MAC: Mines and Communities

Philippines Update

Published by MAC on 2006-09-11

Philippines Update

Last week started with criticism of the Philippine government by supporters of mining, for supposedly moving from "active promotion of [mining in] the previous two years to one of cautious re-consideration of policy reforms". It ended with the government rallying behind the big companies in response. At the same time President Macapagal-Arroyo was trying to drum up new investment in mining during her visit to Europe; at the same time she was dogged by protests over the killings of political activists.

Some companies may be answering her call, since there are rumours that Rio Tinto may consider investing again in the Philippines after it publicly withdrew in the 1990s following widespread opposition by Subanon tribes of Mindanao. Yet more Chinese companies could be joining the invasion, along with Harmony of South Africa.

Lafayette's trial mining run continues to painfully stutter forward, although the Department of Environment and Natural Resources finally granted a further 60 days in the teeth of bitter local and national opposition.

Groups in Marinduque claim that mining companies are masquerading as small-scale operators to gain access to an area which was scarred - in both reaity and memory - by the Marcopper disaster a decade ago.

Philippines goes quiet on promotion of mining

By Dolly Aglay, Reuters -

11th September 2006

MANILA (Reuters) - Mining executives from Africa are visiting the Philippines this week to see how much of its vaunted $1 trillion worth of unexplored mineral wealth is on offer.

But instead of trumpeting this, the Philippines is keeping the details quiet for fear lest green groups picket the venue of the conference and the mine visits.

"I think it's unfortunate that the government should think this way," Peter Wallace, president of private think-tank Wallace Business Forum, said.

"What they should be doing is actively inform the public of the tremendous benefits of mining."

Manila, however, seems to be wavering in its policy of mining promotion.

The Chamber of Mines of the Philippines postponed a mining conference scheduled on October 3-5 this year to 2007 because of "a seeming policy shift from active promotion of the previous two years to one of cautious re-consideration of policy reforms."

"This has led to stymied investment inflows affecting the country's competitiveness as a mining destination, and wait-and-see attitude once again from our foreign investors," the chamber said in a letter to President Gloria Macapagal Arroyo, a copy of which was obtained by Reuters.

Wallace said he was disappointed to hear about the postponement of the conference.

"We have a potential to uplift the Philippine people out of poverty, yet short-sighted people seem determined to prevent this from happening," Wallace said, referring to anti-mining groups.

"I wonder what they are going to offer as an alternative."

Welcome Mat

The Arroyo government laid out a welcome mat to foreign firms in February 2005, telling them at an international conference in Manila that it had shifted its policy to promotion from tolerance.

Two months earlier, the Supreme Court upheld the legality of a 1995 law allowing foreign firms to own 100 percent in local mining projects from 40 percent.

The change in Manila's policy prompted foreign firms to take a second look at one of the world's highly mineralized but least explored countries in the Pacific Ring of Fire, an area dotted with volcanoes and vulnerable to earthquakes.

Miners say GMA fails to live up to vows, cancel int'l meet

By Ayen Infante, Tribute

12th September 2006

The local mining industry has decided to call off an international mining event that was set in Manila next month to save the Arroyo Administration from possible embarrassment.

In a letter to Malacañang, Chamber of Mines of the Philippines president Benjamin Philip Romualdez, cited several reasons the industry agreed to cancel an international mining conference and exhibition that was supposed to happen in Manila from Oct. 3 to 5.

Romualdez highlighted in his letter that the government has failed to deliver the promised policy reforms to make the industry globally competitive and stable.

He stressed "changes in policies have led mining companies to believe and confirm their early suspicions that investment policies in the Philippines are not stable and are heightened by high political risks".

Given the current state of the industry, Romualdez, in the same letter, explained "the postponement is a more prudent approach to take at this time. This decision was reached to shield your administration from operational and governance issues that will inevitably surface in an international conference and could reverberate in the global mining community".

