MAC: Mines and Communities

Philippines Update

Published by MAC on 2006-11-11

Philippines Update

11th November 2006

Lafayette's Rapu Rapu project continues to hog the Philippines mining news, after the company was granted yet another 30-day extension on its test run, to much public disquiet. The mine again sustained damage from a typhoon, reminding people of the potential 'pit-falls' (quite literally) of mining in the Philippines.

As if to stress the point, the Philippine government has been in over-drive to persuade people that there is no further threat from what is left of the Marcopper mine and tailings dam, after an earthquake struck the area.

Other bad news for communities is confirmation that open-pit mining is the preferred option for the proposed Tampakan project. But there is bad news for London-listed Mincorp Asia, as the Court of Appeal rules against it's subsidiary in a battle over exploration rights.

DENR okayed second Lafayette test run extension but snubbing request for independent fact-finding probe into Rapu-Rapu, environmental NGO says

Center for Environmental Concerns-Philippines (CEC-Phils) Press Release

10th November 2006

The Center for Environmental Concerns-Philippines (CEC-Phils) today assailed the DENR for "failing to act upon requests to conduct an independent environmental probe into Rapu-Rapu while hastily granting a second test run extension to Lafayette Philippines Inc.". CEC was looking into the merits and basis of the extended test runs granted to the controversial mining company.

"There appears to be no solid basis for the DENR to approve the extension. Environment Secretary Angelo Reyes himself admitted, that the second extension would allow them to inspect the Rapu-Rapu project if it is complying with DENR requirements. On what grounds then does DENR derive its decision to further extend the test runs if their officials themselves have yet to inspect the site up to now? These test runs are long drawn out. Lafayette has been accorded with unprecedented accommodations in spite of bungling its operations. It is high time that these claims of DENR and Lafayette officials be subjected to public scrutiny. " CEC-Phils Executive Director Ces Quimpo said

"It's questionable why the DENR speedily approved Lafayette's request for yet another extension, but has taken no action on our earlier offer to conduct a fact-finding probe in Rapu-Rapu by environmentalists, scientists, and community representatives," Quimpo added..

"In a letter dated October 10, 2006 and received by the DENR Records Management and Documents Division October 11, 2006, CEC-Phils requested for a permit from the DENR to let an independent fact-finding team from the CEC-Phils and Defend Patrimony to visit the mine site and the Lafayette facility. We also requested for the DENR's monitoring reports on the 30-60 day test runs. This was organized in response to the government's seeming slowness in addressing and investigating Lafayette's state of operations during its two extended test runs ," Quimpo recalled.

"We have been diligently following up this request with them for almost a month already, but the DENR has yet to respond. The DENR's repeated snubbing of such a valid and well-intentioned probe seems to be a delaying tactic against concerned environmental organizations who want to independently look into the validity of Lafayette's application for a Permanent Lifting Order as soon as possible," Quimpo said.

CEC-Phils is a non-stock, non-profit non-government organization offering research, education and advocacy assistance to grassroots communities. Sagip Isla, Sagip Kapwa, Inc. a community based organization in Rapurapu island, is one of the CEC's community partners which has been affected by Lafayette's mining operations.

Reference: Frances Quimpo
Center for Environmental Concerns-Philippines, Inc. (CEC)
No.25 Matulungin St., Bgy. Central
Quezon City,
Philippines 1100
TelefaxNo. +632-9209099,+632-9248756

Strike three: Environmental activists assail DENR's extention of Lafayette test runs as gov't cover-up

Defend Partrimony Press Release

9th November 2006

Environmental organizations united under the DEFEND PATRIMONY alliance today expressed "vehement objections to the triple extension of Lafayette Mining Ltd's month-long test runs in Rapu-Rapu Island, Albay", saying that the allotted period "of 90 days or three months was more than enough for the Department of Natural Resources and Environment (DENR) and the Pollution Adjudication Board (PAB) to ascertain whether Lafayette should be allowed to continue with its operations or not".

"This is already strike three for Lafayette. This third extension only indicates that Lafayette Mining Ltd. lacks the capacity to implement environmentally-sustainable mining operations in the small island ecosystem of Rapu-Rapu," DEFEND PATRIMONY Spokesperson Trixie Concepcion said. Concepcion also expressed doubts that the basis for extension was valid.

