a few legally recognize the identity of transpeople and protect the rights of intersex people. The mining industry in the Philippines has been traditionally dominated by men with its macho culture and homophobic tendencies. In the past, even women were banned from entering underground mines or working in offshore drilling rigs. I remember my days in the university when geology majors were considered campus “barakos” (studs) and effeminate students were often silently scorned if not treated as outcasts. Since we spent a lot of our academic time doing research in the field, who would want to share a tent or bunk with someone whose sexual orientation was rather ambiguous? Those with gender identity issues were thus discouraged to work in the mine sites and if there were a few, they were prevented from coming out because the industry’s culture discouraged complainants from speaking out as they may be subjected to further abuse by co-workers. For many employees, coming out may be a very affirming experience, but for those working in the mining industry, it can be really difficult.On numerous occasions when I have been invited as resource speaker before geology and mining engineering majors in various universities all over the country, I noticed through the years that the number of students who belong to the lesbian, gay, bisexual, transgender and intersex (“LGBTI” in this article but collectively referred to as “LGBTQIAP+”) community is increasing. I often wonder if there will be a place for them in the resources industry or will they end up working in call centers and customer services. When these post-millennials join the resources industry workforce, will they have enough legal protection against discrimination based on their sexual orientation and gender identity?Background on LGBTI RightsSignificant progress in LGBTI rights have been achieved on account of legal reforms and transformation in social attitudes despite setbacks and reversals in some countries which opted to adhere to strict religious fundamentalism. In 2000, the United Nations launched the UN Global Compact, the world’s largest corporate responsibility initiative, to encourage companies to respect universal principles and contribute to a more sustainable and inclusive global economy. The UN Guiding Principles on Business and Human Rights, endorsed by the UN Human Rights Council in June 2011, are the global standards for preventing and addressing the risk of adverse impacts on human rights linked to business activity. The UN Guiding Principles do not constitute an international instrument that creates legal obligations for companies; the corporate responsibility to respect is a norm of expected conduct based on existing international law and conventions.In September 2017, the Office of the High Commissioner for Human Rights published a guide on tackling discrimination against LGBTI as set out in “Tackling Discrimination against Lesbian, Gay, Bi, Trans, & Intersex People: Standard of Conduct for Business.” Under the guide, companies have a responsibility to respect international human rights standards including the rights of LGBTI people, regardless of the company size, structure, sector, or location.The standards offer practical guidance to companies on how to respect and support the rights of LGBTI people in the workplace, marketplace and community. The standards were developed in partnership with the Institute for Human Rights and Business, and built on the outcome of a series of regional consultations held in 2016 and 2017 in Mumbai, New York, Kampala and Brussels. They were designed to support companies in reviewing existing policies and practices, and establishing new ones to respect and promote the human rights of LGBTI people. They were also intended to support rights-affirming interactions between companies and a wide range of stakeholders from staff to customers, suppliers, shareholders, communities, governments, lawmakers, and trade unions.The Five StandardsAt All Times1 RESPECT HUMAN RIGHTS. All businesses have a responsibility to respect human rights — including the rights of LGBTI people — in their operations and business relationships.In the Workplace2 ELIMINATE DISCRIMINATION. Employees and other people with whom the business engages are entitled to freedom from discrimination. Businesses should ensure that there is no discrimination in their recruitment, employment, working conditions, benefits, respect for privacy, or treatment of harassment.3 PROVIDE SUPPORT. Businesses are expected to provide a positive, affirmative environment within their organization so that LGBTI employees can work with dignity and without stigma. This standard requires businesses to go beyond equal benefits and take steps to ensure inclusion, including addressing the specific workplace needs of LGBTI people.In the Marketplace4 PREVENT OTHER HUMAN RIGHTS VIOLATIONS. Businesses should ensure that they do not discriminate against LGBTI suppliers or distributors, or against LGBTI customers in accessing the company’s products and/or services. In their business relationships, businesses should also ensure that business partners do not discriminate.In the Community5 ACT IN THE PUBLIC SPHERE. Businesses are encouraged to use their leverage to contribute to stopping human rights abuses in the countries in which they operate. In doing so, they should consult closely with local communities and organizations to identify what constructive approaches businesses can take in contexts where legal frameworks and existing practices violate the human rights of LGBTI people. Such steps can include public advocacy, collective action, social dialogue, financial, and in-kind support for organizations advancing LGBTI rights and challenging the validity or implementation of abusive government actions. LGBTI Rights in the PhilippinesArticle II Section 11 of the Constitution declares an existing state policy to value the dignity of every human person and to guarantee full respect for human rights. However, there is no comprehensive anti-discrimination law to date or, code of ethics or legitimate guidelines to protect the rights of LGBTI persons though there are occasional ordinances and policies at the local level.While the Labor Code of the Philippines (1974) mandates that it is the duty of the State to afford “protection to labor, promote full employment, ensure equal work opportunities regardless of sex, race or creed and regulate the relations between workers and employers” (Article 3) and declares it to be “unlawful for any employer to discriminate against any woman employee with respect to terms and conditions of employment solely on account of her sex,” (Article 135), there is no clear reference to LGBTI rights.Philippine laws define sex as being biologically male or female and the Supreme Court, in the absence of contrary legal definitions, follows the construction of sex as such. Republic Act (“RA”) No. 9048, “The Clerical Error Law of 2001”, as amended by RA 10172, “An Act Further Authorizing the City or Municipal Civil Registrar or the Consul General to Correct Clerical or Typographical Errors in the Day and Month in the Date of Birth or Sex of a Person Appearing in the Civil Registrar Without Need of a Judicial Order”, prohibits transsexual persons to change their first name and sex on their birth certificates, and strictly provides that:No petition for correction of erroneous entry concerning the sex of a person