International Developments and TrendsPublished by MAC on 2001-05-01
International Developments and Trends in the Mining Industry
by: Engr. Catalino L. Corpuz jr.
Mining Communities Development Center Inc.
Baguio City, Philippines
Presented during the National Workshop on Mining
October 20, 1999
The mining industry has been in the doldrums since the start of the 1980s. The worldwide price of base metals and gold went down, which substantially reduced the profit margin of mining multinational corporations (MNCs). The mining industry was unable to adjust to the global economic crisis that slowed down economic growth worldwide.
There are many factors that lessened the demand for metals. Manufacturing companies resorted to substitution and recycling in order to cope with escalating high prices of industrial metals. There was relative "peace" when Eastern Europe collapsed and China opened up to the west, easing somewhat the arms race that characterized the tension among the superpowers. It was also a period when more focus was given to the development of the electronics and service sector industries -- industries that do not consume too much metal.
The phenomenon in the gold industry is different. The concept of a nation's wealth based on gold reserves is a thing of the past. The tying of the world's major currencies to gold and consequently to the dollar was constantly challenged by European countries. Gold's monetary role diminished in the 1960s and 1970s. With the birth of the Euro-dollar, European currencies were freed from the dollar and gold. This further diminished the value of gold as central banks began to unload their gold reserves.
All these factors lessened the demand both for base and precious metals, creating a surplus in inventory in the international market.
The new initiative by industrialized countries to bail themselves out from the economic crisis would intensify the exploitation of developing countries under the concept of the "borderless" economy. The mining industry was in the stage of restructuring itself in preparation for the anticipated increase in demand in metals, especially in Asia. Prior to the Mexican and Asian financial crises, Asia was an engine of growth for world metal consumption.
The Chamber of Mines of the US, Canada, UK and Australia and some chief executive officers (CEOs) of top mining MNCs like Rio Tinto Zinc (RTZ) (now Rio Tinto) made sure that they would benefit from liberalization, deregulation and privatization as they became active actors themselves. They initiated the changes in the mining codes of more than 70 countries that would provide ease of access to mineral resources, guarantees and tax breaks against loss, tax holidays, guaranteed rights to move from exploration to mining, freedom from interference and expropriation, reduced payments and share to government, and repatriation of capital and profits. The liberalization of the mining industry in these countries was in different stages of implementation when two successive financial crises struck.
The Mexican crisis and the Asian financial crisis that started in Thailand "temporarily" set back the so-called worldwide economic recovery under the new economic order. One of the immediate impacts of the Asian financial crisis was a 10% decline in the demand for base metals.
Recovery at last for Base Metals
At the start of the year, Reuters made a poll of some 20 analysts and the result was gloomy: except for zinc, the average cash prices for aluminum, copper, lead, nickel and tin showed a slim gain of only 1.9% over 1998. The price of copper reached a new 11-1/2 year low while aluminum, zinc and tin dropped to levels last seen five years ago. As a result, Rio Tinto Zinc subsidiary Kennecott's Utah copper smelter halted all production of copper. Broken Hill Proprietary (BHP), the world's largest copper producer, shut down its entire mining and smelting division in the US. Canada's Highland Valley mine was also scheduled for closure.
But by May 1999, the IMF held out its forecast that world economic growth for the year would be steady at 2.3%. This led the Fleming Mining Group to announce that there are plus signs for metal markets to stage a strong rally.
In July, Rudolf Wolff and Co. Ltd. and HSBC Securities' Global Mining unit raised their 1999 forecasts due to a rosier global economic outlook. Their report said that the recovery in Asia has occurred sooner than previously expected, US economic growth is stronger than anticipated, while economic growth in Europe is still slack.
Rudolf Wolff and Co. Ltd.'s forecast in September 1999 of 3.25% global economic growth in 2000 and the positive economic growths in East Asian nations have boosted prospects for a resurgence in demand for metals.
South Korean recovery for the first half of 1999 was surprising. It is expected to post the biggest growth among Asian countries in 1999 with GDP up 8%. It posted a negative growth of 5.8% in 1998. In Taiwan, economic growth is expected to be 5.5% in 1999, up from 4.65% in 1998. Malaysia's GDP grew by 4.0% in the second quarter. China's economic growth continues but the ADB warned that this will taper off in 1999 and 2000 as the effects of fiscal spending diminish and pump-priming becomes unsustainable due to budget constraints. Expectations of a recovery in the Japanese economy are strengthening, following better-than-expected GDP data for the April-June quarter.