"Lafayette said that the third TLO was granted because Typhoon Milenyo halted their plant operations for some time. This contradicts Lafayette's earlier claims printed in the Mining Journal Online and in previous reports that typhoon Milenyo caused "no damage to the (Lafayette) plant and only some superficial damage to the accommodation" and that Lafayette was "back up and running again…towards full production," she said.

"The DENR has been handling Lafayette Ltd. with kid gloves and has been giving it the red-carpet treatment before and after the two devastating cyanide mine spills. It is making a mockery out of its mandate by snubbing the RRFM's recommendations and has approved two test runs of 30 then 60 days prior to this to give Lafayette all the leeway to prove that it can qualify for the PLO. This third extension practically defeats the DENR's rationale for setting up a defined time-frame of 30 and 60 days where Lafayette's compliance with environmental, social, and technical requirements should be met," Concepcion said.

Kalikasan Peoples' Network for the Environment (Kalikasan-PNE) National Coordinator Clemente Bautista assailed the DENR's third extension as a "cover-up for Lafayette Mining Ltd's total lack of capacity to conduct environmentally-responsible and pro-people mining operations in Rapu-rapu".

"From the start, Rapu-Rapu residents and environmentalists have been calling for an urgent and unconditional moratorium into Rapu-Rapu mining operations after scientific findings showed that large-scale mining—the kind that Lafayette is engaging in –is not feasible in the Rapu-Rapu due to the threat of acid-mine drainage and the absence of technology that could be used to contain this threat," Bautista said.

"The DENR's sluggish and snail-paced environmental monitoring systems in the case of Lafayette Mining Ltd. seems to hinge on the fact that the Rapu-Rapu polymetallic project is one of the Arroyo administration's pet programs for its mining revitalization policy directed towards other foreign mining TNCs. ," Bautista said.

Clemente called on the "DENR to finally look at the real situation, implement the called-for moratorium, and close Lafayette Ltd's operations in Rapu-Rapu once and for all".
Reference: Trixie Concepcion – 09158507394; Clemente Bautista Jr. - 09283448797

Lafayette gets Philippine mine test extension

Mining Journal

8th November 2006

Melbourne-based Lafayette Mining Ltd has been given a second extension to run tests on its gold and copper project after two cyanide spills last year.

The mine on Rapu Rapu island suspended operations three months after pouring its first gold in July 2005 due to the incidents and is running the mine on a temporary operating order.

It completed a 30-day trial run in early September but sought a 60-day extension that ended on Wednesday. The company then asked for a second extension of 30 days to make up for time lost due to typhoon `Milenyo`, which hit the main island of Luzon in late September.

"We had the typhoon that hit Rapu Rapu. There were electrical posts that were down. We easily lost 10 days, Julieto Sarmiento, a Lafayette spokesman, told Reuters, adding the company had to wait for the release of official permits before proceeding to the second and third phases of the trial run.

Environment Secretary Angelo Reyes said in a statement the second extension would enable Lafayette to present more proof that it has complied with the Environment Department`s standards on safe and sustainable mining. "We will not allow Lafayette to operate until it has shown that it has complied with all the requirements - particularly the environment, social and technical responsibilities," Reyes said.

The Rapu Rapu mine is the first foreign-owned mine to open in the Philippines after the Supreme Court upheld in December 2004 the legality of a law allowing foreign firms to own 100 percent in local projects from the previous 40 percent and is one of 24 being promoted by the government to revive the country`s once-mighty mining sector.

Before the suspension, the mine was forecast to generate annual revenues of US$350 million from production of 10,000t of copper in concentrate, 14,000t of zinc, 50,000oz of gold and 600,000oz of silver.

South Korea`s LG International Ltd and the South Korean government`s resources investment arm KORES together hold 26% of Lafayette Philippines while rest is owned by its Australian parent.

