SAVE RAPU-RAPU. SAVE OUR FUTURE.: Improving Transparence of Payments and receipts in the Mining Industry

OPPOSE THE CONTINUING ONSLAUGHT ON THE EARTH

“I brought you into a fertile land to eat its fruit and rich produce. But you came and defiled my land and you made my inheritance detestable.” (Jeremiah 2:7)

We, the Ecumenical Bishops Forum (EBF), express alarm over the wanton abuse of natural resources by the Transnational Mining Corporations (TNCs) with their local cohorts in South Luzon Region, especially in Bicol. The experience of the Bicolano people is no different from the plight of local communities in mining areas throughout the country: massive environmental destruction, shrinking economic base of the people, militarization of mining communities, displacement of communities due to land-grabbing and unjust land-conversion, gross human rights violations, destruction of flora and fauna, and further impoverishment of the country. The unresolved and ever continuing polymetallic mining operations in Rapu-Rapu Island, Albay, Labo, Paracale, and Jose Panganiban, Camarines Norte, the aggressive mine expansion in Aroroy, Masbate by Filminera Resources Corp., the peculiar magnetite off-shore mining in Camarines Sur by Bogo Mining Resources Corp; the Palanog Cement Plant in Albay, Panganiban and San Andres, Catanduanes, and the deeper quagmire of maldevelopment of mining in Matnog, Sorsogon challenge us to rethink our role as responsible God’s stewards of creation ( Genesis 1: 26-31 ).

Destructive mining is blatantly unethical, unjust, and senseless for it exacerbates poverty, causes dislocation of livelihood of the people, and even threatens the base of life and life itself.

It is lamentable that the national government equates TNC mining with development, and is remiss in its duties in protecting the environment to the detriment of the people. It has been proven that the negative costs of mining operations far outweigh the gains.

Thus, to further liberalize the mining industry in favour of the mining corporations as being trumpeted by the Aquino administration will mean more suffering and death, dislocation, displacement and ruin of the environment.

Hence we call on the Filipino people:

1. To oppose all destructive mining operations, both locally or foreign-owned;

2. To scrap the Mining Act of 1995;

3. To demand immediate moratorium of large scale mining

4. To demand the demilitarization of mining communities

5. To fight for justice and integrity of creation;

6. To pass the HB 4315 or the Peoples’ Mining Bill

We urge our churches and faith-based groups and institutions to pursue organizing, awareness building, and other relevant activities, and be in full solidarity with the people’s movement against destructive mining operations.

With the liberating power of the Holy Spirit, we seek strength and wisdom to carry this task of asserting the right of the earth to survive and all that dwell therein.

Ecumenical Bishops Forum

October 6, 2011

DA Reports Rise in Fish Catch But Not in Albay Gulf

In the July 12-18, 2011 issue of Diario Veritas, the Department of Agriculture reported:

Nahilingan nin senyales nin pag-asenso an sector nin pagsisira sa paagi kan pagiging aktibo kan mga regional fishing ports sa primerong quarto kan taon.

Ipinahayag nin Rodolfo Paz, an general manager kan Philippine Fisheries Development Authority (PFDA), an mga dakop kan sira an nagtaas nin maabot sa 93 porsyento sa Navotas, Iloilo, asin Sual, Pangasinan.

Siring man an nanotaran sa Davao Fish Port Complex na nagkaigwa man na 40% na pagdakul nin dakop kumparadosa dakop kan mga parasira sa kaparehong peryodo kan nakaaging taon.

Katakod kaini, pinag-engganyar kan DA an gabos na local na gobyerno sa nasyon na pakusugon an industriya nina pagsisira partikular sa aspeto kan environmental protection asin pagbukod sa mga ilegal na mga parasira.

Nakaabot kaya an report sa DA na rampante an paggamit nin mga dinamitakan mga parasira sa nagkakapirang kostal na lugar kan nasyon kun saen saro kan naunambitan digdi iyo an rehiyon Bikol.

At least two points are implied in this report. First, there are rises in fish catch in several areas of the country but not in Albay Gulf. Second, the DA blames all declines in fish catch on environmental degradation “and” illegal fishing.

On the first implication: Why is there no report of any rise in fish catch in Albay Gulf? The answer is obvious: there is in fact a precipitous decline as attested to by fishermen. A 95% decline has been reported here since 2005 the same year when Lafayette went into full operation. Why is there such a decline? We have referred that question to the DA and its line bureau BFAR (Bureau of Fisheries and Aquatic Resources) but no answer has ever been given. (They have not even reported any investigation conducted on the cause of death of a 15-meter sperm whale in 2010.)