This rosy picture in the Asian economy increases the demand for base metals. South Korean demand for copper was projected to be 550,000 tons for 1999 but this was revised to 650,000 tons. In 1998, domestic demand was 530,000 tons. Industry sources say nonferrous metal producers in South Korea are currently operating their plants at full capacity to meet strong domestic demand as well as export orders.
But Taiwan traders are still cautious about near-term prospects for a recovery in domestic metal demand, which has been filled in by imports. In 1998, demand for aluminum stood at some 300,000 tons and traders say it will remain about the same in 1999, which is about 10% to 15% below levels before the crisis. Demand for aluminum would increase by 3% at most in 2000. Taiwan imported some 460,000 tons of refined copper in 1998, down from 503,100 tons in 1997. Its imports in 1999 are estimated at about 450,000 tons. The impact of the recent earthquake will be an increase in demand for metals once reconstruction gets underway.
Hopes are growing that cash-strapped Chinese metal companies may benefit from the country's new 60-billion yuan ($ 7.25 billion) bond issue through easier access to credit. In late August, China unveiled a huge stimulus package aimed at reinvigorating economic growth through spending on infrastructure such as roads and bridges. Chinese demand for copper, totaling 805,000 tons in the first seven months of this year, posted a 10.3% increase from a year earlier. Some Japanese sources said
China has become the second biggest copper consuming country following the US, as China exceeded Japan's consumption in 1998.
But it is unlikely that Japanese demand for base metals will recover to the peak levels of 1991 and 1992 as the country's industrial structure is changing. A strong yen in the early 1990s and pressure from trading partners to cut its trade surplus prompted Japanese automobile and appliance makers to shift factories abroad, especially to other Asian countries. As a result, some Japanese smelters will continue to focus on metal exports to neighboring countries to enable them to operate plants at full capacity to cut output costs. Domestic demand for copper peaked at 1.7 million tons in 1990-1991 but is estimated at 1.31 million tons in 1999-2000.
All told, these positive growths in the GDP and higher consumption demands translated into new highs in the prices of base metals. Compared to the low prices in 1999, there was a gain from 8% to as high as 87% in the price of base metals by September 7, 1999 (see following table).
A Japanese metal industry analyst says, however, that it will take at least another year to see a recovery in demand from the financial crisis that swept Asia in mid-1997. Demand for copper, zinc and lead will recover by 5% this year in the whole of Asia, and it will also post another 5% recovery next year if economies grow as expected. This means Asian demand for base metals will recover to pre-crisis levels by the end of 2000, after a 10% decline in 1998.
Prices of Base Metals ($ per ton)
September 7 High 1999 Low % Gain
Copper 1,801 1,365 32 %
Aluminum 1,527 1,158 32 %
Zinc 1,229 914 34 %
Lead 537 461 16 %
Nickel 7,390 3,945 87 %
Tin 5,380 4,960 8 %
Has Gold regained its Midas Touch?
In nearly two decades, the price of gold continuously went down after reaching a high of $800 - $1,000 per ounce in 1980. After hovering at $300 per ounce last year, it fell drastically to $251.70 per ounce on August 25, the lowest for the past 20 years.
However, in a span of just two and a half days in the last week of September, the price of gold has broken the $300/oz price barrier and has since stood its ground. On September 28, 1999, the price of gold went up to as high as $327.40/oz as it also recorded a single day leap of as much as $59/oz.
Two factors led to the sudden increase in the price of gold. Fifteen European central banks, which hold some 50% of official reserves, pledged to limit annual sales of gold to 400 tons for the next five years, thus cutting down on gold supply to the market and boosting its sagging price. European banks also announced that they would put a limit to the amount of gold available for loan. In the past, gold loaned by central banks earned interest rates way below those of money at 1 - 2 %. With the announcement to limit the amount of gold for loan, interest rates soared to 10% and the price of gold went up further.
In 1996 the price of gold was in the range from $ 380 to $ 400/oz. The speculation in 1997 was for gold to reach the $ 400/oz mark. However, this did not materialize, as central banks began selling their gold reserves, which increased the supply of gold in the international market and pushed the price of gold at an accelerated downtrend.
