MAC: Mines and Communities

Mining: The Civil-society Perspective (2)

Published by MAC on 2006-12-23
Source: Manila Times

Mining: The civil-society perspective (2)

NATURE FOR LIFE, By Anabelle E. Plantilla - Manila Times

23rd December 2006

Local mining is in an economic downturn. Starting in the late seventies and continuing up into the nineties, the global mining industry began to suffer from plunging mineral prices. The economic effects were evident as well, from 1981 to 1990, 14 percent of the country's total exports came from mining. In 1991 this number dropped to 8.87, in 1992, it fell further to 7.37 percent.

The year 1993 saw 220 abandoned mines in the Philippines. Mining's contribution to the gross domestic products from 1981-92 averaged around 1.77 percent. The industry needed rescue; the solution was through a piece of legislation, now known as Republic Act 7942, the Mining Act of 1995. Signed into law by former President Fidel V. Ramos in 1995, the Act's principal author was then-Sen. Gloria Macapagal-Arroyo, who had helped to create a bill that was looked favorably upon by the stagnant mining industry.

The mining industry gave inputs in the crafting of the bill, creating what was in their minds a law that would help to remove the toughest barriers to mining, particularly those which prevented the large transnational mining corporations from bringing their business to the country. However, in the minds of others, the act was seen as a clear and present danger to the national patrimony and the environment as well a violation of the 1987 Constitution. The root of this problem comes from the creation of an environment appealing enough for foreign mining investors.

Investors, by and large, are wary of the Philippines given its history of social and political upheaval. The Mining Act removed the very barrier that TNCs find most daunting, the nationalist protections present in the 1987 Constitution. The law states that certain industry companies (mining among them) could only be 40 percent foreign (with the other 60 percent Filipino) was seen as the single greatest impediment to foreign investment in the country.

It should be noted though that by definition as a "protectionist" policy, it was written not as an impediment to foreigners but as a way to ensure that Filipinos had priority in their own country. To get around this ownership issue, the Act introduced the concept of the Financial or Technical Assistance Agreement (FTAA) under which a completely (100 percent) foreign-owned company could explore, develop and mine in the country.

The FTAA offers a 10-year tax holiday for companies. It also exempts them from paying capital taxes and allows them to repatriate, that is, to remove from the country and use it in their own lands, 100 percent of all the capital and the profits they make from mining. Auxiliary mining rights are also granted by the Act to foreign investors. These include the rights to water and forest resources in the area of their application, as well as what are known as "easement" rights. This is a purely pro-business consideration, giving a corporation the right to "ease out" any impediment to mining operations. In almost all cases, these impediments are people. Locally, they could be anything from farmers to fishermen to "uncooperative" indigenous groups. Though not directly stated, it is assumed that force of arms-via military cooperation or "private security contractors" a.k.a. mercenaries-is allowed to achieve easement.

The Act is biased toward TNCs or large-scale mining. It was challenged in the Supreme Court, tying it up for years. Finally, in a famous non-decision, the high court ruled it unconstitutional, only to reverse its position a few months later. With the Mining Act of 1995 in place, the government saw that it would need a way to push mining revitalization nationwide. This resulted in the National Minerals Policy (NMP) Framework.

The NMP has four policy thrusts: protection and rehabilitation of the environment, promotion of social and community stability, preservation of options for future generations and the establishment of a competitive and stable mining industry. Through their encouragement of the mining industry by way of capitulation to their most outrageous demands, and the passing into law of regulations that solely benefit the TNCs, the government hopes to draw enough of them into the country that it can pull itself from its perennial state of near bankruptcy.

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