Mining suspension worries foreign investors

MANILA, Philippines – Foreign investors were not spared from the Department of Environment and Natural Resources (DENR) order to close 23 mining firms and suspend five others.

Francis Chua, International Chamber of Commerce Philippines chairman, said he has been receiving a lot of calls and messages from investors and the group’s headquarter officials in Paris to ask him what is going on in the country’s mining industry.

“I also received a call from the US, there’s a group that wants to invest at least $1 billion in the Philippines. Their question is ‘Are we protected?’

“We have seen that there are so many companies, the miners from different countries investing millions and millions of dollars, and yet overnight, the government has asked them to stop operations,” Chua said.

The US-based firm, he added, is into real estate and tourism projects and has made large investments in China and other parts of the world.

“They are concerned of what happened. It seems like the government will just close down any investment without due process, without hearing a day in court? They feel it’s a very risky situation,” Chua said, adding that he continues to assure the international business community that it remains “business as usual” in the Philippines.

Environment Secretary Regina Lopez announced on Feb. 2 the closure of 23 mining firms and suspension of five others, bringing shockwaves to mining stakeholders and investors.

“Responsible mining is very important to our economic development. Our concern is not who is right or wrong, but clarity, transparency and due process,” said George Barcelon, Philippine Chamber of Commerce and Industry president.

“We thought this is a very worrisome trend, if not a very irresponsible move from the DENR. From PSE standpoint, we are used to where processes and benchmarks are followed,” said Hans Sicat, Philippine Stock Exchange president and chief executive officer.

Malacañang earlier said the mining companies would be given an opportunity to respond to the mining audit, on which the DENR based its closure and suspension orders.

Hot issue

Presidential Communications Secretary Martin Andanar said there were heated discussions on the DENR order during last week’s Cabinet meeting that it nearly bumped off other topics in the agenda. 

“Because the discussions were so heated, a member of the Cabinet suggested that the issue be discussed separately in a cluster meeting with the Department of Finance and DENR,” Andanar said in an interview with radio dzRB, adding that Finance Secretary Carlos Dominguez and Lopez have already issued a joint resolution on the matter.

The finance department claimed that the DENR orders would cost affected local governments in 10 provinces over P650 million yearly in foregone revenues. Those to be affected are Benguet, Nueva Vizcaya, Palawan, Cebu, Bulacan, Zambales, Eastern Samar, Dinagat Islands, Surigao del Norte and Surigao del Sur.

Malacañang assured the affected mining companies that they would be given the opportunity to answer or even dispute the findings of the DENR audit.

President Duterte has the final say on the closure of the mining firms. 

Last week, the Mining Industry Coordinating Council, a Cabinet oversight body, announced that it would form a multi-stakeholder review of mining operations in the country.

Those found guilty of violating mining contracts, laws and regulations, after observance of due process, would be meted the appropriate penalty under relevant laws, the council said in a resolution issued Thursday.

Rehabilitate

Rep. Rodel Batocabe of party-list Ako Bicol proposed that the 23 closed mining sites be rehabilitated as these could not just be left at their current state without doing some restoration efforts.

He also called for a “stringent audit” of the Mine Rehabilitation Fund to ensure its transparent and accountable use, noting that, “no proper government audit is in place to safeguard the fund from corruption and unbridled utilization.”

“There is still a loophole in the Philippine Mining Act because the Commission on Audit does not have the function to police the use of these funds for the technical and biological rehabilitation of the affected areas,” Batocabe said. 

Mining companies are required under the Philippine Mining Act of 1995 to set aside 10 percent of the Environmental Protection and Enhancement Program cost or P5 million, whichever is lower, to be used for rehabilitation.

The MRF committee – comprised of the Mines and Geosciences Board regional director, DENR regional executive director, local government unit representatives, non-governmental organizations and the contractors – manages the fund.

But Batocabe observed that the nature of the MRF remains unclear, thus “inhibiting the government to carry out a state audit.”

He cited the case of Rapu-Rapu Minerals, the first approved operation under the new mining act, which appeared to have used P80 million of the MRF “for maintenance and consultancy fees without the actual rehabilitation.”

The lawmaker said the case prompted him to ask that the MRF be classified as a public fund. 

If his move is approved, the MRF would be subjected to the scrutiny of the Commission on Audit.  

Meanwhile, some mining engineering students fear that their future employment is jeopardized by the DENR order.

In a statement, the University of the Philippines Mining Engineering Society (UP Miners) said the order implies the unemployment of new graduates in the field of mining engineering, geology and metallurgical engineering, among others.

“The action by the DENR has instigated issues of employment panic and dilemma to future engineers and scientists of the industry, aside from the questionable mining audit itself. It defeats the purpose of studying the technicalities and philosophies of the field when the industry itself is without a defined standard acceptable to the government,” the group said.

UP Miners joined the call for transparency and full disclosure of the DENR mining audit results.

“For as long as the transparency of the mining audit remains inaccessible, we shall keep invoking our right to access detailed information regarding the audit for us to know what needs to be improved and to aid in the advancement of the profession towards environmental protection,” the group said.

They also questioned how an audit done by Lopez’s team was eventually preferred over an audit conducted based on international standards.

“Even mine sites with an international ISO-14001 certification that was acquired after over a year of audit and which the Secretary initially deemed sufficient to demonstrate a company’s high standards have not passed the audit done by Lopez’s team that consisted mostly of non-experts, including anti-mining representatives,” UP Miners claimed.

The Chamber of Mines of the Philippines said Lopez “is slowly killing an industry that has paid billions in taxes and fees annually.”

It added that the industry paid P10.1 billion in tax revenues in 2015 and that the mining operations that were ordered closed down or suspended account for 46 percent of the revenues. – With Alexis Romero, Louise Maureen Simeon, Delon Porcalla