The Netherlands, Belgium, Canada, Argentina and Australia have sold significant portions of their reserves. Belgium sold 203 tons in March 1996. Argentina sold its entire non-monetary gold reserves of 4 million ounces from January - July 1997. Australia sold 167 tons or two-thirds of its gold reserves in July 1997. Britain announced its plan to sell 415 of its 715 ton gold reserves, and in July 1999, sold 25 tons, the second of its 5 bi-monthly offerings. Switzerland, holding 2,590 tons of gold, the third largest national reserve of gold in the world, will vote in the year 2000 on whether to sell more than half of the country's reserves.
The sale of gold by central banks drew harsh criticism from the mining industry, especially from South Africa whose economy is very much dependent on mining. With the price of gold turning erratic and unpredictable, most of the smaller gold mines faced closure.
Chaos in the gold industry was temporarily halted, and a win-win solution was found for government, brokers and stockholders, mining companies and mine workers whose countries are heavily dependent on the gold mining industry -- but not for affected communities. The IMF, which earlier announced it would sell its gold in order to fund debt relief for poor countries, held back its plan. The European central banks met and agreed to put a limit to the sale of gold for the next five years.
More advances in technology
Advances in technology in recent years, such as in the fields of electronics and biotechnology, have benefited the mining industry. These lessened production costs in mining from exploration to the production phase.
Application of advances in the field of electronics can be seen in mining exploration tools such as satellite mappers and magnetic sensors. This has made it possible to accurately pinpoint the location of mineral deposits. In making feasibility studies, CAT scanners have become efficient tools in estimating mineral ore reserves.
Telemining, a new concept in mining, is a recent application of advances in electronics. This makes the entire cycle of mining capable of remote operations. This was developed by Inco, the biggest nickel mining company in the world. Inco stated that telemining would make mining "safer", more productive and more economical. Based on Inco's model, with the use of telemining technology, a conventional mine with a 20-year life and producing $1.2 billion in value would translate into a mine with a life of 13 years and produce a total value of $2.4 billion even with low-grade ore.
The application of advances in biotechnology in the mining industry is the bioleaching process, which is now being used in the extraction of gold, copper and uranium. Newmont Mining Co., the second leading gold producer in the United States, developed this technology and was able to bring down gold production costs
in the range of $ 130 - $ 190/oz. Even if the gold price has gone down worldwide to as low as $ 250/oz, Newmont maintained its profitability and leading role in the gold mining industry.
In time of economic crisis, corporations become innovative in discovering the most efficient technology to bring down costs and are able to accumulate more profits.
Reconcentration of Mine Capital
There has been a lot of movement within the mining industry in the last four years. First, mining companies streamlined their operations. Second, some companies downsized their operations. And third, companies went into mergers and acquisitions. All of these are happening to maintain, consolidate, strengthen and expand mining companies' global reach of operation.
Anglo-American Mining Company placed all of its gold mining operations into one group. The new group's name is Anglogold. In streamlining its operation, it is poised to maintain itself as the world's largest and best producer of gold.
Broken Hill Proprietary is divesting its assets in the steel industry both in Australia and in the US to raise funds and strengthen itself in the copper industry. Aside from streamlining its operation, BHP also closed down three of its copper mines in the US. But while downsizing in the US, it plans to open up new mines in Papua New Guinea and Chile.
Mergers and acquisitions involving top mining companies accelerated these past years. Recent ones are: the merger of Gencor and Gold Fields which are poised to challenge Anglo-American as the world's largest gold producer, and Asarco and Cyprus Amax to challenge the leadership of Phelps Dodge in the US copper industry. But Phelps Dodge and Grupo Mexico are currently in a bitter fight to take control of Asarco to become the world's largest copper producing mining company.
Rio Tinto Zinc (RTZ), which combined with CRA in 1996 and renamed itself Rio Tinto, also acquired 11.8% of Freeport Copper and Gold to maintain its leadership in the gold industry. Not to be outdone, Anglo-American acquired Ashanti, the biggest gold producing mining company in Ghana. Prior to this, Ashanti acquired three gold mining companies in Ghana. These mergers and acquisitions will re-concentrate mine capital in a few companies or whoever wins in the corporate war.
In 1990, 33 per cent of the value of all Western mining products was owned by 20 companies (Moody 1993). By 1993, the top 10 companies alone controlled 28.6 per cent of production. The two largest companies, Anglo American and Rio Tinto, between them now control 18 per cent of the world's metallic resources and supply 90 per cent of the world's rough diamonds (Mining Journal 29 May 1998, Moody NI 1998). In the key sector of copper, the 10 largest companies in 1992 controlled 61.2 per cent of production; and the top 20 companies, 79.4 per cent (RMG 1995).
