MAC/20: Mines and Communities

Manila to review investor friendly mining law

Published by MAC on 2006-03-10

Manila to review investor friendly mining law

by Dolly Aglay, Reuters

10th March 2006

http://za.today.reuters.com/news/NewsArticle.aspx?type=businessNews&storyID=2006-03-10T111934Z_01_BAN040713_RTRIDST_0_OZABS-MINERALS-PHILIPPINES-MINING-20060310.XML

MANILA - The Philippine government bowed to pressure from the Catholic Church on Friday and agreed to review its investor-friendly mining law, putting a much-vaunted revival of its mining industry back into limbo.

Manila, which is trying to lure foreign funding of about $6.5 billion to tap its rich mineral deposits, made the commitment after bishops in the mainly Catholic country called for the cancellation of all mining concessions earlier this year.

The bishops want environmental rules strengthened and for the financial benefits of mining to be shared by local communities.

"We will review the Mining Act immediately," House of Representatives Speaker Jose de Venecia told reporters after officials led by President Gloria Macapagal Arroyo met with bishops from the country's most active mining areas.

De Venecia said he will ask the lower house's committee on environment and natural resources to look at the possible amendment of provisions in the mining act of 1995.

He said the review will take 30 days. Any amendment to the law, however, may take more than a month because it has to be deliberated by both houses of Congress.

"We have agreed to look at the Chilean model, the Australian model, the Canadian model with regards to their legislation that strengthens the protection of the environment in mining operations," de Venecia said.

A landmark Supreme Court ruling in 2004 cleared the way for full foreign ownership of mines and prompted a state drive to attract foreign investment to dig up an estimated $1 trillion worth of mineral wealth.

During the 1970s and 1980s, the Philippines was one of the biggest mining centres in the world but two decades of neglect, environmental mishaps and clashes over land rights have seen its potential stunted.

UNCERTAINTY

Analysts said the review could derail the industry's tentative efforts to get back on its feet.

"This is very disturbing. It puts uncertainty back into the sector just when interest was being aroused around the world," Peter Wallace, president at consulting firm Wallace Business Forum, told Reuters.

"I would not be surprised to see foreign investors defer interest until this review is completed and the outcome well known. But even then, will be able to trust what is decided?"

The bishops said the mining law had to be reviewed to strengthen environmental rules and to ensure the financial benefits from mining are shared by local communities.

"We are not against mining per se, but we are very much against the way mining is being accomplished right now in the Philippines," retired Bishop Francisco Claver told reporters.

"The action of the government has been very weak with the implementation of environmental laws and the sharing of the wealth with the poor," he added.

The bishops said they also raised last year's cyanide spills by a unit of Australian-listed Lafayette Mining at its Rapu-rapu polymetallic project in central Philippines.

Rapu-rapu mine-- the first to be developed by foreigners in nearly four decades -- halted operations after the cyanide spills, just three months after it started gold production.

Lafayette has said it will not restart the mine until it is certain the operations will be conducted in an environmentally sustainable manner.

Bishop Reynaldo Evangelista of Marinduque said he asked the government to exclude the proposed rehabilitation of the Marcopper copper mine, where tonnes of waste spilled into a river in the central Philippines in 1996, causing extensive damage.

Environment Secretary Angelo Reyes said Manila will require foreign firms to set up a fund to cover future accidents. "If they are going to develop mining in the Philippines, a fund will be set up to address any untoward incident."

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