"We would like first to contain and resolve these issues quietly and expeditiously with our partners in government and other stakeholders of the mining industry, just as we have done with the CBCP (Catholic Bishops Conference of the Philippines) in June this year, after a series of dialogue and consultation, CBCP has toned down their stance and made a statement in media that they are not against mining per se but are for responsible mining," it added.

Romualdez said the Board's decision was based on policy-related issues which include changes in the investment incentives which are being pushed in the Senate indicating that since mining is a "resource seeking" and "market seeking" activity, it is not entitled to incentives; in spite of the Justice Department's opinion that local government units cannot enact ordinances that go against the Philippines Mining Act, resolutions banning mining in four provinces namely, Samar, Marinduque, Mindoro and Capiz have been passed and are being implemented; bills seeking to repeal the Philippine Mining Act of 1995 are being deliberated in both houses of Congress without giving a chance for the law to be implemented; and the Minerals Development Council which had its first organizational meeting in January 2006 has not met to date.

It added the promised "one-stop-shop in the central and regional offices of the Department of Environment and Natural Resources in coordination with relevant agencies involved in the processing of mining tenements is non-existent, and additional layers in tenement processing are being made contrary to Pres. Arroyo's policy of reducing red tape in government agencies; the streamlining of procedures in the grant of mining tenements that would reduce processing time from a best case of three years (with an average of five years) to seven months is not happening; and a moratorium on new mining tenements outside of the 24 priority projects was announced by the Office of the President.

Gov't to answer mining concerns 'point by point


13th September 2006

THE GOVERNMENT RECOGNIZES policy concerns raised by the Chamber of Mines and is prepared to respond point by point, a senior official yesterday said.

He refused further comment, however, and said the government is currently concentrating on welcoming a delegation of prospective mining investors from South Africa.

"The [Environment] secretary and I have talked about it and we have decided that we will respond to it point by point," Mines and Geosciences Bureau (MGB) director Horacio Ramos told Business World.

The Chamber of Mines has postponed an international investment conference scheduled next month, citing a perceived policy shift by the government in promoting the industry.

The low-key visit of South African investors has been cited as an indication of how the government has changed its attitude from its earlier gung-ho drive to attract mining investments.

The South African visitors are in the country following an invitation by Environment Secretary Angelo T. Reyes earlier this year. Mr. Reyes, immediately after his appointment to the department's top spot in February, spoke at the INDABA mining conference in South Africa.

That meet is considered to be one of the biggest in the world and Mr. Reyes was described as the first Asian minister to address the said conference.

Mr. Reyes declined to comment yesterday, as did other senior officials from the Trade department and Malacañang.

A mining chamber source confirmed that the South African businessmen are looking for prospective investments. They are scheduled to visit the Padcal mines of Philex Mining Corp. in Benguet today and are also expected to meet with President Gloria Macapagal Arroyo, who is currently out of the country.

The MGB has refused to elaborate on the visit of the South African delegation, saying they were not authorized to speak on the matter.

Following the INDABA conference, four large firms, ranked among the top ten in the world, were said to have expressed their intent to develop new mining projects in the Philippines.

These firms were identified as Harmony Gold Mining Ltd., Anglo Gold Ashanti Ltd., Anglo American Exploration Pty. Ltd. and Rand Gold and Exploration Ltd.

Of the four, Anglo American Exploration Pty. Ltd. already has a presence in the Philippines, via a partnership with Silangan Mindanao Mining Corp. at the Boyongan Copper Project in Surigao del Norte. The Boyongan mining project is one of the administration's 24 priority mining projects.

Mining chamber president Benjamin G. Romualdez has claimed that the government's uncertain policy stance has "stymied" investments. He said it is important to note that most committed investments are already here.

In July, the MGB reported that about half of the expected $122 million in investments this year have been infused in 24 priority projects. Mining investments as of May 2006 totaled US$47.91 million.