Such mergers will mean the wielding of even more economic power by transnational mining companies. And with this power, they can further expand their control over mineral lands which will lead to displacements of people. Their influence on governments of developing and Third World countries to change their laws and policies to liberalize the mining industry will also increase. For example, in West Papua, Freeport McMoRan, an American gold mining company, has become the de facto government in the area.
With the entry of transnational mining companies in developing countries, local mining companies which cannot compete with them may have no recourse but to go into joint ventures or to merge with them.
More Aid to Mining MNCs
a. World Bank's Guidelines on Environmental Standards in Mining
In 1997, the World Bank released its revised guidelines on environmental standards in mining. But instead of promoting or upholding standards for humane and safe living, the World Bank standards are way below existing ones such as those set by the US Environmental Protection Agency (EPA) and by the UN World Health Organization (WHO).
The World Bank's revised guidelines accept submarine tailings disposal and allow emission levels of toxic materials from mines, in some cases at levels higher than limits set by existing standards. There are no guidelines, for instance, on safety standards for tailings dams, no ban on disposal of tailings direct into rivers, and no requirement for long-term monitoring after mine closure.
In the past, depending on their strength, community struggles were able to put a stop to mining operations because of their assertion of environmental safeguards for their humane and safe living. But now the World Bank has made it easier and even encouraged mining companies to cut costs to the detriment of community people.
b. World Bank's new Resettlement Policy
In 1980, the World Bank established its Resettlement Policy (as Operational Directive 4.30 or OD 4.3), the objectives of which were to have Bank-financed projects benefit the people they displaced, and to restore, if not improve, their former standard of living. The policy also required that World Bank-financed projects should avoid or minimize involuntary displacement by exploring all viable alternative project designs; treat involuntary resettlement as a development program; and give preference to land-based resettlement strategies for people dislocated from their agricultural lands.
Twice, in 1994 and again in 1998, the World Bank made internal evaluations of its Resettlement Policy. Since the evaluations showed a clear failure by the Bank to achieve the objectives outlined in OD 4.30, NGOs called for the Bank to stop financing any project which required involuntary resettlement until:
- the problems within the ongoing portfolio were addressed;
- borrower governments institute legal and policy frameworks which will ensure restoration of incomes to resettlers and adherence to Bank policy;
- concrete mechanisms and incentives are created inside the Bank to ensure full Bank staff compliance with the policy on involuntary resettlement.
As part of the policy "conversion" process, the World Bank released a new draft of its Resettlement Policy in March 1997. The new policy resulted in important overall omissions in five areas as identified by NGOs:
- The Bank's preference for land-for-land exchanges in involuntary resettlement was dropped.
- The bulk of the protections, once afforded to displaced people, was left to the discretion of the implementing agency or the task manager at the Bank.
- Protection for host communities was weakened significantly.
- Mandatory requirements for an environmental impact of any proposed resettlement sites to be included in the EA of the main investment were dropped.
- Socio-economic surveys became optional.
Non-government organizations wrote to the Bank in protest but the Bank never responded. Then, on July 9, 1999, the World Bank posted the final draft on its web site for public comment.
c. UNDP and WHO's collaboration with MNCs
Recent developments are very disturbing, which involve well-respected agencies such as the United Nations Development Programme (UNDP) and the World Health Organization. These two agencies initiated and entered into collaboration with TNCs which are well-known for the negative impacts their activities have had on human rights, the environment and development.
The UNDP entered into a joint programme called the 'Global Sustainable Development Facility 2B2M: 2 Billion People to the Market by 2020 (2B2M/GSDF) with 16 multinational corporations. According to the UNDP, the objective of the 2B2M/GSDF project is to "create sustainable economic growth and allow the private sector to prosper through the inclusion of two billion new people in the global market economy."
As the UNDP puts it, the GSDF will "benefit from the advice and support of the UNDP through a special relationship". Part of this "special relationship" appears to be financial in the form of a $ 50,000 sponsorship fee which proves to be more of a bargain for sponsoring multinationals such as the British Rio Tinto plc, the Swiss-Swedish Asea, Brown, Boveri (A B B), the Swiss biotechnology giant Novartis and US-based Dow Chemical -- companies whose images may be significantly brightened by their collaboration with the UN.