shall be entertained ………… except if the petition is accompanied by a certification issued by an accredited government physician attesting to the fact that the petitioner has not undergone sex change or sex transplant.In Republic vs. Cagandahan (G.R. No. 166676, 12 September 2008), the Supreme Court however decided in favor of changing the name and sex of an intersex person on the claims that he had Congenital Adrenal Hyperplasia, which caused him to manifest female biological characteristics. The SC held that:Ultimately, we are of the view that where the person is biologically or naturally intersex the determining factor in his gender classification would be what the individual, like respondent, having reached the age of majority, with good reason thinks of his/her sex. Respondent here thinks of himself as a male and considering that his body produces high levels of male hormones (androgen) there is preponderant biological support for considering him as being male. Sexual development in cases of intersex persons makes the gender classification at birth inconclusive. It is at maturity that the gender of such persons, like respondent, is fixed.The Court nevertheless denied transgender persons from legally changing their name and sex by virtue of RA 9048 Section 2 where “no correction must involve the change of nationality, age, status or sex of the petitioner”, when it ruled that “a change of name is not a matter of right but of judicial discretion, to be exercised in the light of the reasons adduced and the consequences that will follow.”Sexual Orientation and Gender Identity and Expression (“SOGIE”) Equality BillAn anti-discrimination bill is currently being deliberated in Congress to address LGBTI rights. The SOGIE Equality Bill is intended to prevent various economic and public accommodation-related acts of discrimination against people based on their sexual orientation, gender identity or expression. The current versions of the bill are sponsored by Kaka Bag-ao, Geraldine Roman, and Tom Villarin in the House of Representatives, and Risa Hontiveros in the Senate. The version in the House of Representative (H.B. 4982) passed its final reading on 20 September 2017. On the other hand, the the Senate version (S.B.N. 1271) is still under interpolation with Senate President Vicente Sotto III, and Senators Manny Pacquiao and Joel Villanueva, opposing it on religious grounds.The current draft includes, among others, seven (7) prohibited acts that refer to discriminative processes against the LGBTI in employment or in the labor market: 1. inclusion of SOGIE, or its disclosure in the criteria for hiring, promotion, transfer, designation, re-assignment, dismissal, performance review, training, incentives, benefits or allowances, privileges, and other terms or conditions of employment; 2. evoking or refusing the accreditation, recognition, or registration to organize in the workplace; 3. publishing information that intends to “out” or reveal the SOGIE of a person without their consent; 4. engaging in public speech that is meant to shame, insult, or normalize discrimination against LGBTIs which intimidates them; 5. subjecting persons or groups of persons to harassment in the form of unwanted conduct, or patterns of conduct, or series of acts which annoys, bullies, demeans, offends, threatens, intimidates, or creates a distressing environment for the LGBTI which is motivated by the offended party’s SOGIE, which may manifest in the form of assault, stalking, derogatory comments, lewd propositions, and may be conducted in various mediums, including but not limited to visual representation, broadcast communication, communication through mail or any telecommunication device, or through the internet; 6. subjecting any person to gender profiling, degrading investigatory searches including recording or analyzing a person to make a generalization about their SOGIE; and 7. subjecting a person to analogous acts that impairs their enjoyment, or recognition of their rights and freedoms. However, the bill has been criticized for not clearly stating how it plans to address issues regarding benefits that heterosexual people enjoy, as well as the issue of being called for hazardous tasks, or tasks beyond official office hours. The bill also fails to address or recognize the structures of heteronormativity that assumes that the LGBTI, unlike heterosexual employees, do not have families, or partners that equally deserve their time and attention. The bill does not clearly encourage public or private organizations to allot benefits that the LGBTI may also want to claim such as parental leaves for those who have legally, or taken responsibility for other younger relatives and act as their parents, or domestic partner benefits such as insurance, and the transfer of benefits of an employee upon death to their partners. The sponsors mentioned that the bill will not cover same-sex marriage. However, social protection is linked to marriage equality and civil partnerships, because it is through legally recognizing same-sex relationships that LGBTI workers and their partners and children become entitled to medical care, pensions, adoption rights, and parental leave and child benefits on the same terms as heterosexual couples. The bill is also silent on the the rights of the children of LGBTI persons as these children continue to experience discrimination, social stigmatization, and a general climate of intolerance and negative public attitudes. In addition, access to health services provided through workplaces also presents an obstacle for many LBGTI workers as, due to stigma, many refrain from accessing needed and critical prevention, treatment and support services. The difficulty also lies in how discriminated workers access legal redress as the process may entail costs in the form of economic loss from the prolonged legal procedure. Even where legal protection is in place, many LGBTI workers still face considerable discrimination and harassment, leading many to conceal their sexual orientation or transfer to industries with a more tolerant working environment. Nonetheless, the passing of anti-discrimination legislation against LGBTI people in the workplace can influence the public toward greater tolerance, and support from both workers’ and employers’ organizations will lead to an effective implementation of the law. LGBTI in Philippine Labor MarketIn 2014 the UNDP and USAID came out with a report, “Being LGBT in Asia: The Philippines Country Report, A Participatory Review and Analysis of the Legal and Social Environment for Lesbian, Gay, Bisexual and Transgender (LGBT) Persons and Civil Society”, which contained a compilation and presentation of studies and documents from the Philippine National LGBTI Community dialogue held in Manila on June 2013. The report reviewed the legal and social environment that the LGBTIs face, which was discussed by fifty (50) LGBTI organizations from around the country regarding eight themes which included education, health, employment, family affairs, community, religion, media, and politics. The report noted that because of the absence of any statistics, the extent of employment related-SOGIE discrimination was hidden, and government agencies in charge of issues regarding SOGIE discrimination did not report on LGBTI discrimination. The report also mentioned how discrimination in the labor market can occur during the process of hiring, assigning