Of red wine, poetry, and world-class mines

Why can’t we be like Chile?

We have a lot in common. While we have Ferdinand Marcos and our perennially inebriated Nick Joaquin, Chile has Augusto Pinochet and its Pablo Neruda. We have our Mindanao fruit plantations, Chile has its sprawling fruit processing plant in Copiapo. We have our B’laans and T’bolis, Chile has its Mapuches, Aymaras, and a host of other indigenous peoples.

Like us, Chileans are mostly Catholic. They enjoy good tropical cuisine and bask in warm, temperate climate.

Indeed, we’re so much like our Latin American brethren, except for one thing: They’re the world’s largest producer of copper, and they’re proud of it!

And why shouldn’t they be? In a land where wines are a matter not just of taste but of economic performance - it’s the world’s fifth largest exporter of wine - and where poets like Neruda and Gabriela Mistral are not just inspirational bards but Nobel laureates, wanting and being the best can only be natural.

Today, mining drives the Chilean economy. Six years ago, fueled by taxes from mining companies, the government “modernized its roads, highways and national railways; extended its four underground LRT lines; improved its social programs; and reduced its government debt,” wrote Dr. Rogelio V. Paglomutan, then chief financial officer of Brass Chile S.A. in Santiago City, and a former professor of mine at the UP school of business.

Paglomutan, who hails from Tagum City, added that in the same period, “sales of brand new vehicles in Chile reached 185,000 units versus 97,000 units in the Philippines, an indication that the purchasing power of the middle class has improved considerably (considering a population of only 16.2 million with a land area 2.5 times larger than the Philippines). Houses of the low income class in Chile are already the houses of the lower middle income class in the Philippines.”

Now, Paglomutan, as CFO, may have been lifting his own proverbial stool, although it’s unlikely the academically stringent School of Economics of the University of Asia and the Pacific would have allowed a flawed article to grace its journal. Besides, Chile’s boom is widely known. In acknowledging the link between positive economic performance and good governance, Transparency International reports that, consistently since 2005, Chile is ranked among the least corrupt countries in the region, compared even to the United States. That’s more than we can say of the Philippines which continues to languish in the corruption indices despite P-Noy’s “tuwid na daan.”

Which all makes for a compelling comparison. Chile saw a raging bull and grabbed it by the horns. A 2005 article in the Engineering and Mining Journal says that Indonesia, Cambodia, Laos, Thailand, India, and even Vietnam are doing the same. We, on the other hand, are seeing the same bull and scampering away!

Philippine mineral wealth has ranked the country as fourth in the world for copper, third for gold, fifth for nickel, and sixth for chromite. All that translates to about a trillion dollars worth of minerals. Imagine what even a fraction of a trillion dollars can do to a developing country like the Philippines, which relies on OFW remittances to prop up its economy.

Despite this underground wealth, a measly 1.4 percent of it as of 2005 is actually covered by permits.

Mindanao alone accounts for about 80 percent of the national total deposits of copper, nickel, and gold. Imagine what responsibly-generated revenues can do to a land where the poverty incidence hovers above 42 percent, where a million residents in southern Mindanao alone don’t have sanitary toilets, and where per capita income is a mere 40 percent of the national figure.

Longtime Mindanao observer Ed Tadem of the University of the Philippines wrote last year that Mindanao’s “subsistence incidence was 24.88 percent, or 11.1 points higher than the national figure. This is an ironic situation given Mindanao’s reputation as the Philippines’ food basket, supplying 40 percent of the country’s food requirements and 30 percent of the national food trade.”

Tadem’s context may pander to the more liberal-minded, but his figures are solid.

So is the country gearing up for the challenges ahead? That remains to be seen.

A groundbreaking Philippine Mining Act, enacted in 1995 by the Ramos administration, was suspended by the Supreme Court in early 2005. When the High Court reversed itself the same year, industry players rejoiced, but not before feeling restless over what seemed like a national ambivalence over policy matters relating to minerals development. So telling was this high-level confusion, in fact, that a strategy paper developed in mid-2000 by the industry pushed for authorities to “identify policy differences that hinder the growth of investment.” It also called on government to “review local laws versus national laws.”

That last one turned out to be prescient. Little did observers expect that when South Cotabato passed in 2010 its environmental code that bans open pit mining, the Department of Environment and Natural Resources would use this same edict to thumb down the environmental compliance certificate (ECC) of Sagittarius Mines, Inc. (SMI) in January this year. The Philippine Mining Act stipulates no such ban, and both the South Cotabato provincial government and the environment department have yet to fully explain how on earth they could circumvent a national law.

SMI runs the proposed Tampakan project, which is expected to eventually help accelerate growth in an island whose GDP in 2003 was a paltry 18 percent of the national total. Demolishing such a potential bridge to progress, it seems, is like shooting one’s own foot.

Perhaps the DENR was misinformed, deluged as it is by modern-day hysterics. “Casualties and death,” “billion of tons of toxic waste,” “rocks and tailings that may pollute water and damage agricultural production,” a project located on a “stratovolcano complex that can be filled with explosives and toxic gas capable of killing many people…” - these are but some of the doomsday tales being peddled by those who scamper away from the bull.

But what global miner, pray tell, would put his money on a killer enterprise? What private corporation worth its track record would risk everything by murdering civilians and polluting rivers?

Governments, even purported revolutionaries, behave like so, on occasion. But business isn’t run that way, except by the rogue exceptions, in which case local communities are rightfully empowered to resist.

Mining is such an underdeveloped industry that catcalls from the peanut gallery are undeserved. Opponents repeatedly fan fears over industrial accidents. But in a speech last February, Manuel V. Pangilinan, head of Philex Mining Corp., explained why such anxieties are unfounded. Admitting that the mining industry isn’t perfect, he pointed out that the country has enough laws to ensure environmental protection. “Unfortunate accidents have happened, even to large mines, which lead to a perception that mining is dangerous and destructive. But the mistakes of a few should not be construed that the whole is wrong – any more than one car accident or one oil spill should shutdown an entire industry,” he said.

Even in Chile, despite the international-standard regulations imposed upon mining companies, four accidents happened within the industry between 1996-2006. But no activists, not even Catholic bishops, raised howls and demanded mine closures. “The accidents have not deterred the enthusiasm of the stakeholders in pursuing the development of mining for its overall economic development,” wrote Dr. Paglomutan, who was once assistant treasurer of the Philippines and who now maintains scholarly work at the country’s leading universities.

The bottom line is really poverty. As a matter of perspective, we ought to be at least open-minded about mining not for anything else but to address our underdevelopment. Fr. Emeterio Barcelon, SJ, writes that over the last three decades, about two kilos of gold are mined daily in Diwalwal. The high-grade nickel in Surigao is also shipped out of the island without any processing. “And yet we cannot provide jobs for our people who want to do honest work,” he laments.

Hunger may be romanticized and pontificated upon by a shrill few. But in the end, “its stark imperatives go beyond the poetry of blue skies and tangerine sunsets,” warned Pangilinan. And only when we have taken those imperatives to heart, and resolved to do something about them, may we truly appreciate our poets’ intoxicated tales of penury and self-persecution.

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