We have ascribed the decline to mining in Rapu-Rapu from which flow several creeks that are discolored. Officials of Rapu-Rapu Polymetallic Project reply that fish catch decline is a global phenomenon (technical meeting on April 26, 2011 in EMB). Now, we have here a rebuttal to that defense - the DA report of fish catch rise in at least four areas. Fish catch decline is not a global phenomenon.

On the second implication: Since DA reports rises in fish catch in four areas of the country and calls for curtailment of illegal fishing, then it follows that after curtailing illegal fishing we can observe a rise in fish catch. In Albay Gulf, the Bantay Dagat, a local watch group against illegal fishing, has been very active in this campaign. However, the fish catch decline continues. Couple this observation with the fact that the DA confirms the presence of a fish sanctuary in Gaba Bay, Villahermosa, Rapu-Rapu . With a fish sanctuary and active campaign against illegal fishing, fish population should increase within one or two seasons but this does not happen. Hence, illegal fishing cannot be the cause. Again, we are led to the more obvious – the mining operation in Rapu-Rapu.

It should be pointed out that much of the fish catch in the past according to fishermen consisted of migratory fish from the Pacific Ocean – yellowfin tuna, kwaw, malasugi, tanguigue, sharks, etc. These species do not need the local breeding grounds in Albay Gulf to multiply. They spawn in the areas around Guam and come to Albay Gulf to feed seasonally. They pass through the gap between Rapu-Rapu and Prieto Diaz following the current. Since 2005, the catch of these species has consistently declined. Something is barring their path in that gap and that something is none other than the contamination of silt and heavy metals flowing from the mine site through the creeks and ultimately to the waters around Rapu-Rapu. The current carries the contaminants into the Albay Gulf and spreads them as the tide flows back out into the Philippine Sea.

Any way we look at the phenomenon in Albay Gulf, the glaring fact is that mining has adversely affected our food supply. Between fishing where we derive 100% of the benefits and Rapu-Rapu mining where were derive only 1/3 of 1% (according to the statement of Gov. Joey Salceda in the Philippine Daily Inquirer on March 28, 2011), we have to choose the former.

The same issue of Diario Veritas banners the headline “City secures fish trade.” It reports the plan of the Legazpi City Council “to beef up the local fishing industry through stern legislation . . . Councilor Carlos Ante had already invited the different leaders of the local fisher folk to lay out details of a proposed ordinance to secure their livelihood.” I laud the efforts of the good councilor. However, I suggest that a more comprehensive view of the problem be taken if it is ever intended to be solved. As management theory suggests, any solution should address the real cause of the problem. Limiting the analysis within the immediate vicinity of the city’s coastal waters will lead to a failure at solution.

Not too long ago, we learned that several city councilors led by then Mayor Noel Rosal visited the Rapu-Rapu mine. In the newsletter of the Mines and Geosciences Bureau, Foresight, he was quoted as follows: “The mine is full of promise for the province” (Pages 9 and 11). I wrote Hon. Rosal in November 2010 (by then he had become the City Administrator) attaching photographs of the creeks colored brown, red, yellow and orange. I asked if the tour guides brought his group to the creeks. It’s September 2011 and I still have to receive a reply. I also wrote to MGB V and EMB V. Both replied that the contamination in the creeks is within “tolerable levels.”

RRMI, RRPI, LG, Kores and MSC should not think that they have succeeded in convincing the local community in their claim that the mine is operated responsibly and that the benefits they have derived translate to sustainable development of the people. The condition of the creeks, the fish catch decline and the poverty prevailing in the island all speak eloquently of the truth. Environmental damage and economic injustice have worsened. Adding insult to injury, they have praised themselves through press releases about their environmental awards while the residents of Rapu-Rapu and the fishermen of Albay Gulf continue to suffer. The contamination in the creeks may be within “tolerable levels” in the standards of the DENR but the poverty of the island residents, the fish catch decline and the environmental damage are definitely intolerable in the standards of the local community.

The DA, BFAR, DENR, Legazpi City Council, other local government units and other authorities better look into Rapu-Rapu mining honestly if they really want to solve the problem of fish catch decline in Albay Gulf. Anything less than that would not be in keeping with the public trust reposed in them.