wages, granting promotions and benefits, as well as with regard to retention. Dismissals also occurred based on a person’s SOGIE as companies were unwilling to destroy their reputation by hiring LGBTIs who act and present themselves according to their SOGIE.Participants of the dialogue also reported how LGBTIs were hired in order to be abused or taken advantage of because of their unable to legally marry which leads to less benefits costs for the company in the absence of maternity or paternity leaves. LGBTI employees were also forced to take graveyard shifts or overtime work as they have no families to go home to, as well as assigning stereotypical jobs because of their gender identity. Sexual harassment on the workplace was another issue that the LGBTIs face because of their SOGIE. To deal with issues with regards to LGBTI employment, the participants of the dialogue created a list of recommendations as follows: (1) pushing for legislation focus in on LGBTI people in the workplace; (2) auditing existing employment related policies in relation to LGBTI issues; (3) working with existing government projects to include LGBTI people such as SOGIE inclusion in poverty reduction strategies; (4) provide for psychosocial and paralegal support to the LGBTI in the workplace; (5) strengthening LGBTIs by forming an LGBTI group, or labor union; and (6) pushing for SOGIE sensitivity trainings.In another study done by Patricia Angela Luzano Enriquez, “How Discrimination Happens - Being LGBT and the Experience of Discrimination in Access to Employment, and the Labour Market in the Philippines” (2017), the research paper noted that twenty-five percent (25%) of respondents have experienced harassment from their employers or superior officers, thirty-three percent (33%) have experienced harassment from co-workers, and sixty percent (60%) have been the subject of slurs and jokes in the workplace.Prior to the publication of Enriquez’s paper, research on SOGIE-based discrimination and related incidents in the work setting were usually qualitative in the form of case studies and in-depth interviews compiled by advocacy and human rights organizations, which monitored and documented these incidents while providing legal aid, counseling, and other services to victims. The first ever “Philippine Corporate SOGIE Diversity and Inclusiveness (CSDI) Index”, a study conducted by the Philippine LGBT Chamber of Commerce and research firm Cogencia Consulting, Inc., and supported by the Netherlands Embassy in Manila, surveyed one hundred (100) companies on their anti-discrimination and equal opportunity employment policies. The study revealed that only seventeen percent (17%) of the respondents — all foreign headquartered companies in the business process outsourcing sector — have anti-discrimination policies explicitly referencing measures to counteract gender discrimination. These policies refer to explicitly prohibiting specific actions such as misgendering, “outing” (publicizing an employee’s SOGIE without their consent), and making use of slurs against LGBTQIAP+ employees. Moreover, only ten (10) out of the seventeen (17) companies have a structure for tracking SOGIE inclusiveness, and only six have actually conducted educational discussions or SOGIE trainings. Eleven (11) out of the seventeen (17) companies explicitly use the terms “sexual orientation,” “gender identity,” and “gender expression” in their anti-discrimination policies, and only three (3) companies have policies against discrimination on the basis of sexual orientation. More than half of the companies surveyed have no plans of creating any SOGIE-based anti-discrimination policies.Definition of TermsSOGIE – stands for Sexual Orientation, Gender Identity and Gender Expression. Sexual orientation is the direction of emotional, sexual attraction, or conduct toward people of the same sex (homosexual orientation) or towards people of both sexes (bisexual orientation), or towards people of the opposite sex (heterosexual orientation), or to the absence of sexual attraction (asexual orientation). Gender Identity, on the other hand, refers to the personal sense of identity as characterized, among others, by lifestyle, manner of clothing, inclinations, and behavior in relation to masculine or feminine conventions. Gender expression are the various ways a person communicates gender identity to others through behavior, clothing, hairstyles, communication or speech pattern, or body characteristics.LGBTQIAP+ – the collective of persons who are lesbian, gay, bisexual, transgender, queer, intersex, asexual, pansexual, and the plus (+) stands to incorporate other marginalized and minority sexuality/gender identities.Heteronormativity – of, relating to, or based on the attitude that heterosexuality is the only normal and natural expression of sexuality.Misgendering – referring to someone (especially a transgender person) using a word, usually a pronoun or form of address that does not correctly reflect the gender with which they identify.Pinkwashing – using a variety of marketing and political strategies to promote brands or products by appealing to LGBTQIAP+-friendliness, in order to be perceived as progressive, modern and tolerant.SOGIE-based Discrimination – refers to any distinction, exclusion, restriction, or preference which is based on any ground such as sex, sexual orientation, gender identity or expression, and which has the purpose or effect of nullifying or impairing the recognition, access to, enjoyment, or exercise by all persons on an equal footing of all rights and freedoms.Equal employment opportunity – policies that help ensure that people are hired, retained and promoted on the basis of their ability to perform a job, rather than discriminated against on the basis of factors such as race, color, age, gender, national origin, sexual orientation, veteran status, religion, marital status, or mental or physical disability.LGBTI in the Mining Industry The Human Rights Campaign (“HCR”) annually compiles and updates its Corporate Equality Index (“CEI”), a list of companies meeting criteria identifying them as LGBTI-inclusive. The index ranks companies based on a number of indicators, such as access to benefits for same-sex partners, transgender inclusive health insurance, existence of resource groups and diversity councils, and positive external relationships with the LGBTI community, among others. The coveted distinction of “Best Places to Work for LGBT Equality” reflects true inclusion of the transgender workforce, from non-discrimination protections, to inclusive benefits and diversity practices, to respectful gender transition guidelines, allowing employees to self-identity based on gender identity, and engaging the broader transgender community. Previous CEI showed that the mining industry lagged behind other male-dominated industries, such as oil and gas, aerospace and defense, and automotive. It even lagged professional sports, if measured by the media coverage of well-known athletes announcing themselves as gay or lesbian. In the 2018 CEI, Alcoa Corp. and Newmont Mining Corp. qualified under Mining and Metals, while Chevron Corp., ConocoPhillips, and Shell Oil Co. qualified under Oil and Gas.The mining and metals industry is one of the worst in terms of engagement on LGBTI issues, according to Deena Fidas, Director of the Workplace Equality Program at HRC. One of the reasons the industry is doing so poorly is attributed