The mining industry is in bad shape these days because of the pending mining guidelines on contract sharing, environmental, and ancestral domain issues.  All these problems began popping up because of the peak demand for minerals in the local and global markets.

All stakeholders want more

Everyone involved (stockholders, host communities, local government, and now the national government) wants a bigger share of the profits of local and multi-national mining companies. These companies are in a tight corner because they fear that the new guidelines will shrink their profits and lessen their economic assistance and social responsibility projects in host communities. This grievous situation may cause more nationalistic/anti-mining sentiment among residents of  local communities where they mine.

Aside from the national government, local governments all the way down to the barangay level are now also asking for a bigger share of profits. Communities surrounding the mined areas are also seeking more social responsibility projects such as aid to schools, rehabilitation budget, health and hygiene assistance, and community livelihood support.   

Finance Secretary Cesar Purisima recently announced that the new government focus was to get its fair share of revenue from existing mining companies and prospective firms that would operate locally. To achieve this, the DoF would review existing mining contracts covered by Mineral Production Sharing Agreements that only provide a two-percent share versus the Financial or Technical Assistant Agreement that provide 50-percent profit share to the government.

To be fair, the DoF offered to respect existing MPSA contracts but vowed to  exhaust all the administrative remedies to address the lower profit sharing with the mining sector without having to go to Congress for legislative remedy.

Expected policy direction

With the new DoF focus, expect future mining contracts given to large-scale mining operations in the form of FTAAs, where the government will get a 50-percent profit share.

In the pipeline are the Tampakan gold project of Indophil/Xstrata in Mindanao and the Lepanto/Gold Fields’s Far Southeast Gold Project in Benguet, Northern Luzon.

Environmental  and social issues

This has been an issue ever since mineral extraction started in this country.  Environmental standards compliance is being observed by large-scale miners because they are under the direct and strict supervision of environmental enforcers.  These large mining companies strictly follow environmental standards so as not to  jeopardize their operations.  .

But environment inspections are rarely done on small operators such as the miners in Mindanao. The recent landslide in Compostela Valley that resulted in many deaths can be attributed to environmental irresponsibility.

This isolated incident again fanned the dying embers of the anti- mining movement, undermining the potential of responsible or sustainable mining and denying poor and largely neglected communities their potential for growth and development as well as depriving their constituents a better quality of life.

The terrain and remoteness of these communities make them difficult, and the national government is hard-pressed to develop them because of massive administrative and logistical costs required. Quite undeniably, these can only be provided efficiently by large-scale mining firms.

Philex and Lepanto are pioneers in gold mining and have been performing their economic, social, and corporate responsibility roles at heart. The host communities are now enjoying socio-economic progress coming from the fruit of the earth.

These companies have provided permanent employment to thousands. They also funded and assisted host communities in building infrastructure projects such as roads, bridges, schools, medical clinics, and water service, and electrical systems.

Same is true with Nickel Asia, the biggest nickel company, which showcased its massive reforestation project in its Rio Tuba mine site in Palawan.

PCM, JFC appeal

The Philippine Chamber of Mines and the Joint Foreign Chambers of Commerce have presented their position papers appealing to the government not to change the current mining law and implementing guidelines. To these organizations, the current law is already sufficient to protect the interest of all stakeholders in the industry.

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