Mincorp says Philippine Court of Appeal rules against unit in permit dispute

LSE News

9th November 2006

LONDON (AFX) - The Philippines Court of Appeal has ruled against one of Mincorp PLC's partly-owned subsidiaries in a dispute over an exploration permit. Bonaventure Mining, a wholly-owned subsidiary of Mincorp Asia, is in dispute with VIL Mines over the Exploration Permit Application of approximately 9,400 hectares covering the Mt. Cadig nickel deposit in the Philippines. Mincorp PLC currently holds 40 pct of Mincorp Asia.

Bonaventure said it intends to dispute the latest decision in the Philippine Supreme Court, and Mincorp Asia's lawyers 'are of the opinion that the Court of Appeals' decision can be overturned in the Supreme Court as it is in serious conflict with applicable administrative laws and the normal operating procedure adopted by the Philippine Department of Environment and Natural Resources.' Mincorp said that as the appeal to the Supreme Court will delay the issuance of the Exploration Permit, Bonaventure has decided to stop any further exploration expenditure on the property for the time being.

DENR says inactive mine dam is safe

By Delfin Mallari Jr., Inquirer

10th November 2006

LUCENA CITY-The Department of Environment and Natural Resources has assured the local government and residents of Marinduque that the mine structures and waste facilities of Marcopper Mining Corp. in Sta. Cruz town were intact but vowed to keep a close watch on the inactive mine in the wake of a recent earthquake that hit the province.

"The results of an onsite investigation made by DENR experts showed that there were no manifestations of cracks in any of Marcopper's structures nor were there seepages along the slopes and toe of its dams," Environment Secretary Angelo Reyes said in a press statement.

On Oct. 20, a 5.2-magnitude earthquake jolted the sea floor between the islands of Mindoro and Marinduque.

The tremor's epicenter was located offshore at about 35 km west of Boac town in Marinduque.

Reyes said he immediately sent a three-man team from the Mines and Geosciences Bureau (MGB) in Region 4-B (Mimaropa) to the mine site following a request from Marinduque Rep. Edmund O. Reyes and Gov. Carmencita O. Reyes to look for any possible impact of the earthquake on the mine's structure.

He said he particularly ordered regular clearing of materials along spillways and toes of dams in order to facilitate the monitoring of seepages.

"I have already instructed our men in the field to continue monitoring the site and for the company to institute measures to provide better access for monitoring activities," said Reyes.

According to the DENR report, the MGB team thoroughly checked the various structures of the mine.

Open pit method best for Tampakan, say mining officials

Written by MindaNews

7th November 2006

GENERAL SANTOS CITY (MindaNews/6 Nov) -- The mining company exploring the site at the Tampakan area will likely be using the open pit method in extracting copper and gold deposits there after conducting a study as to which method is best.

Tony Robbins, managing director of Indophil Resources NL, said this was based on a prefeasibility study completed last September. Indophil owns 95 percent of the Tampakan project and the rest by Alsons Corp., a Filipino company led by the Alcantara family.

The study said the mining area -- which covers Tampakan in South Cotabato, Columbio in Sultan Kudarat and Kiblawan in Davao del Sur -- has a world class, two billion-ton resource, containing 11.6 million tons of copper and 14.6 million ounces of gold at a 0.3 percent copper cut-off grade.

But Robbins said that the "block cave" method, which involves underground operations, has not been ruled out because the mine site could be operated for a long because of the huge amount of mineral deposits. Groups opposed to mining operations in the area have repeatedly warned that the mining proponents would employ open pit mining, which they say will cause irreparable damage to the environment.

"An environmental catastrophe looms over our head and the future generation if such [open pit] method will be employed by the firm," said Eliezer Billanes, chairman of South Cotabato, [North] Cotabato, Sultan Kudarat, Sarangani, General Santos City, Davao del Sur Alliance for Genuine Development (Soccsksargends Agenda). Robbins said that they will hire 3,500 people, mostly locals to do the hard labor, once mining operations go full blast by 2009.

Sagittarius Mines, Inc., which is representing the Australian company Indophil in the latter's operations at Tampakan, will be conducting a definitive feasibility study stage costing $30 million.