to mining companies’ lack of interaction with the public.In Australia, LGBTI mineworkers participating in a study felt that because of their sexual orientation and gender identity they couldn’t relate to their heterosexual counterparts at the workplace. Fear of discrimination and prejudice was a common issue among the sampled group of participants with most claiming to have experienced or witnessed acts of racism, discrimination and prejudice either directly at them or towards others like them, thus reducing their desire to socialize with other employees while on-site. One individual in particular, found that many of the younger and newer LGBTI employees entering into fly-in, fly-out employment struggle to adjust to the attitude and behavior exhibited by those around them and as a result end up leaving. This was commonly attributed to the work environment which fostered a group mentality that lead to most LGBTI participating in the study to perceive the mining industry as being backwards and homophobic. People from LGBTI backgrounds were in a regular state of fear each day due to discrimination thus, socialization was kept at a minimal and mainly professional level to avoid confrontation and discrimination. The Business Case for Recognizing LGBTI RightsTo combat stereotypes and prejudices against LGBTI workers, many forward-thinking workplaces are implementing diversity policies, usually as part of a framework to promote equality and diversity. While primarily a matter of workers’ rights, such an approach also makes business sense. This awareness makes sense from a business perspective because laws are constantly changing, which puts companies at risk of costly legal liabilities, as in the case of a gay coal miner who sued and entered into a settlement with Spartan Mining Co., a subsidiary of Massey Energy Co., alleging the company’s management didn’t protect him from abusive co-workers.Mining companies are also likely to see their talent pools shrink the longer they ignore LGBTI issues. Prejudice on account of sexual orientation and gender identity, can impede the recruitment or promotion of the best candidate for the job. When employers pass over talented individuals based on characteristics with no bearing or relevance for the job, such as their sexual orientation, gender identity and sex characteristics, businesses are left with a sub-optimal workforce, diminishing their ability to deliver. Discrimination forces otherwise qualified LGBTI employees to quit their jobs, creating unnecessary turnover-related costs and loss of talent. Discrimination and prejudice in the workplace impair productivity, contribute to absenteeism, and undercut motivation, entrepreneurship, and company loyalty. LGBTI people are unlikely to apply for jobs in a hostile industry, and so are their parents, friends and allies.In fact, the LGBTI community was a useful ally of the mining industry during the United Kingdom Miners’ Strike in 1984, which was known as one of the bitterest industrial disputes in UK history. To support the miners, many activist groups were formed to aid in the strike efforts, one of which was the “Lesbians and Gays Support the Miners”, a London-based activist group who formed a relationship with the mining community in Wales’ Dulais Valley.Moreover, a diverse workforce brings with it different ideas and ways of doing things that can propel innovation and appeal to additional markets. An analysis by the Harvard Business Review (2014) also showed that companies with a high level of diversity perform better. Employees at more diverse companies in the US were forty-five percent (45%) more likely to report that their firm’s market share grew over the previous year and seventy percent (70%) more likely to report that the firm had entered a new market. A Credit Suisse study (2014) also showed that companies that embraced LBGTI employees outperformed in average return on equity, cash flow return on investment, and an increase in profit.Discrimination, including against LGBTI people, affects productivity and undermines social and economic development, with negative consequences for both companies and communities. It also leads to loss of market share. In a study done by the Harvard Business Review (2016), diversity and inclusion is associated with business success.The CEI shows that the majority of Fortune 500 companies offer extensive protections and equal benefits for LGBTI employees. It’s no surprise that many CEI top-scoring businesses are also top-performing businesses. They know that creating inclusive workplaces and communities where their employees can thrive is an investment in their own competitive edge. That’s why LGBTI-inclusive workplace policies are becoming the norm in the U.S., and having an impact around the globe. Today, more than ninety percent (90%) of CEI-rated businesses have embraced both sexual orientation and gender identity employment protections for their U.S. and global operations.ConclusionLabor rights recognition of LGBTI persons is now becoming the norm as many countries are now adopting anti-discrimination laws based on sexual orientation or gender identity. It is also clear that countries with strong laws and policies promoting equality for LGBTI workers, and companies that implement such laws and policies fare better, which provide a business and economic case for inclusion and diversity. An inclusive, diverse, and non-discriminatory industry would not be hard put to find allies from the LGBTI community especially for a much-maligned and misunderstood sector like mining.Fernando “Ronnie” S. Penarroyo specializes in Energy and Resources Law, Project Finance and Business Development. He may be contacted at fspenarroyo@gmail.com for any matters or inquiries in relation to the Philippine resources industry. Feel free to follow Atty. Penarroyo on LinkedIn (https://www.linkedin.com/in/fernando-s-penarroyo-2b8a7312/)References:Alicias, Maria Dolores, The Socially-Excluded Groups in the Philippines: A Context Analysis for the Voice Program, January 2017, https://knowledge.hivos.org/sites/default/files/voice-phl-baseline-report-2017_0.pdfBahtic, Mirsad, “FIFO Employment and its Impact on LGBT FIFO Workers and Partners”, Curtin University, http://www.aomevents.com/media/files/AIRAANZ%2016/55.pdfBeing LGBT in Asia: The Philippines Country Report, A Participatory Review and Analysis of the Legal and Social Environment for Lesbian, Gay, Bisexual and Transgender (LGBT) Persons and Civil Society, USAID UNDP, 2014, https://www.usaid.gov/sites/default/files/documents/1861/2014%20UNDP-USAID%20Philippines%20LGBT%20Country%20Report%20-%20FINAL.pdfBerger, Eric and Doillet, Nicole, “What’s the effect of pro- LGBT policies on stock Price?”, Harvard Business Review, July 2014, https://hbr.org/2014/07/whats-the-effect-ofpro-lgbt-policies-on-stock-price.Corporate Equality Index 2019: Rating Workplaces on Lesbian, Gay, Bisexual, Transgender, and Queer Equality, Human Rights Campaign, https://assets2.hrc.org/files/assets/resources/CEI-2019-FullReport.pdf?