Meanwhile, the WHO recently teamed up with five leading international mining companies -- Placer Dome, BHP, Pasminco, Rio Tinto and WMC -- to form the "World Alliance for Community Health," the stated aim of which is to improve community health through the promotion, development and facilitation of projects led by the private sector.
This joint collaboration of the UNDP and WHO with MNCs raises basic questions.
The UNDP is claiming that the lives of the world's poorest two billion people can or will be improved by drawing them into a ruthless world economic system dominated by a few hundred giant corporations, including the GSDF sponsors. Yet the most pressing needs of the world's poorest citizens are in arenas of little or no interest to global corporations: the provision of basic health, education and food resources.
Corporations have shunned these areas because poor people, by definition, have little disposable income and because providing clean water, new classrooms and sufficient food rarely yields a profit. The poverty of this group is graphically illustrated in the latest UNDP Human Development Report, which calculates that the world's poorest 2.5 billion people have a collective income roughly equal to the collective wealth of the world's richest 225 billionaires.
In this initiative, the UNDP's motivation is misplaced.
In the case of the WHO initiative, mining companies are taking on more of what used to be the role of government. In the Philippines, for example, mining companies have not only offered to build clinics and roads as part of their development of mines but have even offered to finance and assist in the securing of indigenous land rights in exchange for memoranda of agreement to allow mining.
Furthermore, global corporations' activities -- including those of companies which have agreed to participate in the UNDP and WHO joint ventures -- are frequently at odds with the goals of sustainable human development such as health, education, environment and nutrition.
And yet, it seems that the UNDP and the WHO see no conflict here, with the UNDP's assertion but without substantiation, that "in the long term a strong relationship exists between sustainable human development and the growth of shareholder value."
d. WTO's persistence for a Treaty on Investment
The World Trade Organization (WTO), the latest instrument of MNCs, continues to implement its mandate to remove all barriers to the free entry of corporations to exploit primary resources and barriers to free trade and entry of investments.
The strong worldwide campaign against the approval of the Multilateral Agreement on Investment (MAI) did not dampen its proponents. With the moves to liberalize investments further, there are indications that an investment treaty will be rammed through during the next official WTO meeting in Seattle in November 1999.
In the past, investments had to be secured, thus the need for the political risk insurance system, especially in mining investment. This will no longer be necessary once an investment treaty is approved by the WTO.
International Movement on Mining Issues
People's struggles on the mining issue have steadily developed as an international concern for the past four years.
Numerous international and regional conferences helped a great deal in bringing together representatives from mining-affected communities. These resulted in a deeper understanding of the mining issue on a global level and in shared experiences in confronting mining companies and government agencies. It also opened wide the possibilities and opportunities for cooperation as conference participants, NGOs and various institutions sought assistance from one another.
Some of these important international and regional conferences were:
- The Mining and Indigenous Peoples Conference
(London, May 6 - 16, 1996)
- First International Conference on Women and Mining
(Baguio City, Philippines, January 20 - 28, 1997)
- Mining, Society and Environment in Africa
(Accra, Ghana, March 2 - 4, 1998)
- Asia-Pacific Skills Share
(Baguio City, April 17 - 25, 1998)
- International Conference Against Mining TNCs
(Manila, Philippines, November 14 - 16, 1998)
- Gold Summit
(California, USA, August 2 - 6, 1999).
The Mining and Indigenous Peoples Conference in London was the first international gathering of indigenous peoples to discuss the mining issue. It attracted worldwide attention as the conference released its Hot Spot list which pinpointed areas of immediate concern.
The International Conference against Mining TNCs in Manila established the worldwide anti-imperialist character of the mining issue.
The Gold Summit in California was different from other conferences in that it was more of an action-oriented gathering of mining activists. Past conferences were more of the information-sharing type, as the urgent need then was to know the nature of the mining issue and provide a venue for networking. The Gold Summit conference had two important outputs: the call for a moratorium in opening new gold mines and the formation of a group from among countries affected by Newmont Gold Mining
Company to launch a campaign against it. This is similar to the Partizans, a campaign group against Rio Tinto based in London.
The Mining, Society and Environment Conference in Accra and the Asia Pacific Mining Skills Share were regional mining conferences. The former was a first attempt to consolidate the mining issue on the continental level. The latter, held in Baguio City, Philippines, was an attempt to bring together community representatives from the Asia-Pacific region to share how Australian mining companies have operated in their areas.
