MAC: Mines and Communities

Mining: The Civil-society View (5)

Published by MAC on 2007-01-13
Source: Manila Times

Mining: The civil-society view (5)

The price of Philippine mining

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

13th January 2007

Money is all what it all comes down to. The Financial or Technical Assistance Agreement (FTAA) that allows for 100 percent foreign ownership of a mining firm is the biggest draw to foreign mining companies, not for legal or logistical purposes-Mar­copper's proof enough that a firm can escape all legal sanction by simply existing in the Philippines-but for sheer money reasons. Under the rules of the FTAA, all profits the company makes on its mine are for the company. It will not pay taxes for years. All its profits, all its earnings may be brought out of the country.

For these rules, the Mining Act of 1995 has been called the equal of the mining laws of such mining-intensive countries as the US, Canada and Australia. Does anyone else see the sizable difference between the Philippines and those three countries? Global studies on mining have shown that countries (such as several nations in Africa) who give their economy over to mining remain poor unless they echo the progression of the first world mining countries who developed industries around their mineral extraction. Some of these countries, such as Sierra Leone and Congo are known for their "bloody minerals." Sierra Leone has some of the richest diamond mines in the world, but their products are treated as "conflict diamonds" in an industry perpetuated through brutal military force and child slavery.

The Philippines' own mining history has shown that the provinces that are the highest producers of minerals-such as Agusan and Camarines Norte-are among the nation's poorest. Mining has not alleviated poverty even under conditions where the government was guaranteed a share of the profits, when companies were 60 percent Filipino-owned, prior to the Mining Act of 1995.

With FTAAs allowing totally foreign companies to extract, not to mention to repatriate all the wealth and enjoy tax holidays, where then will the Philippines profit from its own mineral wealth? If tons of gold are being shipped out of the country and the companies are doing this with the blessing of the government, where will the promised riches come from?

To explain at length is to enter a discussion of income transfers, excise taxes and the global economy. To make that long story short, the government hopes to profit off a company's crumbs. Since the profits of a mining company under such laws will be so large, the relatively tiny amount that the government will make will still be substantial. This is among those ideas that look excellent on paper but fail to get translated into reality. Hence, the disconnect among government officials. They base their ideas on a flawed system and introduce more flawed ideas to prop it up.

A perceived stance of a tough but welcome approach to mining is flawed. The Mining Act is not tough on polluters. One of its Implementing Rules and Regulations involves charging companies P50 a ton of spilled tailings, no matter how much the costs of the environmental damage.

Put in simpler terms, this means that Marcopper would be charged a fine of some P80 million (about $1.63 million at today's 48-to-1 rate) for the estimated 1.6 million tons of tailings that spilled from its dam. After the spill, international agencies estimated that the cost of rehabilitating the Boac River would exceed $100 million. This fine is not only ridiculous, but painfully insulting to the people of Marinduque.

While the government may wish to exhibit toughness, it has shown constantly that it will bend over backwards for to please mining industry investors. Yet another provision says that a mining company need only receive permission from the two levels of the LGU-rather than all levels-to begin its mining operations. While the reality is that local government is indeed fractious and racked with factional power struggles, this type of decision-making ren­ders the participation of the people of communities moot. For it is the communities, those directly affected by mining that will protest it, while local and provincial authorities will find little to object to. Definitely not the money. This forced marginalization of citizens and communities opposed to mining ventures ensures that everyone who isn't coming with back hoes and millions in foreign currency receives little or no attention from government. Unless it is attention to bring them around into favoring the mining venture.


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