_ga=2.182396199.1824982299.1557286736-994957363.1553496100Enriquez, Patricia Angela Luzano, “How Discrimination Happens Being LGBT and the Experience of Discrimination in Access to Employment, and the Labour Market in the Philippines”, Social Policy for Development, 15 December 2017, Retrieved from the Erasmus University Thesis Repository website: https://thesis.eur.nl/pub/41669/Enriquez-Patricia-Angela-Luzano-.pdf Gaynor, Carla Elizabeth, “Affect, Coalitional Politics, and Pride: Imagining Activism through Lesbians and Gays Support the Miners and the United Kingdom Miners’ Strike of 1984-5”, Syracuse University, January 2017, https://surface.syr.edu/cgi/viewcontent.cgi?article=1124&context=thesisILO Declaration on Social Justice for a Fair Globalization, International Labor Organization, 10 June 2008, http://www.ilo.org/wcmsp5/groups/public/---dgreports/---cabinet/documents/genericdocument/wcms_371208.pdf.Kwentong Bebot: Lived Experiences of Lesbians, Bisexual and Transgender Women in the Philippines, Rainbow Rights Project, https://www.outrightinternational.org/sites/default/files/PhilippinesCC.pdfPhilippine Corporate SOGIE Diversity & Inclusiveness Index 2018, A project of the Philippine LGBT Chamber of Commerce with research undertaken by Cogencia Consulting Inc., Supported by the Kingdom of the Netherlands, http://lgbtph.org/wp-content/uploads/2018/11/LGBTChamber-CSDIindex2018.pdfRenders, Ashley, “Homophobic Culture Permeates Mining Industry”, The Corporate Knights, 06 February 2015, https://www.corporateknights.com/channels/mining/lgbt-employees-14232150/Rock, David and Grant, Heidi, “Why Diverse Teams Are Smarter,” Harvard Business Review, November 2016, https://hbr.org/2016/11/why-diverse-teams-are-smarter.Tackling Discrimination against Lesbian, Gay, Bi, Trans, & Intersex People: Standards of Conduct for Business, Office of the UN High Commissioner for Human Rights, September 2017, https://www.unfe.org/wp-content/uploads/2017/09/UN-Standards-of-Conduct.pdf“United Nations Reports,” The Office of the United Nations High Commissioner of Human Rights, accessed August 2, 2017, http://www.ohchr.org/EN/Issues/Discrimination/Pages/LGBTUNReports.aspx.Vara, Vauhini, “It’s Still Hard to Come Out at Work”, The New Yorker, 31 October 2014, https://www.newyorker.com/business/currency/still-hard-come-work

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Commentary

Philippine Resources - May 29, 2019

Mine-Mouth power plant development to lower electricity cost in the Philippines

By: Guillermo R. Balce, Arnulfo A. Robles, Ismael U. Ocampo and Mars T. OcampoABSTRACTThe development of coal-fired mine-mouth power plants in the Philippines is one measure that can address the country’s need for electricity cost reduction, energy supply security and a shift from coal to renewable energy.The use of mine-mouth power plants as a low-cost electricity development option in the USA, Thailand, Indonesia, Laos and Mongolia are cited as examples that can guide the Philippines.A review of coal resources in the country indicates 10 potential sites for mine-mouth power plants distributed in proximity to the electricity grid and HVDC substations. The estimated cost of generating electricity from these sites ranges from Php2.61/kwh to Php4.45/kwh, which is significantly lower than the average generation cost of Php5.425 in 2014.Because mine-mouth power plants use indigenous coal resources, they can reduce the Philippines’ exposure to coal price volatility and protect the country from coal supply disruption due to commercial and political risks.Coal-fired mine-mouth power plants utilizing circulating fluidized bed combustion (CFBC) technology and low calorific value lignite can be converted to biomass-fired plants, which can use agricultural waste or wood chips sourced from systematic management of forest areas near plant sites. Thus, coal-fired mine-mouth power development is a potential measure in the country’s quest to shift from coal to renewable energy.We therefore recommend that coal-fired mine-mouth power plants be given an incentive of priority dispatch similar to renewable energy plants. Benefits to host communities should be increased from 0.01 to 0.02 PhP/kWh (DOE 1-94) to encourage hosting of coal-biomass-fired mine-mouth power plants. COC holders and power plant investors should be encouraged to operate commercial biomass farms or industrial forest management areas in the vicinity of the plants to provide continuous fuel supply. The increment of 0.01 PhP/kWh may be shared among the barangays, municipalities and provinces to encourage the LGUs to host such power plants.Inclusive economic growth is further assured by organizing the nearby communities into forest management cooperatives to plant and grow appropriate fast-growing tree species to supply the wood chip requirements of the coal-biomass-fired power plant. For instance, planting rubber trees that would provide rubber sap to a nearby rubber factory after 5 years would be ideal. This would provide immediate income after only 5 years up to 10 years when the rubber trees would be fully mature for wood chipping as they no longer produce rubber sap.By planting specific areas in an organized manner, a continuous year-round supply of biomass wood chips is assured for the power plant, thereby extending the life of the mine-mouth coal reserves. Moreover, the biomass tree farm would ensure ecological balance within the surface/strip mine area. Once the coal reserves are exhausted or deemed expensive to mine, the biomass tree farm would ensure continued power plant operation, provide steady income to local communities and assure the supply of rubber sap to a nearby raw rubber factory.INTRODUCTIONA mine-mouth power plant is a coal-fired electricity generating plant built near its source of coal, a coal mine. Its location is primarily dictated by water availability, as a 100-MW plant requires about 5 million liters of water per day for cooling and steam production. A run-of-river source with a discharge of 60 liters per second (0.06 cu. m. per sec.) is sufficient. However, water flow must be continuous all year round and ponding is necessary to store and conserve water and prevent warm water from the plant to merge with the cool water of the natural drainage system.The most widely used coal-fired generating technologies are CFBC and pulverized coal (PC). Table 1 shows the comparative parameters of the different CFBC and PC options. Before 1990, PC technology used turbine generating steam at a subcritical pressure of 16.5 mega pascal (MPa) and a temperature of 540°C. By 1990 the design had improved to a supercritical pressure of ≥ 22.1 MPa and temperatures of 540-560°C. In 1995-2000, this had been upgraded to pressures of 27.5-30 MPa and temperatures of 560-600°C. After 2000, the ultra-supercritical conditions of ≥ 30 MPa and ≥600°C became the most favored design for PC power plants. For mine-mouth power plants that use low-heating value lignite, the favored technology is the supercritical CFBC.MINE MOUTH AS LOW-COST ELECTRICITY DEVELOPMENT OPTIONNorth AmericaAdvances in long-range electricity transmission in the 1990s enabled the construction of many mine-mouth power plants in the USA and Western Canada. These plants did not need long-distance rail transport and shipping, which reduced fuel costs by at least 50% and substantially reduced the cost of producing electricity. In 1995, Wyoming coal sent to Georgia, USA was sold for USD 29 per ton while it sold for only USD 13 per ton in Wyoming. The cost of converting coal to electricity in a mine-mouth power plant in Gillete, Wyoming was just a little over one US cent per Kwh.ThailandLocated in the mountains of Lampang, Thailand, the Mae Moh Power Plant is Southeast Asia’s first mine-mouth power plant. It was built in four phases from 1978 to 1996 by the Electricity