To lose a forest

By Cielito C. Goño, Commentar, Inquirer

6th November 2006

FIRE RAZED THE HILLS OF HOMONHON FOR over two months in the early 1980s. When it was over, an estimated 2,000 hectares of forest were gone. Since then, the local mining company and the residents of the historic island have been trading blame for it. On one side, Heritage Resources & Mining Corp. says it was not even operating there when the fire occurred, and that it was the honey harvesters who had accidentally set off the blaze. On the other side of the argument, there are the locals who say that people associated with the company were the only ones known to have been where the fire was, and question how the company could have known that some honey collectors did it when it says it wasn't even there.

Meanwhile, if there was any attempt at reforestation, there certainly isn't any trace of such endeavor. There are no signs of any kind of intervention that has made a dent in reversing the damage. Today, more than two decades after the destruction, the area is still littered with the burnt and ashen remains of trees. From one of the island's highest points, we saw that the hills of Homonhon were mostly brown, the topsoil unprotected and exposed to wind and rain. There is some vegetation, but the forest is gone.

In his book "Collapse: How Societies Choose to Fail or Succeed," Pulitzer Prize-winning scientist Jared Diamond looked at environmental and socio-economic structural factors to explain how societies-such as the Easter islanders, the American Southwest Anasazi, the Mayans and Greenland's Norse settlers-disappeared. He found that deforestation was one of, if not the, major factor in the collapse of these societies. He argued that the role of deforestation in their decline was more powerful than was previously thought.

Because forests, once destroyed, take so long to regenerate, their destruction can mean a slow but permanent alteration of ecosystems, setting off worsening incidences of crop failures, as well as erosion and siltation that through time can completely degrade fishing grounds.

Diamond believed that wind and rain slowly carried off the thin topsoil left unprotected by deforestation in Easter Island, leading to starvation and population crash. Soil loss due to deforestation, he argued, was also vital in the breakdown of Mayan and Anasazi societies. "Collapse'' earnestly cautions that while forests and fishing grounds took thousands of years to form, the societies that depend on them can dispose of them with irrational disregard. (Or "with bounded rationality," as the new institutionalist school in the social sciences would have it.)

I strain to read "Collapse," without images of the the burnt forests and open-pit mines of Samar in my head, or memories of complaints about how hardrock mining can mean environmental devastation for small-island ecosystems, like those of Rapu-Rapu and Masbate. Like any firm, the nature of a mining company dictates that it is responsible mainly to its stockholders, rather than to the local communities whose resources it is exploiting.

While Diamond also cited mining companies that have been socially and environmentally responsible, he said that even in the United States, the government has a difficult job holding mining companies accountable.

Environmental bonds that mining companies are required to post in some states (as they also are, under the Philippines' Mining Act) have no clause for the inevitable escalation of cleanup costs, including water treatment. Moreover, cleanup costs are routinely underestimated because they are usually given by the mining companies themselves. Diamond says this is "because government regulatory bodies lack the time, knowledge and detailed mine engineering plans necessary to make such an estimate for themselves. In many cases . the actual cleanup costs have proved to be up to 100 times the mining company estimate."

There is little that can stop mining companies from walking away from environmental rehabilitation after they are done with a place, especially if they declare bankruptcy. As a result, American taxpayers face billions of dollars in liability to clean up and rehabilitate hardrock mines. In the Philippines, the Department of Environment and Natural Resources has identified 857 abandoned mines "needing attention." For only one of these-the old Bagacay mines left by the Philippine Pyrite Co. in Western Samar-the DENR has reportedly set aside P50 million. It seems that here, as well, the taxpayers must foot the bill for whatever damage to the environment a mining operation leaves behind.

Supporters of the Philippines' Mining Act speak, for the most part, in the language of macro-economic interests. To them, the measure is a relaxation of the policies that previously restrained mineral extraction. The move will boost GDP, they say.

What is absent in the reckoning, however, is that national income accounts do not reflect the depletion of natural resources. As economist Jeffrey Sachs often argues, when a tree is cut, sold and not replanted, the logger's income is counted, and that is the end of that math. Because of our concepts of what wealth is, we do not see the tree as having a value and so we fail to compute that; rather than creating cash from nothing, we exchanged one form of resource (the tree) for another (cash). So, also, we can say that when minerals are extracted and sold, we see the result merely for the GDP that mining generates, but fail to account for the costs of losing a forest and silting up fishing grounds.

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