The International Conference on Women and Mining, also held in Baguio City, focused on the impact of mining on women.
Direct confrontation against destructive mining operations and human rights abuses has taken various forms -- from seeking legal redress to militant action.
A positive example is the experience of the indigenous peoples of Bougainville. The people launched a guerrilla war in 1988 that stopped the operation of Conzinc Riotinto of Australia (CRA) and its local subsidiary Bougainville Copper Limited (BCL). In 1997, the Papua New Guinea government tried to re-open the mine. Some
of its ministers were bribed and bought shares in CRA/RTZ. To facilitate the mine's re-opening, the government decided to contract the services of mercenaries to crush the Bougainville rebellion. It entered into a US $36-million deal with Sandline
International, a British mercenary company, which recruited and deployed 70 African mercenaries in Bougainville. However, the plan resulted in a 12-day crisis as demonstrations and riots ensued which led to the ouster of the Prime Minister.
The Amungme people of West Papua have been opposing the operation of Freeport McMoRan's mine since it opened in 1967. They brought their case before the US court to stop the company's operation because of its various violations of human rights. In response, to curb its bad image, the mining company announced the establishment of a US $ 100-million trust fund for environmental restoration in West Papua. It also pledged to set aside 1% of its annual revenue (around US $15 million) as a trust fund for at least ten years to help the people of West Papua and promised to quadruple the number of people employed in the mines.
But the Amungme people, through its organization LEMASA, rejected the trust fund. The West Papuan people, from time to time, are able to escalate their opposition against the mines with intermittent guerrilla warfare against the Indonesian Government waged by an independence movement known as the Operasi Papua Merdeka (OPM).
In North Barito, Central Kailimantan, Indonesia, the indigenous peoples of Dayak Siang, Murung and Bekumpai undertook a re-occupation campaign of mineral lands operated by Aurora Gold of Australia. The campaign resulted in the takeover one by one by the people of the company's three mining sites on June 21, July 14 and September 20, 1999. The Kerikil mining site was the last one to be re-occupied by mostly women who made the peaceful takeover.
In the Philippines, the mining issue has gained national attention with the general call to the Filipino people to defend the country's sovereignty over its territory and control over its mineral resources. It is also a call against the further oppression of the indigenous peoples as about 70% of the mineral lands being applied for are located in ancestral lands and territories. At present, militant struggles are being waged in all major islands of the country.
The Asia-Pacific Economic Cooperation (APEC) has also become an arena of struggle. In both the official and the NGO-organized parallel conferences, mining became a major issue. In 1995, JATAN, a Japanese NGO, and some members of the Japanese Parliament, organized a workshop on mining prior to the Osaka APEC Conference. A resolution against destructive mining was made to be presented in the official APEC conference. In 1996, the APEC parallel conference in the Philippines took the theme, anti-imperialist globalization, and mining was again projected as a
major issue. Some delegates to the BAYAN-organized conference went on an exposure trip to mining communities.
In Vancouver in 1997, NGO and PO representatives were both in the official and unofficial conferences. In the official conference, there was a move to make the Code of Conduct as a framework for struggle but this was effectively neutralized. In the NGO-sponsored parallel conference, mining was a big issue, as Canada is one of the major home bases of mining companies that are into exploration and mining operations throughout the world.
The UN system, especially the Working Group on Indigenous Populations under the UNCHR, has also become a forum where indigenous peoples address issues related to their rights to own and control their lands and resources. Aside from the UN-WGIP conferences, the yearly commemoration of the Decade of the Indigenous Peoples has served as a venue to voice out issues against mining.
The indigenous peoples are calling for the approval of the Draft Declaration on Indigenous Peoples’ Rights as an international instrument to defend their territories even before the Decade of the Indigenous Peoples ends in 2004.
Surely, the campaign against mining has developed with an international dimension which is broad and militant. However, there is a need to foster understanding and cooperation between affected communities and mine workers.
Implications of International Developments and Trends
With the perceived steady growth in the world economy and the observation that Asian countries are on the way to recovery from the financial crisis, analysts conclude that there are indicators for an increasing demand for base metals and industrial minerals.
A situation has somehow been created from a win-win formula which everyone involved in the gold mining industry would welcome. In maintaining the gold price above the $300/oz level, even marginal mining companies have been made happy. In the Philippines, the mining industry would welcome such developments. The reaction may not be comparable to the situation in 1978 when gold prices steadily climbed until 1980, making mining companies sprout overnight all over the country.