The MGB said investments will most likely reach the US$122-million mark given outlays for at least three projects - the Didipio Copper-Gold Project in Nueva Vizcaya, and the Siana Gold Project and the Adlay - Cagdianao - Tandawa Project in Surigao del Norte. .

The Palawan Nickel Project was to account for the bulk of the investment at $22.71 million. The project is a joint-venture partnership between Filipino firm Coral Bay Nickel Corp. and Japanese mining firm Sumitomo Metal Mining Co. Ltd. Sumitomo invested $180 million in October 2005 to put up a new nickel processing plant in Rio Tuba, Palawan, seeking to double production to 20,000 metric tons over the next three years.

The Tampakan Copper Project of Filipino firm Sagittarius Mines Inc. and Australian partner Indophil Resources, meanwhile, was to account for about $8 million of expected 2006 investments.

Another $21 million is expected to be added to the Tampakan project. Indophil managing director Tony Robbins has said this amount will be used for the pre-feasibility - study of the Tampakan reserves.

The 24 mining projects, designated as priorities, are set for full production by 2010. MGB show four are currently operating: the Palawan Nickel Project, Teresa Gold Project, Canatuan Silver-Gold Project, and the Sto. Tomas II Copper Expansion Project. The rest are at various stages of development and construction.

The Rapu-Rapu Polymetallic Project, operated by Australian miner Lafayette Philippines Inc., was the first to be commissioned. Its operations, however, have been disrupted by a mine spill last October.

That incident has prompted calls for the government to review the Mining Act of 1995, which the Supreme Court ruled in 2005 as allowing 100% foreign ownership of mineral ventures.

Canadian firm plans to explore Philippines nickel

11th September 2006

Reuters -

MANILA - Canada's Chemical Vapour Metal Refining Inc. plans to explore nickel in the Philippines, and may later put up an integrated processing facility in the country, officials said.

The local unit of the Canadian firm, CVMR Resources Philippines Inc, has applied for exploration permits with the government in Samar and Palawan provinces, Philippine manager Jinkee Agapito, told Reuters.

Last week, the Mines and Geosciences Bureau said the Canadian firm and Rio Tinto, the world's second largest mining firm, were among big foreign firms that expressed interest to invest in the country.

Horacio Ramos, head of the bureau, said the Canadian firm is interested in an integrated nickel operation in the Philippines which entails mining, processing and producing value-added products like nickel brickettes.

Investment for this would be up to $3 billion, Ramos said.

Agapito, however, said she cannot confirm how much the Canadian firm plans to invest in the Philippines.

The Philippines, which is trying to lure foreign firms to invest an initial $6.5 billion in 24 priority projects to revive its once mighty mining industry, plans to require mining companies to later go into value-added production, a government source said.

"The plan is to provide incentives so that value-added processing can be done in the country," the source, who requested not to be identified, said.

Under the plan, producers of copper cathodes will be asked to also invest in wire manufacturing while gold producers will be encouraged to make jewelry.

Chinese nickel group may join Canadians in Nonoc mine

Manila Bulletin

14th September 2006

HONG KONG (Reuters) — Jilin Nickel Group, China’s second largest producer of the metal, may consider joining its Canadian minority shareholder to develop nickel resources in the Philippines, a company official said on Wednesday.

The government of Jilin province sold a 10 percent stake in Jilin Nickel to Canada’s Chemical Vapour Metal Refining Inc. in October last year, the official said, without providing financial details.

Chemical Vapour is involved in mining, metal refining and also provides equipment to Jilin Nickel.

The Canadian firm’s unit, CVMR Resources Philippines Inc., has said it has applied in the provinces of Samar and Palawan for exploration permits. A Philippine official has said the CVMR is interested in an integrated nickel operation.

"It is possible we will cooperate to develop the nickel resources," the Jilin official said, referring to the Philippine projects.

If Jilin does not invest in the resource, Chemical Vapour was likely to sell the material from the Philippines to Jilin Nickel in the future, he said.