September 4, 2011

Mining Engineers’ Conference in Legazpi City blind to local residents’ plight!

On July 13 to 15, 2011 some 300 mining engineers converged in Legazpi City for their Bicol regional conference. This event is unfortunate because it projects the impression that mining engineers are blind to the plight of their fellow Filipinos suffering from the environmental damage and economic injustice wrought by mining companies.

We remind the Provincial Government of Albay about the Sangguniang Panlalawigan Resolution 2011-020 issued on March 8, 2011 banning all future mining activities in the province. It should have shown consistency by expressing disfavor against the convention.

We rebuke the City Government of Legazpi for going against the sentiments of Albayanos against the continued destruction of our environment. The city has recently manifested its inability to walk the talk. In Mount Bariw, Barangay Estanza, a large swath of hillside is severely denuded yet it has done nothing. The silt from the denudation has flowed to Barangay Pinaric where it is several inches thick. In Embarcadero, large volumes of floating garbage greet the citizens whenever they go for a leisurely stroll along the boulevard. The city government has been so preoccupied with pleasing tourists but compromised the welfare of local residents who voted them into office and pay millions in taxes. Tourists bring in income but that income is just a means towards providing better living conditions for local residents. The means cannot be exchanged for the end. If the welfare of citizens is disadvantaged by the city government’s preoccupation with pleasing tourists, then it is time to withdraw the trust reposed in them during election.

The hosting of the mining engineers’ convention in Legazpi is a misstep of the city government. It betrays a failure to understand genuine environmental advocacy. While the city brags about its sanitary landfill, it fails to prove its pro-environment agenda by making a prominent endorsement of mining as a stimulant of progress. While we need products derived from mining, we insist that it should be done in the right place and the right manner. That is what responsible mining is all about. So far, however, all claims of responsible mining by many companies are nothing but hot air because of the evident damage wrought on their surroundings like what is happening in Rapu-Rapu, Aroroy, Palanog, Matnog, Paracale, Catanduanes, Caramoan, etc.

They say, if we do not want mining then we should not use the products of that industry. They are dead wrong. We want mining that does not destroy the environment. We want mining that reserves the natural resources of the Philippines for Filipinos. We want mining that spreads the fruits of development to the masses and not only to the foreign investors and their local junior partners.

We want mining that does not sacrifice our agriculture so that we protect our own food supply. Mining generally provides for non-basic needs while agriculture produces our most basic needs like food, clothing, shelter and livelihood. While mining generates a few temporary jobs, agriculture provides long-term sources of income thus genuinely assuring sustainable development.

We call on all mining engineers to support our notion of genuinely responsible mining. In view of the bad record of mining in Bicol, we ask them not to project the impression that they condone what is happening here contrary to declarations by the DENR, MGB, EMB and companies that all is well in Bicol mining. Bicol is severely suffering from the impacts of mining and the statements of the aforementioned entities are belied when we see the plight of the farmers and fishermen and the condition of our mountains, rivers, creeks and seas.

So in their visit to Rapu-Rapu today, they should make an objective assessment on the effects of mining in the island and its residents and not make it a mere field trip. They should talk to the people to know the real impact of RRPP on their lives. They tell us nothing but misery and deepening poverty. While the project heaps billions upon the foreign investors and their local junior partners, it brings “Lilliputian” benefits to the residents of the island and severe fish catch decline in Albay Gulf on which depend some 14,000 fishermen. Today, there is no more fish to catch in the gulf.

In 2010, the project earned P11.7 billion but according to Gov. Joey Salceda himself the province got a social fund of P41.71 million or a measly one-third (1/3) of 1%! If that is not enough, one can look at the creeks flowing from the mine site to the sea. They are colored yellow, orange, red and brown.

We ask the delegates to the mining conference to wake up to realities and not be deceived by the lies of those who support mining operations in Bicol.

July 19, 2011

RRPP’s Awards - Rubbing Salt on the People’s Injury

The DENR recently awarded the Rapu-Rapu Polymetallic Project with the Saringaya Award while the Pollution Control Association of the Philippines, Inc gave it the Mother Nature Award. RRPP also boasts of other “awards” for its alleged “safe and responsible mining” in the island. The project’s executives also claim that they have “raised” the living standards of the host communities.

