The Peruvian elections and the Philippines

A serious drawback to finding solutions for the country’s problems is our insularity. We cannot see beyond our borders to debate intelligently. By now we should have opened to the world – acquired new friends, listened to different points of view and then decided what is best for us. It would mean we would not rely exclusively on Western media. We have to remove our colonial blinders and begin to think for ourselves.

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The Peruvian elections would be dismissed as irrelevant to us – it is too far away and was never a player in our history. But with the debate on mining going on, we may learn some lessons from this South American country.

Peru recently held its elections but as I write the results are still being counted with two top candidates vying neck and neck for the position. One is a former Army officer and one-time coup leader Ollanta Humala appears to have won the most votes and the other who comes second is the daughter of jailed former President Keiko Fujimori in second place. There were other more moderate candidates including a former President, a former Finance Minister and former Mayor of the capital Lima. They gained substantial votes but these are a long way behind the top two.

In the next few weeks, Peru watchers say there will be the familiar horse-trading between the two leading candidates and the runners up to try to win the run-off. There are features of the Peruvian elections that can be found in the Philippines. But we do not have a run-off and I think this would have greatly improved the selection of the winner to govern with a majority.

Nevertheless, a Peruvian watcher says we are not so far behind in backward politics. It isn’t true that it happens only in the Philippines that candidates are voted in because their names are familiar rather than because of their abilities. With the correct punch lines in the campaign, a candidate with only his or her name to rely on can win an election. Alama and Fujimori are popular names.

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The country should be interesting to us because like the Philippines, Peru has substantial mining reserves. But unlike us, the mining sector in Peru is well developed and accounts for more than 60 percent of the country’s foreign exchange reserves.

Development through mining was very much part of the debate in the presidential elections. It was not a debate such as we have here between pro-mining and ban mining.

The debate in Peru was how best to ensure that the development of the mining sector benefits local communities — through a windfall tax — or other policy instruments. Even between polarized candidates there was no question of banning mining. That is the kind of intelligent debate we should have in the Philippines.

The Philippine economy may have done well over the last decade with growth above seven percent last year and 2007. But we could do better. So far we have relied on our overseas workers’ remittances. The most recent creator of jobs has been the business process outsourcing that now employs some 500,000 people.

But it would be foolhardy to rely on both sources. The tragic events in Japan and the Middle East are enough warning signs that we will need other sources of jobs and income in the near future. The government’s most important task is to create jobs at home.

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Here we have much to learn from Peru. Like the Peruvians, we can develop our mining sector and make it a source of jobs and income. That does not mean that we should be lax about ensuring that mining is undertaken with its effect on the environment.

There is a responsibility to ensure that mining benefits the community — especially local residents. Working with the mining sector, creating the right mix of policies to attract investments and ensure sustainability is where we need civil society and the government to work together.

I have said it more than once in this column that those who advocate an outright ban on mining are off the mark. They should lead by example. They should stop using cars – these are made of metal that comes from mining, and the petrol used to power the cars is also a ‘mined’ resource. Or maybe some advocates do not know that about gas and oil. In fact, most of our modern day conveniences use mined resources in some form or another. Unless we are willing to give up all of these the proposal to ban mining in the Philippines is hypocritical. So let’s stop this fruitless debate on banning it and look at examples around the world where mining has been done in a responsible manner and benefitted local communities as well.

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Xstrata’s project in Las Bambas, Peru has been approved by the environmental and social impact assessment (Esia) from the Peruvian Ministry of Energy and Mines.

In the Philippines, Sagittarius Mines Inc. (SMI), local partner of Xstrata Copper in developing the Tampakan copper-gold project, has also submitted its (Esia) proposal on its copper-gold mine in South Cotabato. DENR is still to approve it. Instead of looking into the environmental protection and community development projects (with some $1billion already funding community development) protestors are calling for a ban on mining. It is acting irresponsibly and ant-poor. In this sense, the Peruvian government understands better what the debate should be about.

Xstrata’s project in Tampakan is expected to bring in $5.9-billion worth of investments. That is big if not the biggest single foreign investment in the Philippines. Las Bambas in Peru, Tampakan in the Philippines. We must keep an eye on how our leadership will tackle the Tampakan project. On it hangs the reputation of the Philippines as a reliable place to invest. It becomes either the largest mine in the Philippines with a potential to become the fifth largest copper mine in the world or a complete dud that would finally remove us from investors’ list.

With the Esia approval for Xstrata’s Las Bambas project, it will start the mine construction in the third quarter of 2011. If approved the Tampakan project will begin construction in 2016. Las Bambas and Tampakan projects are showcases for Xstrata Copper’s capacity to deliver responsible mining as a global investor. So Peru may be far away but it is not irrelevant to us.