"We have a cooperation agreement with CVMR in developing nickel raw materials. We also have an intention to invest," he said.

Such an investment would be the first overseas project for the Chinese firm and would raise supply of the material to Jilin Nickel, the parent of Jilin Jien Nickel Industry Co. Ltd.

China’s largest nickel producer, Jinchuan Group Ltd., and its largest steel group, Baosteel Group, have already agreed to invest $ 1 billion to revive the Nonoc nickel complex in the Philippines.

Jilin Nickel is nearly trebling nickel capacity to 23,000 tonnes by 2008, from 8,000 tonnes currently, but its two nickel mines in China cover 50 percent of its ore demand.

"We have not decided whether the existing 8,000 tonnes of capacity will be switched to produce copper. It will depend on the raw material supply," the official said.

In 2006, the firm aimed to produce 8,000 tonnes of nickel, against about 7,300 tonnes last year, he said.

Lafayette forced to shut Rapu-Rapu anew


12th September 2006

SYDNEY-Australia's Lafayette Mining Ltd. said yesterday it was forced to again halt operations at its Rapu-Rapu mine in the Philippines after a temporary government operating license expired.

The mine was closed last year after two cyanide spills but had nearly resumed full operations by late last week under a 60-day trial run approved by the government.

Lafayette's shares fell 5.75 percent to 8 Australian cents, in a broader S&P/ASX 200 index down 0.6 percent.

Lafayette said results from mine operations over the trial run had demonstrated the mine's ore treatment plant was in compliance with regulatory standards, but its application for a further 60-day extension to operate the plant had not been considered by the Pollution Adjudication Board of the Philippines.

Plant operations were suspended late on Friday to ensure compliance with government requirements, the company said.

"Lafayette remains hopeful that the extension will be granted shortly," it said in a statement.

The country's first new mine developed by foreign interests in almost four decades suspended operations three months after pouring its first gold on July 20 last year, forcing Lafayette to conduct remedial environmental work or face permanent closure.

The plant had reached 90 percent of rated capacity last week and was expected to meet 100 percent of capacity within a further two days, the company had told the Australian Stock Exchange on Sept. 5.

Lafayette estimates the lode can generate revenues of $350 million a year from production of 10,000 tons of copper in concentrates, 14,000 tons of zinc, 50,000 ounces of gold and 600,000 ounces of - Reuters

Gov't gives Lafayette test 60-day extension

By Blanche Rivera, Inquirer -

14th September 2006

THE GOVERNMENT has allowed Australian mining firm Lafayette Philippines Inc. to extend the test run of its Rapu-Rapu mine by another 60 days.

Saying the country needed to proceed with economic development once environmental protection was assured, Environment Secretary Angelo T. Reyes on Tuesday approved Lafayette's motion for extension of its 30-day three-stage test run which ended on Sept. 9.

The Pollution Adjudication Board, a quasi-judicial body under the Department of Environment and Natural Resources (DENR), has issued a 60-day temporary lifting order of the suspension of Lafayette's operations, allowing the firm to continue a test run of its facilities at full capacity.

"The boards found valid the regional offices' opinion that the efficiency in Respondent's detoxification system can accurately be assessed by allowing it to extend the period of operation," the PAB said in its order dated Sept. 11, citing the recommendations of the Mines and Geosciences Bureau and the Environmental Management Bureau of the DENR.

The PAB, however, required Lafayette to submit within five days an updated schedule of activities within the 60-day test run, the projected efficiency of the mill recovery and the pollution and environmental management measures, and an internal audit of its environmental management system.

Lafayette was also asked to comply with certain technical requirements that will determine cyanide loading and cyanide destruction efficiency, and to monitor the dissolved oxygen levels to ensure efficient detoxification.

"I will not allow the environment to be polluted by any means . However once the protection of the environment is assured, we must allow economic development to take place also for the benefit of our people and to boost the financial resources of the government," Reyes said in a statement Wednesday.