As the cliché goes, the proof of the pudding is in the eating. One needs only to go to the island and talk to the people to know the real impact of RRPP on their lives. They tell nothing but misery and deepening poverty. While the project heaps billions upon the foreign investors and their local junior partners, it brings “Lilliputian” benefits to the residents of the island and severe fish catch decline in Albay Gulf on which depend some 14,000 fishermen. Today, there is no more fish to catch in the gulf.

In 2010, the project earned P11.7 billion but according to Gov. Joey Salceda himself the province got a social fund of P41.71 million or a measly one-third (1/3) of 1%! If that is not enough, one can look at the creeks flowing from the mine site to the sea. They are colored yellow, orange, red and brown. Challenged to prove his belief in the reports of the Multi-partite Monitoring Team by bathing in the creeks on schedules and sites set by SARA, Director Reynulfo Juan of MGB V, showed photos of people perching on rocks in the discolored creeks on dates and sites they themselves chose. Challenged by SARA to withdraw the armed CAFGUs and allow free access and surprise visits to the creeks, Engr. Rogelio Corpus, President of RRMI, replied that they cannot allow such because they “have to protect their interests.” Hence, the interests of the environment and those of RRPP are contradictory.

The executives of RRPP can go on deluding themselves with fantastic claims of “safe and responsible mining” in Rapu-Rapu but the truth is well-known to the people who suffer much from the environmental damage and economic injustice attendant to the project. The emperor’s new clothes are well-praised by the award-giving bodies. One day, the truth will prevail and the awards will instead shatter their credibility. There is time under heaven for everything, says the Bible. Today, in the island of Rapu-Rapu and villages dependent on Albay Gulf, the people are groaning in pain. The awards are salt rubbed on their wounds while RRPP’s supporters have their photo-ops and raise their toasts of wine in fine dining. We believe that the day will come when, after being denied for so long, the people shall claim justice and RRPP’s awards will go to the dustbin.

July 18, 2011

Noon at Ngayon, Walang Responsableng Dayuhang Pagmimina sa Kabikolan!

Ang nagaganap na 1st Bicol Mining Conference mula Hulyo 13-15, 2011 dito sa Bikol (La Piazza Hotel) sa pangunguna ng MGB-V/DENR-V at ng Phil. Society of Mining Engineers ay isa na namang masamang pangitain para sa mamamayang Bikolano. Pag-uusapan na naman ng ahensya ng MGB-5 at DENR-5 kasama ang mga dayuhang korporasyon sa pagmimina kung paano pa uubusin ang yamang mineral ng Kabikolan, wawasakin ang kabundukan, karagatan at kalupaan ng Bikol.

Kahiya-hiya at malakas pa ang loob na ang itinakdang tema ng kumperensyang magaganap ay: Towards Responsible Mining: “Against All Odds”. Responsable para kanino? - Para sa mga malalaki at dayuhang korporasyon sa pagmimina kasama ng mga malalaking lokal na negosyante at para sa mga matataas na opisyales ng gobyerno at ahensya na nakikipagsabwatan sa mga korporasyong ito.

Kalokohang sabihin na ang operasyon na Open Pit Mining sa Rapu-Rapu, Albay (Rapu-Rapu Polymetallic Project ng Lafayette/LG-Kollins) at sa Aroroy, Masbate (Masbate Gold Project ng Filminera Resources Corporation) ay responsable! Mayroon bang pagpapasabog (blasting) ng kabundukan at kalupaan na “safe and environmental friendly”? Samantalang winawasak nga at hinuhukay pailalim.

Hindi rin responsable ang Magnetite Offshore Mining ng Bogo Mining Resources Corp. sa limang bayan ng Calabanga, Sipocot, Tinambac, Cabusao at Siruma sa Camarines Sur kung saan hahalukayin ang kailaliman ng karagatan 15 kilometro mula sa baybayin nito.

Hindi kailanman naging responsable ang mga dayuhang korporasyon ng pagmimina sa mga naapektuhan ng kanilang mga operasyon. Simula ng operasyon ng RRPP sa Rapu-Rapu ay lalong lumala ang kahirapan at nagkagutom-gutom ang mga residente dito dahil sa pagbagsak ng kanilang kabuhayan sa pangingisda at pagsasaka dulot ng mga lason ng pagmimina dito. Kung mayroong nakinabang sa binayad ng RRPP na P10,862.85 (mine waste fee) para sa 217,257 tonelada na “mine waste” ay ang MGB-V. (mula sa ulat ng MGB-V,2010). Sampung libong piso! Katumbas ba ito ng isang buhay ng nanay na namatay dahil nakakain ng isda dahil sa fishkill doon o ng isang batang namatay doon dahil sa kagutuman?