Generating Authority of Thailand (EGAT). The power plant at present consists of 10 units with a total installed capacity of 2,400 MW, accounting for 12% of Thailand’s installed capacity and generating approximately 18,000 gigawatt-hours of electricity per year. The nearby Mae Moh Coal Mine supplies 40,000 tons of lignite per day or approximately 16 million tons per year from a coal resource of approximately 864 million tons. The cost of power production is 60 satang per Kwh (1.6 US cent per Kwh). In March 2015 EGAT awarded Alstom Power Systems and Marubeni Corporation an EPC contract for the construction of a new unit with an installed capacity of 600 MW to replace the plant’s existing Units 4 to 7. The new unit is programmed to be commissioned in 2018 and will use the ultra-supercritical boiler and steam turbine technology.IndonesiaThe Indonesian government aims to make mine-mouth power plants as the main source of its 35,000-MW programmed additional capacity by 2019. To encourage coal mine license holders and operators to develop vast but inaccessible lignite deposits for mine-mouth power plants, the Ministry of Energy and Mineral Resources issued regulations (MEMR 10/14 and MEMR 9/16) providing for incentive pricing of coal from mines to mine-mouth power plants with assured margins of 15%-25% over production cost. The resulting minimum regulated price of coal sold to mine-mouth power plants, called “coal base price”, is USD 16.36 per ton at an assured margin of 15% and coal quality of less than GAR 3000 or higher. In response, PT Bukit Asam, Indonesia’s national coal corporation, has committed to build 4,400 MW within its coal concessions in Sumatra. Since May 2010 PT PLN, the national power corporation, has been bidding out approximately 6,510 MW of mine-mouth plants in Sumatra, with an estimated cost of USD 110.44 million per 100 MW. Independent power producers (IPPs) have committed 800 MW also in Sumatra. In East Kalimantan, Borneo Island, coal mining company PT Adaro is constructing a 600-MW mine-mouth plant within its license area.LaosIn the Lao Peoples Democratic Republic (Lao PDR), the Hongsa Mine Mouth Power Project, a 2,504 MW (4 x 626 MW) mine mouth power plant complex, has been under construction since October 2010. The first two units of 626 MW each were commissioned in 2015, with the third unit commissioned in 2016. The fourth unit began operating this year upon expansion of lignite reserves from 370.8 million tons to 577 million tons with an average heating value of 2500 Kcal/kg. Coal cost averages Baht 300/ton or USD 8.10/ton. Power production is allocated mainly to Thailand’s EGAT under a 25-year power purchase agreement (PPA) with the Thai-Lao Lignite Company at 5.7 US cents per Kwh. Figure 1 is a layout of Hongsa Lignite Mine and Power Plant showing the water source for steam generation and cooling.MongoliaIn Mongolia, the Chandgana Mine Mouth Power Project is in the last stage of negotiation for government guarantee of revenue requirement for international financing. The project consists of four units of 150 MW each totaling 600 MW licensed since 2010 to Prophecy Power Generation LLC (PPG). Coal source is the Chandgana Tal Coal Deposit of Chandgana Coal LLC, which is 100% owned by Prophecy Development Corporation of Vancouver, Canada, the owner of PPG. Coal supply is 3.6 million tons per year, backed up by measured resource of 733 million tons. The coal supply agreement between Chandgana Coal and PPG is pegged at a coal price of USD 17.70 per ton.PhilippinesIn the Philippines, a mine-mouth power plant has been in operation since 2014 as a component of the coal mining operation of the Semirara Mining Corporation in Semirara Island, Caluya Municipality, Antique Province. The plant has a 15-MW capacity using CFBC technology. Production cost is Php 3.55 /Kwh (US cent 7.1/Kwh). In 2014, the Philippine National Oil Company – Exploration Corporation (PNOC-EC) was supposed to start the construction of a 50- to100-MW mine-mouth power plant in Cauayan, Isabela located beside a 25 million-ton lignite reserve. However, in August 2015, the Philippine government deferred approval of the plan pending proof of PNOC-EC’s financial capability to undertake the project. PNOC-EC is currently searching for a viable project partner.MINE-MOUTH POWER PLANT DEVELOPMENT IN THE PHILIPPINESThe countries cited as examples clearly demonstrate the potential of mine-mouth power development to significantly reduce electricity cost in the Philippines. The 5.7 US cents per Kwh price of electricity sold to Thailand from the Hongsa mine-mouth power plant in Lao PDR is a viable target for mine-mouth power plants in the Philippines. If this cost is doubled to include transmission, distribution and other costs to deliver the electricity to Filipino consumers, the price would be only 11.14 US cents or just a little lower than the 12 US cents that the average American household pays for one Kwh of electricity. The foregoing explores the feasibility and benefits of mine-mouth power plant development in the Philippines.1. AVAILABILITY AND DISTRIBUTION OF COAL RESOURCES IN RELATION TO THE NATIONAL POWER TRANSMISSION GRIDFigure 2 shows the known coal deposits in the Philippines. The wide distribution of these deposits throughout the archipelago favors the distributed generation of base load electric power, an important factor towards minimizing transmission costs and losses. At least 10 of the deposits have accurate delineation of resources and coal qualities that can be used for mine-mouth power plant planning, as shown in Table 2a and Table 2b.Figure 3 shows the 10 potential mine mouth plant sites in relation to the existing transmission grid and planned upgrading until 2030. Although the Iguig and Semirara sites will not be connected to the grid until 2022, the other eight sites are within 30 kms of existing HVDC substations where the prospective plants can be connected to the grid.2. PROJECTED INSTALLED CAPACITIES AND ELECTRICITY PRODUCTION COSTSThe potential installed baseload capacities and electricity production costs are estimated from available data for each of the 10 sites using an investment cost of USD 1,200/KW based on 2014 Indonesian bidding estimates and a higher USD 1,850/KW estimate based on the CFB power plants recently constructed in the Philippines. The two scenarios are given in Table 3a and Table 3b.Table 3a (at 1,850 $/kW) and Table 3b (at 1,200 $/kW) show the estimated installed capacity, the planned capacity of various proponents and electricity cost from mine-mouth power plants based on planned capacity. The average costs of mine-mouth electricity nationwide are PhP 3.52 and PhP 2.74 /kWh based on USD 1,850 and 1,200 /kW of all-in (installed) capital cost of CFB plant.The formula for calculating the potential installed capacity from the coal reserves for a 25-year mine-mouth power plant is shown below which assumes a CFBC thermal efficiency of 34.39% (plant heat rate = 3412 / 34.39% = 9,921 Btu/kWh) and net capacity factor of 85%.MW = (Coal Reserve/25 x 10^6 x 10^3) x GHV x 2.2046 x (34.39% / 3412) / (365 x 24 x 85%) / 1000The total potential installed baseload capacity is 1,828 MW or about 10.4 % of the existing installed capacity of 17,610.8 MW nationwide. The planned capacity addition from mine-mouth power plants from prospective developers aggregates to a higher capacity of 1,985 MW or 11.3% of existing installed capacity.3. OVERALL REDUCTION IN