MAC/20: Mines and Communities

Miners’ Doomsday Scenario has no Basis

Published by MAC on 2004-08-02


Miners’ Doomsday Scenario has no Basis

Press Release by LRC-KSK - Quezon City

August 2, 2004

"There is no doomsday scenario except for those who want more at the expense of a more genuine reading of the Constitution."

Thus said the Legal Rights and Natural Resources Center, Inc .- Kasama sa Kalikasan (LRC-KsK), a co-petitioner and lead counsel in the case of La Bugal Tribal Association vs. DENR Secretary. It may be recalled that the Supreme Court nullified the Financial and Technical Assistance Agreement (FTAA) of Western Mining Corporation (WMC) with the Philippine Government and some provisions of the Mining Act of 1995 in January 27, 2004.

In its final memorandum submitted to the SC last July 19, 2004, lawyers from LRC-KsK argued that government shirked from its duty of fully controlling and supervising mining agreements, particularly those for financial or technical assistance. The Center said, "There is no assurance that our people benefit equitably or that we fairly capture the economic rent simply because we let the enterprise be. Government at times may be a poor substitute for how communities perceive their ecologies, but it is—at this time—the only Constitutional medium through which their interests will be fully protected."

The Office of the Solicitor-General (OSG), in several news articles, warned of a substantial decline in the country’s gross domestic product (GDP) growth once the Supreme Court upholds its decision of that cancelled provisions of the Mining Act of 1995. LRC-KsK, however, noted that these claims are speculative and even contrary to empirical evidence. After the Mining Act decision was promulgated, the mining industry continued to grow, with mining revenues peaking at P27.7 billion in 2003, up by 32% from previous years.

In 2003, even as some mining companies left the Philippines, new players came in including TVI Resource Development Philippines, Inc., Canatuan Gold in Zamboanga; Hinatuan Mining Corporation, South Dinagat Nickel Project in Surigao del Norte; Heritage Resources and Mining Corporation, Homonhon Chromite Project in Samar; and Benguet Corporation, and the Acupan Mining Project.

LRC-KsK cited studies commissioned by the World Bank and OXFAM America showing the negative impact of mining on the environment and the economy.

The World Bank- Extractive Industry Review warns of environmental degradation, social disruption, conflict, and uneven sharing of benefits to local communities that bear the negative social and environmental impact. It relates patterns of human rights abuses and civil conflict related to mining. The report mentions how marginalized groups and identities may have a very weak bargaining positions vis-à-vis governments and larger transnational corporations.

OXFAM America, meanwhile, found that local US counties that were dependent on mining experienced lower growth in and levels of per capita income than non-dependent counties. It said that unemployment was also higher in mining dependent counties due to technological changes that displaced labor and migrants’ vain expectation that they will be hired by the mining companies, among other causes. Of 301 quantitative economic findings about how mining dependent communities fared relative to other communities, almost two negative impacts were reported for every positive finding.

LRC-KsK said that the benefits from exploration, development and utilization are not "bottom-up" but "top-down." Because governance in developing countries is often weak, the revenues from extractive industries channeled through central governments may not be equitably distributed nor used to alleviate poverty. It warned of the natural resource curse of developing nations that have a high ratio of natural resources in their exports relative to total GDP. According to Harvard researchers, the greater the dependence on natural resource exports, the slower the growth in GDP per capita.

LRC-KsK further said, "Encouraging the mining sector to grow unabated without fully considering the alternatives might not be the only option for genuine development. It is certainly not how our present Constitution envisions our economy."

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