Good governance and mining

As I write this column, the new Executive Order on mining was being awaited with bated breath by the mining industry. The word was it has been postponed... yet again. In my opinion, mining is the only big ticket industry that can lift our economy. By this I mean to lift the lives of millions of our countrymen from squalor and poverty — not merely higher GNPs.

It will not come with changing laws or policies to please all clashing vested interests. I am afraid EOs, however well they are crafted, are only words on a piece of paper. It is a start but it will not be enough to make the mining industry work for the country. It will need leadership with a vision and the will to realize that vision. Uppermost in that vision is how it is implemented and supervised.

If President Aquino truly wants to raise money to alleviate poverty in the Philippines, he is well advised not to dilly-dally. Now is the time with foreign and local investors looking to how he handles the mining imbroglio. The needs of our poor coincide with the high demand for metallic resources we have that other countries can only envy. We need tourism, we need to preserve the environment and we need mining. But these have to be balanced with strong and informed leadership instead of being evaded to the detriment of the country and the economy.

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With the new EO the gridlock will not end. The new rules need to be implemented.

Why have (other countries, including many in our region) been able to balance these differing interests to their national advantage? I think the answer is good governance.

The more regulations, the more cumbersome the processing if it is true that the functions of the Mineral Development Council will be expanded. The new council will only be an added bureaucratic hurdle for the mining groups that at the moment are already saddled with requirements that are acted upon by authorities only if they please.

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On the issue of locating where mining can be allowed for environmental reasons, a land use survey through remote sensing has been long suggested. The suggestion was made way back in Marcos’ time and would have cost the Philippines about P10 billion. But as my friend scientist told me it would be worth every centavo.

It would spare us from conflicts on where mining can be allowed not just because church or local authorities say so but because there is a scientific basis.

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As a mineral rich country we should actively take part in the mining circles around the world so we are informed about the industry. For example, countries in Africa who are into mining look to training being offered by countries like Australia and are prepared to train miners. It has just opened a new international mining centre based at the University of Western Australia.

The $31-million International Mining for Development Centre is funded by the Federal Government through AusAID. It will provide practical advisory, education and training services to developing nations on mining-related issues. I think that would be ideal for the pick and shovel miners. It is the lack of jobs and their need to survive that drive them to mine indiscriminately.

 “Well governed mining, gas and petroleum sectors can not only help reduce poverty, but also reduce a developing country’s dependency on aid,” the Australian prime minister said.

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There shouldn’t be any quarrel between private sector and government. Both are for responsible mining. But they are caught in the rhetoric of their positions with those from government bent on regulation (unfair and officious to the miners) and the miners seeking the space for progress (reckless and unmindful of environment according to government and anti-mining advocates).

Strangely, with all our mineral riches and the potential to bring down poverty in the country this is not happening.

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The Grant group reports that in terms of resources the Philippines beats most countries hands down.

 “The potential for the Philippine mining industry — often overlooked — is in fact beyond imagination. Out of the 30 million hectares of the Philippines, 9 million hectares or 30 percent of the entire country is identified to have high potential for mineral deposits. Yet only about 420,000 hectares or a mere 1.4 percent of the 30 million hectares are covered with existing mining rights. We have identified 24 major mining projects that will require $8.0 billion in investments for the next five to six years. They are primarily gold, copper and nickel projects.”

The Philippines has a long mining heritage even before the Spanish colonizers came.

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We asked Ambassador Mayorga of Chile how it developed its mining industry. It accounts now for 25 percent of the government income. “It is mining that provides for a strong social program that has reduced extreme poverty to a mere 8 percent.”

Like the Philippines, Chile has a long mining tradition for around 180 years, Ambassador Mayorga said. So what did they do to make the tradition profitable and in the service of its people?

“In the last 40 years Chile opened its economy allowing the participation of foreign capital and now we are the first producer of copper and nitrates in the world.” He adds that the public sector also participates in activity with around 40 percent.

“By the way,” the Chilean ambassador adds, “the best salaries in the country are paid in mining.”

The Chileans are just as keen about environment, but it is not to the exclusion of one against the other. “To protect the environment companies must present a mitigation plan in order to repair environmental impact.”

In Chile, foreign investments are strongly protected with investor companies signing up for an insurance investment contract with the State of Chile. The investor chooses a model for a contract without dealing with the authorities and it is free of charge.

The setup of a company and the subscription of the foreign investment contract take not more than 45 days. Companies must pay taxes prior to remittances of profit abroad.

Mining export represents around 65 percent of total exports and constitutes the principal wealth of Chile. Do you wonder why Chile has now moved up as a developed and vibrant economy?