AVERAGE ELECTRICITY RATESThe following Table 4 shows the price breakdown of electricity in 2004 and 2014 and the average annual growth rate of each component (Final Report of Task Force on Reducing the Cost of Electricity Power, 2014). Generation cost is Php5.425/kWh in 2014 and is growing at an average annual growth rate of 4.6%, while total delivered electricity cost inclusive of transmission, system loss, distribution, subsidies, universal charge and government taxes aggregate to Php9.568 /kWh in 2014 with an average annual growth rate of 4.7% p.a.Table 4. Electricity Cost Components and Annual Average Growth Rates (2004, 2014).Reduction in electricity cost at USD1,850/kWUsing the current Philippine all-in capital cost (overnight cost) for a mine-mouth CFBC of USD1,850/kW, the average price of electricity from these mine-mouth power plants is Php3.52 /kWh (7.49 US cents/Kwh). (see box below)The current grid rate average of Php5.425 /kWh (11.54 US cents/Kwh) at present can be substantially reduced and a lower weighted average grid rate from blending the two rates will be achieved at Php5.232 /kWh (11.13 US cents/Kwh) or a significant reduction of 3.56% relative to 2014 grid rates.Reduction in electricity cost at USD1,200/kWUsing the all-in capital cost from winning bidders in Indonesia for mine-mouth CFBC of USD1,200/kW, the average price of electricity from these mine-mouth power plants is Php2.74 /kWh (5.83 US cents/Kwh). (see box below)The current grid rate average of Php5.425 /kWh (11.54 US cents/Kwh) at present can be substantially reduced and a lower weighted average grid rate from blending the two rates will be achieved at Php5.153/kWh (10.96 US cents/Kwh) or a significant reduction of 5.01% relative to 2014 grid rates.Major Assumptions for the Project Finance Model (DCF IRR)The DCF IRR model was converged to project NPV equal to zero at the target project IRR (100% equity, 0% debt) of 12% p.a. The model also computes the expected equity NPV, equity IRR and other calculated parameters such as project PAYBACK, equity PAYBACK and debt service cover ratio (DSCR – minimum, average, and maximum).The project finance model (discounted cash flow IRR method) used the following input assumptions in running each mine-mouth capacity of a given mine-mouth resource area. (see next box)4. ADDITIONAL BENEFITS OF MINE-MOUTH POWER DEVELOPMENTAside from the reduction of electricity generation cost, mine mouth power plant development in the Philippines could contribute tremendous benefits to the economy and provide sustainability in power development. These are:a. Savings in petroleum fuel use,b. Savings in foreign exchange for imported coal,c. Protection from coal supply disruption and coal price volatility,d. Potential to shift from coal to renewable energy, ande. Enhance inclusive growth and sustainability of power development.Reduction of transportation distance for supplying coal from mine to power plant should result in significant savings in petroleum fuel use. The minimum savings would be the amount of diesel oil to be used in transporting the coal to the nearest shore where a power plant may be located or a ship can carry the coal to a plant. Considering the 10 potential mine mouth plant sites above, the minimum savings in diesel oil is thus estimated to be about 469.8 million liters or 2.9 million barrels.Savings in foreign exchange for imported coal can be estimated from the present price of about USD30/ton-CFR of lignite from Indonesia that is imported by the newly installed CFB power plants in the Philippines. Assuming that this price remains as the average during the 25-year life of the power plants, the total avoided foreign exchange cost of the 450 million tons used during 25 years is about USD 13.5 billion.During the past five years (2009-2015), coal prices experienced steep fluctuations. Figure 4 shows the volatility of coal prices and the recent uptrend from a long period of declining prices. Mine-mouth power plant development would certainly protect the Philippines from the negative effects of coal price volatility and supply disruptions stemming from Indonesia’s moratorium on coal shipments to the Philippines due to hijacking and piracy of coal barges in the seas between the two countries.With the high fuel flexibility of CFBC technology, it is now possible for power plants to shift from lignite to biomass. A mine-mouth plant running on CFBC and coal fuel with heating value of 2500 Kcal/kg can be converted to a biomass-fueled plant with no drastic changes in turbine and boiler conditions. It is possible to plan the construction of a mine-mouth power plant that will run on lignite for the first 10 to 15 years and then switch to biomass or wood chips. A parallel development of commercial biomass-producing farms and/or industrial forest management areas in the plant’s vicinity can be implemented during the first half of the plant’s lifespan; the plant can subsequently function as a biomass-fired power plant for the remainder of its lifespan. This concept can address the clamor of climate change mitigation advocates for a shift from coal to renewable energy.Inclusive economic growth is further assured by organizing the nearby communities to forest management cooperatives that can plant and grow appropriate fast-growing tree species to supply the wood chip requirements of the coal-biomass-fired power plant. For instance, planting rubber trees that would provide rubber sap to a nearby rubber factory after 5 years would be ideal. This would provide immediate income after only 5 years up to 10 years when the rubber trees would be fully mature for wood chipping as they no longer produce rubber sap. By planting specific areas in an organized manner, a continuous supply of biomass wood chips is assured for the power plant, thereby extending the life of the mine-mouth coal reserves. Moreover, the biomass tree farm would ensure ecological balance within the surface/strip mine area. Once the coal reserves are exhausted or deemed expensive to mine, the biomass tree farm would ensure continued power plant operation and provide a steady supply of rubber sap to a nearby raw rubber factory.Mine-mouth power plant development contributes to inclusive growth because it requires indigenous fuel sources and local labor. Moreover, the potential for mine-mouth plants to convert from coal to renewable biomass-fired plants ensures sustainability.CONCLUSIONSMine-mouth power development can greatly reduce the cost of electricity and provide many additional benefits to the Philippine economy, namely:a. Savings in petroleum fuel use,b. Savings in foreign exchange for imported coal,c. Protection from coal supply disruption and coal price volatility,d. Potential to shift from coal to renewable energy, ande. Enhance inclusive growth and sustainability of power development.POLICY RECOMMENDATIONS1. Priority dispatch for mine-mouth power plants.2. Priority supply of electricity to host communities.3. Upgrading benefits to host communities of MMPPs.4. Develop commercial biomass farms for producing wood chips to replace coal once it is mined out or becomes economically non-viable to extract due to high strip ratio.The initial coal mining operation and power generation will provide the needed capital to start the commercial operation of the biomass farm utilizing local labor with expert assistance from relevant agencies to ensure inclusive growth and sustainability in rural areas.