The possible scenarios we face in the Philippines are:
1. Drum-beating that the country has the capacity to overtake other Asian countries
The hype that Asian countries are recovering from the financial crisis would be used by a macho-posturing President to urge the country not to be left behind and instead to catch up, recover from the crisis and be on track to become a New Industrialized Country under the government's new Medium Term Development Program.
The full implementation of the liberalization, privatization and deregulation program in the mining industry would be a major component of this endeavor.
2. Fast tracking of infrastructure program
The government has gone slowly in the processing of mining applications because the infrastructures needed are not yet in place. If the framework of contracts are the Financial and Technical Assistance Agreements (FTAAs), the government can still bide its time as mining companies first have to conduct from 4 - 6 years of exploration work. Once mining companies reach production phase, the government should already be ready to support their operations with the necessary infrastructures.
Thus, the government will accelerate its infrastructure program, especially the construction of roads and upgrading of sea ports for the transport of ores and concentrates and the construction of hydroelectric dams and coal-fired energy plants to provide the needed cheap power to mining companies.
3. Fast-tracking of mineral application processing
Mining is a matter of timing. Mining companies subscribe to the saying, "Strike the iron while it is hot."
The Chamber of Mines will exert pressure on the government to fast-track the processing of mineral applications in order to take advantage of the relatively higher prices of base and precious metals in the international market.
4. Implementation of the full force of the law
We are already witnessing the full force of the law. In areas where there is strong opposition against mining, the government is deploying military troops. Recently, the government threatened to bring in the military in Siocon, Zamboanga del Norte and in the Diwalwal gold rush area.
The combined use of the Philippine Mining Act of 1995 and the Indigenous Peoples Rights Act (IPRA) will be used to the hilt to ease people out to pave the way for the smooth entry of mining companies.
5. More propaganda offensives by mining companies
We expect more lies, sweet talk and promises from mining companies.
In the past years, the mining companies' propaganda offensive touched on sustainable development in the industry, corporate responsibility, adherence to best technology, and respect for indigenous peoples' rights.
On the other hand, oppositionists to destructive mining operations are labelled as anti-development, destructive nationalists and communists. Oppositionists are being challenged to present their alternatives.
It would not be surprising if in the future, their propaganda offensives make references to collaboration with the UNDP or WHO, or company officials are accompanied by representatives from these agencies.
Another scenario is the implementation of more socio-economic programs in mining-affected areas in a trilateral partnership among the UNDP and WHO, the mining company and the community.
Also possible would be a concerted propaganda favoring the use of the Submarine Tailings Disposal system. Being an archipelagic country with mountainous and rugged terrain, this technology would be seen by mine companies as a feasible and cheap way to dispose of mine tailings.
6. More policies favoring the mining industry
The objective of Charter Change is obvious: to remove all nationalist provisions and to fine-tune it further to suit the framework of globalization.
Another thing that the Filipinos have to watch out for is a VFA-type agreement (Visiting Forces Agreement) that may be forged with the UK and Australia.
The Filipino people have to strengthen their opposition to the implementation of the VFA agreement with the US, as the UK and Australian governments have also suggested entering into similar arrangements with the government to safeguard their investments in the country.
With the above scenarios, a challenged is posed to us how we could sustain, broaden and intensify the opposition by the Filipino people against the government's pro-imperialist mining policy.
All laws, policies and guidelines are already in place for mining companies starting from the easy access to mineral lands, unhampered mining operations to squeezing as much profit as possible.
We are faced with the reality that 3 FTAAs, 118 Mineral Production Sharing Agreement (MPSA) applications and 46 Exploration Permit Agreement (EPA) applications have already been approved which cover a total land area of 677,770 hectares. In addition, 72 FTAAs, 1,938 MPSAs and 498 EPAs, with an aggregate area of 13,548,006 hectares, are under processing. Combined together, the total area for mining encompasses a land area of 14,225,776 hectares or roughly 50% of the country's land area.
Granting that there is one mining company for each application, the people are confronted with 2,675 mining companies and the atrocities, abuses and human rights violations they will be subjected to will be multiplied almost 3,000-fold.
And the World Bank, UNDP and WHO cannot escape responsibility as they have helped this to happen with watered-down policies and guidelines.
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