Mining prospects in the new administration

For years, and column after column to the point of being boring, I’ve pushed for the development of mining. I’ve been devastated by the level of poverty in the Philippines, and the frankly inhuman way far, far too many have to live. So I’ve never understood why the Philippine Catholic Church is so vehemently and irrationally opposed to it.

Does it want people poor? I’m not aware of anything church officials do to help the poor get jobs in any alternative area. So maybe, in my cynical mind, they do. I certainly hope not and maybe some bishop can enlighten me on the role the church plays in helping the government provide an environment for job creation.

Mining is a principal reason Australia has a GDP per capita of $42,200. Filipinos suffer on $1,860. Mining could not only dramatically bring that up, but do so where it’s most needed—in some of the poorest provinces.

I beg the Church, rethink your stand, think of your parishioners. Take an active stand in supporting mining, but only mining that is done in a responsible manner. Responsible mining that takes care of the environment and the local people. Be a responsible religion that takes care of the welfare of its parishioners.

It can be done. TVI Pacific, which operates gold, silver and copper mines in

Canatuan, Zamboanga del Norte, is a good example of this. I suggest the Bishops visit that mine and see the good it is doing to the local communities and to the national economy. How it is currently, and what its plans are, all ensure that the land is cared for.

I’m glad to see that the Aquino administration recognizes the value mining can bring to the people and the country. Administration officials say they will work toward getting the support of the bishops to promote responsible mining. The bishops agree with small-scale mining because it helps the little folk, but they oppose large-scale mining. Small-scale mining, however, is immensely destructive. Mercury is used to collect the gold and then washed downstream, poisoning the fish that the children eat and get similarly poisoned, resulting in malformed bones, hair and teeth loss and permanent brain damage—is that what the Church wants?

The big boys gave those processes up years ago.

Secretary Ramon Paje has taken it upon himself to convince the bishops. He could succeed if he gets the support of the wider community, particularly from business. Regardless of whether he does or not, he has initiated moves to encourage mining firms to take a second look at a country that has some of the richest resources in the world—it’s in the top five overall on mineral deposits.

Paje has streamlined the approval process with the condition I like, that if approval or denial isn’t made within 40 days of applying for an environmental clearance certificate, approval is automatic. That puts real and realistic pressure on bureaucrats to perform.

He’s also gotten agreement of the governor to allow mining to resume in Marinduque after it was banned following the disastrous tailings spill of Marcopper (something I wrote extensively about at that time, highlighting that blame was equally or more with government, and that Placer Dome spent around US$ 80 million on resuscitating the land).

In Tampakan, the biggest investment the Philippines could ever receive—US$5 billion—was put in jeopardy by a myopic decision signed into local law by the previous governor. The new governor (thank God there was a change)has, with the support of the Secretary, withheld the publication of the law while he discusses further with his council to agree to rescind it. Without publication, it can’t take effect. I expect common sense will eventually prevail when it’s recognized that if it ever went to court, the local code would be thrown out. National interest overrides local where strategic investments are concerned (Local Government Code sections 26 and 27), and this is certainly a strategic investment.

This project would include two massive water treatment plants and power plants that will have a combined capacity of 405 MW.

The water treatment plants will treat all the run-off water from the mine to a stage where it can be drunk straight from the tap. Many of the diseases, particularly of children in the province, are caused by dirty water. The treated mine water will remove that risk. Mindanao is having 8 to 12 hours blackouts daily, the power plants will give continuous electricity to all the local communities. Will the Church and non-government organizations provide that clean water and power and the jobs?

Much depends on the successful final resolution of Tampakan. Many other international miners are watching it closely. The Philippines will either see a dramatic lift in the economy as mining, responsible mining takes off—or it won’t, if the oppositionists prevail. And Filipinos, not just in South Cotabato but nationwide, will remain in poverty.

Listening to Secretary Paje, I think the government’s going to win this one.

Look at the huge benefit call centers and other business process outsourcing companies have done for the country in the past decade. Mining could do the same in the next.

Let’s consider the people.

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Corruption exists not only in financial terms, but also physical. Infrastructure construction is, too often, shoddy. Unscrupulous contractors, either by design or forced to due to the large bribes paid, build below standard.

Roads, for example, soon fall apart and need constant repair. Public Works and Highways Secretary Rogelio Singson has the right idea: Include maintenance in the contract. I’d suggest full maintenance costs and work to be the responsibility of the contractor for 10 years, with a bond placed to ensure the work is done. That way it won’t pay to under-build, and it will put pressure not to pay large bribes.

Also if the government is serious it wants public-private partnerships, then it must assure the private sector partner of a reasonable return on his money. Far too few projects are commercially sound, most are to meet social needs. You can’t put a toll on a farm-to-market road. Charging commercial rates on many projects is just not possible (the huge subsidy on the LRT lines as an example).

The government, thus, should guarantee a minimum return, and pay the difference if it’s not achieved. The cost would be a fraction of what it would otherwise have to pay if it did it itself. To ease the pain, the World Bank is prepared to underwrite such a guarantee. Public-private partnerships won’t happen without something of this nature.

Sanctity of contracts will be equally important. How to assure that, I don’t know.

Even if this administration is serious that it will, what about the next? Six years is not long for a PPP project. Maybe a clause that immediately elevates a case of forced contract amendment to an international court—where government has no influence.

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Finally, let me respond to Muriel Banaga’s letter to the editor yesterday.

Firstly I don’t know what nationality has got to do with it, I’m arguing for something that makes great economic and commercial sense—for everyone. You’ll note I said: “Let the Philippines be the first.” Be the leader not the only one.

I think the airline industry should be like all other industries today, driven by the market, not protected by arcane government regulation. Philippine Airlines and Qantas are no longer state-owned. They are private businesses and can well survive in a competitive environment.

Opening the skies should bring in a much greater number of tourists, which would greatly benefit a wide swathe of Filipinos across the nation. Not just provide a comfort barrier for one airline.

If it works, as I confidently expect it will, other countries will have no choice but to follow and open up too. It’s an inevitably in the ever increasing globalization of the world economics. So let’s be first. I’d argue the same for Australia if I were in Australia. –Peter Wallace, Manila Standard Today