Commentary

Philippine Resources - May 29, 2019

Updates on the Bamboo Initiative by OLLI Cares

By Marcelle P. Villegas3 May 2019 - During Philippine Mining Club at I’M Hotel, Makati City, Mr Leo Dominguez presented updates on his Bamboo Initiative, an advocacy which he started with the support of other mining companies and assoc. Mr Dominguez is the President of OLLI Consulting Group, Inc. and flamboyant Masters of Ceremonies in Philippine Mining Club events.During the recent PMC event, he stated, “If you were here on June 8, 2018 you will recall that we had this speaker from our Department of Environment and Natural Resources, Secretary Cimatu, where he spoke to us about reinventing mining. And during that presentation of his and in the ‘Question and Answer’ period after that, we started a conversation around bamboo.”“I'd like to report that that conversation has actually led to some developments. The first development after that was the participation of the mining industry in the FAME exhibition in November (2018) where bamboo products were put forward as part of the exhibit in a pavilion that was funded, thank you, by the Chamber of Mines of the Philippines as well as the Philippine Nickel Industry Association to the tune of PHP1.6 million. And it is in that FAME exhibition that the collaboration amongst the Department of Trade and Industry, the DENR, and the mining industry was first told. So we expect that FAME every year will repeat the story of that collaboration as it improves.”Furthermore, he said, “Now, beyond that in April this year, the Secretary of the Department of Environment and Natural Resources, Cimatu, hosted a meeting with the DTI Secretary, the mining industry as well as his staff responsible for bamboo. So I'd like to refer to it as a bamboo initiative and it was in that very well-attended meeting that the next steps of the bamboo initiative with the mining industry were discussed.”“So our next move will be a technical working group that will deal with the regulations and all that need to be tweaked to really make bamboo a greening material for the mining industry as we go forward.” The meeting which Mr Dominguez was referring to took place on 2nd April 2019 where OLLI Consulting Group, Inc. with DENR, DTI and mining companies and its stakeholders discussed the potential of bamboo in “reinventing mining”. OLLI Consulting Group, Inc. has a CSR component called “OLLI Cares” which supports the “Tanging Tanglaw” Project of Diwata-Women in Resource Development, Inc. (For more information about OLLI Cares and “Tanging Tanglaw Project”, please visit their webpage at https://olli.ph/olli-cares.) In that meeting with Secretary Cimatu and DTI Secretary Ramon Lopez, Mr Dominguez started the session by explaining the importance of bamboo. He said “Aptly called the Bamboo Initiative, this endeavor seeks to create a synergy between the government and the private sector on how to effectively harness the power and potential of this grass for the revegetation and rehabilitation of mine sites across the country.”[1]The following were present in that meeting [1] :~ Philex Mining Corporation - Eulalio Austin ~ Marcventures Mining & Development Corporation - Isidro ‘Butch’ Alcantara Jr.~ Filminera Resources Corporation - Gloria Tan Climaco~ OceanaGold Philippines, Inc. - Jose ‘Joey’ Leviste, Jr.~ The Chamber of Mines’ (COMP) Executive Director Atty. Ronald Recidoro~ Philippine Nickel Industry Association’s (PNIA) Executive Director Charmaine Olea-Capili~ Mine & Geosciences Bureau (MGB) - Mine Safety, Environment and Social Development Division Engr. Rodolfo L. Velasco, Jr.~ DENR’s Forest Management Bureau (FMB) Director - Lourdes Ferrer~ Ecosystems Research and Development Bureau’s (ERDB) - Bighani Manipula and Angelito Exconde~ Biodiversity Management Bureau’s (BMB) - Juvy Ladisla~ OLLI Consulting Group - Christopher Paris Lacson, Steve Araneta and Maria Paula Tolentino- - -Now, going back to the PMC event, Mr Dominguez said, “As you all know, the whole idea is the bamboo will also be the material that the communities on whom your SDMP funds are being spent will be taught to work with the bamboo. The result will be implementing the DTI's roadmap for the development of the bamboo industry. This will generate livelihoods and hopefully more than that -- real enterprises involving our mining communities.”“So one day, we hope to say that when visitors do come to the mining companies, the first protocol will be the community, seeing how hard they are working, products that are going to export market, and so on. And you, mining companies, will be able to tell your visitors that the mine over there is what makes it possible.” “So ladies and gentlemen, at the end of the day, with bamboo we have the opportunity to reinvent mining and then mining will now be defined as follows: The success of a mining company will no longer be judged simply by how profitable or how responsible the mining company is, but it will also be judged by how successful it makes its mining communities.” Finally, he concluded, “Therefore, mining reinvented, thanks to bamboo, will mean that mining is also a social enterprise. We'd like to see where that is going. Ladies and gentlemen, with your help and continuing support for this initiative, we hope to change the conversation about mining and therefore make that conversation speak of it as a social enterprise as well. You will hear more about this as the developments take place.“- - -Reference:[1] Tolentino, Maria Paula (27 April 2019). "OLLI Cares spearheads the Bamboo Initiative". SEMScribe Publishing- - -Acknowledgement:Mr Leo Dominguez and Ms Maria Paula Tolentino

Commentary

Philippine Resources - May 29, 2019

Is the East Mindanao Volcanic Arc Lost, Buried or Eroded?

By Marcelle P. VillegasDuring the GeoCon 2018 last year in December, a study about East Mindanao Volcanic Arc by Dr. Graciano Yumul, Jr. and his team, C.B. Dimalanta, J.A. Gabo-Ratio, B.D. Payot, et. al.[1], was presented. The title is "East Mindanao Volcanic Arc, Philippines: Lost, Buried or Eroded?". The members of the study are from Apex Mining Company, Inc. (Pasig City) and Rushurgent Working Group, National Institute of Geological Sciences, University of the Philippines (Diliman, Quezon City).It seems apparent that whenever an oceanic plate subducts along a trench, this would result into the formation of a volcanic arc. There may also be a formation of geothermal fields, mineralization, accretion of oceanic plates and subduction erosion. The Philippine Mobile Belt also plays a role in this study. The Philippine Mobile Belt is a complex portion of the tectonic boundary between the Philippine Sea Plate and the Eurasian Plate. This includes the Manila Trench to the west and the Philippine Trench to the east, and the Philippine Fault System. This belt is notable to having numerous of crustal blocks or microplates. Now based on the report, the eastern boundary of the Philippine Mobile Belt is characterized by the reactivated East Luzon Trough which shares a common transform boundary with the west-dipping Philippine Trench. “It has been argued that the East Luzon Trough-Philippine Trench is propagating northward whereas the Visayan-Mindanao segment of the subduction zone is propagating southward. This is mirrored by the northward and southward propagation of the Philippine Fault Zone whose northern and southern termini are characterized by horse-tail structures,” according to the study.“A look at the Philippine Trench with respect to the Bicol Peninsula through Samar-Leyte all the way to eastern Mindanao exposes differences in the morphology and distribution of volcanic arc centers. A well-formed volcanic chain characterizes the Bicol Peninsula, whereas an alignment of geothermal fields and volcanoes can be observed along the NW-SE stretch of the Leyte island. However, eastern Mindanao is defined by an almost non-existent volcanic arc range except for Mount Paco in Surigao del Norte and Leonard Range (also known as Leonard Kniassef) in Compostela Valley.”With all these geological features and movements described from the study, here are some points to think about. “A question to ask is why would the volcanic arc range along eastern Mindanao be absent? Was it lost due to large-scale fault-related dislocation? Is the volcanic arc range simply not just exposed? Or through time, would there have been a systematic, region-wide erosion of volcanic arc centers? Or were the volcanic centers not simply formed due to stunted subducted slab or the presence of a subducted, buoyant oceanic bathymetric high?”When we take into consideration the geological evolution on this part of Mindanao, an explanation can be found compatible with what is known. “Implication in terms of arc magmatism (super-critical fluids vs mantle fluids), crustal thickness vis-a-vis barometric fugacity, tholeiitic to calc-alkaline signature of cumulate rocks and the mineralization potential of the region will also be presented.”- - -[1] Complete list of authors and researchers:Dr. Graciano Yumul, Jr., C.B. Dimalanta, J.A. Gabo-Ratio, B.D. Payot, V.S.V. Olfindo, G.T. Valera, C.J. Arellano, K.C. Punzalan, K.D. Jabagat, J.B. Demegillo, K.L. Queano and N.L. CaagusanYou may write the team through csrwg3@gmail.com.

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