Defend Patrimony, a nationwide alliance against mining liberalization, raised howls of protest against the extended test run, saying Lafayette should instead be required to secure a new environmental compliance certificate to prove the reliability of its new structures.

"How low should our government agencies bend for these mining transnational corporations? Lafayette is not even bringing in fresh money. It is only operating on hedge funds, how much taxes can government stand to gain out of such operations?" Ester Perez de Tagle, spokesperson of Concerned Citizens against Pollution, said in a statement.

Proliferation of Pseudo 'Small-Scale' Mining Projects Alarms the People of Marinduque

PRESS RELEASE - Marinduque Council for Environmental Concerns (MACEC)

13th September 2006

Boac, Marinduque - The Marinduque Council for Environmental Concerns (MACEC), a church-based multi-sectoral organization in the Province of Marinduque is alarmed by the proliferation of mining companies in the Island-Province and other parts of the country which pose as 'small-scale' players in the mining industry.

Just recently two mining companies, the Asian Iron Ore Corporation and Archean Mining Corporation, held a public consultation in Barangay Bocboc offering various economic opportunities to the people if they will be allowed to operate a "small-scale iron mining project."

Barangay Bocboc is in the town of Mogpog and was one of the barangays which was grimly and critically affected by an enormoug flooding wrought by the collapse of Marcopper Mining Corporation's Maguila-guila Siltation Dam on December 6, 1993 where two children died of drowning. Their civil case filed against Marcopper Mining Corporation and Placer Dome is still being heard in the Regional Trial Court of Marinduque.

"Is this an indication that anti-mining advocates and environmentalists are already winning the struggle against large-scale mining and the administration's mineral liberalization program?," asked Myke Magalang, Executive Secretary of MACEC.

"This also seems to be a circumvention of the environmental impact assessment process for medium and large-scale mining operations because in order to avoid the scrutiny of national and international anti-mining groups, mining companies are deploying 'never-heard small or dummy corporations' to make it appear that they will only operate small-scale mining projects in a locality. Small -scale mining operations are processed by the Provincial Mining Regulatory Boards," added Magalang

There were also reports of similar incidents in Agusan del Norte which prompted the people of La Fraternidad and Binuangan in the Municipality of Tubay to oppose the approval of the small-scale mining permits for nickel and cobalt of Galeo Equipment Corporation, SR Metal Incorporated and San-R Construction Corporation.

Despite these realities, "the people of Marinduque will continue to struggle for a mining-free province in order to regain the lost integrity of our island paradise. We will invoke the 50-year mining moratorium imposed by the Sangguniang Panlalwigan in 2005 and the unanimous stance of all the legislative bodies of the province to delist the San Antonio Copper Project from the mining priority list of the Arroyo Administration. We have been host to three large-scale copper & mining operations for the past 30 years but their ill-effects are still hounding our environment and the people's health, livelihood and food security," Magalang emphasized.

"As we celebrate today the 106th Anniversary of the Battle of Pulang Lupa, one of the rare battles where the Filipino revolutionaries won against the superior armaments of the American colonizers during the Filipino-American War, we reiterate the portion of the Marinduque Declaration 'that our struggle for environmental justice is no different or less important than that of the illustrious Marinduqueño revolutionaries of the past who made history in the rare victories against the Americans,'" reiterated Magalang.

He also called on all other environmental groups, anti-mining advocates and other advocacy groups " to document and expose other 'pseudo small-scale' mining permit applications in order to alert the people, expose to the media and effectively wage an all-out lobbying and monitoring activities in the Provincial Mining Regulatory Boards and regional offices of DENR's Environmental Management Bureaus which process the ECCs."

Executive Secretary
Marinduque Council for Environmental Concerns
Second Floor, Cathedral Compound, High Town,
Boac, 4900 Marinduque, Tel. Nos. (042) 332-2713

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