Apektado na nga ang mga residente sa pagmimina sa Barangay Nakalaya, Jose Panganiban sa Camarines Norte ay naiipit pa sila ngayon sa kaguluhan at away ng Investwell Corporation at ng FMCGI ng pamilyang Fonacier na nag-aagawan ng yamang mineral ng kanilang lugar.

Kasinungalingang ipamaglaki pa sa ulat ng DENR-V/MGB-V na ang malakihang pagmimina sa Kabikolan ang nagpasigla ng ekonomiya ng rehiyon samantalang ayon sa ulat ay nasa ikalawa sa pinakamahirap na rehiyon ang Bikol sa buong bansa. Kung sinasabi na umunlad ang ekonomiya ng Bikol dahil sa malakihang pagmimina – hindi ito maramdaman ng mga mamamayang Bikolano lalo na ng mga apektado ng mapaminsala at dayuhang pagmimina.

Tanging ang mga malalaki at dayuhang korporasyon sa pagmimina kasama ng mga malalaking lokal na negosyante at mga matataas na opisyales ng gobyerno at ahensya na nakikipagsabwatan sa mga korporasyong ito ang nakikinabang sa mga produkto at kita ng pagmimina dito sa Bikol. Sa ulat ng MBG-V/DENR-V noong 2010, sa kabuuan ay may P4,654,818,424.31 at P57,483,032.45 na kita mula sa “metallic ” at “non-metallic production”dito sa Bikol ayon sa pagkasunod-sunod ngunit hindi naman inulat ang mga dambuhala at limpak na limpak na kita ng mga korporasyon na maluwag na inilalabas patungo sa kanilang bansa. Maluwag nang nailalabas ang kita, maluwag pa ang kanilang operasyon dahil sa mga iba’t-ibang insentibo tulad ng: 6 years income tax exemption, 10 years export tax exemption, and import tax exemption at marami pang iba.

Kaya nga parang parang kabuteng nagsulputan ang mga ito sa Bikol dahil sa pagiging sagana ng rehiyon sa yamang mineral at prayoridad pa ng nakaraang gobyerno ni GMA ito para sa malakihang proyektong pagmimina na ipinagpapatuloy lamang ng gobyerno ni Noynoy Aquino at pinasahol pa sa ilalim ng kanyang Public-Private Partnership Program. Gayundin, patuloy ang pag-iral ng Mining Act of 1995 kung saan ay lalong nagbuyangyang sa ating likas na yaman para dambungin at wasakin ang ating kalikasan.

“Towards Responsible Mining: Against All Odds” ? - Ang responsableng pagmimina ay mangyayari lamang sa ating bansa kung magkakaroon ng re-oryentasyon ang industriya ng pagmimina sa ating bansa. Kung saan, ang kita ng industriya ng pagmimina ay napapakinabangan at napapaunlad ang mamamayang Pilipino at hindi napupunta sa dayuhan at sa mga lokal na kasabwat nito. Kung saan, ang gobyerno ang may kontrol ng industriya at hindi ang mga dayuhan.

Hindi dayuhang pagmimina at malawakang kumbersyon ng lupa ang magpapaunlad sa Kabikolan. Hindi ito ang sagot sa kahirapan at kagutuman ng mamamayang Bikolano. Pagpapaunlad ng agrikultura, trabaho at sapat na sahod, tirahan, libreng serbisyo-sosyal ang tutugon sa kahirapan at kagutuman upang mabuhay ng maayos at marangal ang mamamayang Bikolano. Tunay na Reporma sa Lupa at Pambansang Industriyalisasyon lamang ang magpapaunlad sa bansa at rehiyon.

UMALPAS-KA

Hulyo 13, 2011

A Word of Caution

There is another blogsite posing as SAVE RAPU-RAPU with address http://saverapu-rapu.blogspot.com. (Note the DASH.) That site is a deception. Even our design is imitated. The obvious motive is to confuse our readers. Our address has NO DASH between the words "rapu" and "rapu." Our site was first posted on December 3, 2007; theirs, on April 14, 2008. Hence, we are first in going online with this URL and design. We learned about the other site only recently. The apologists of the mining operation in the island can go to this and other lengths just to sow confusion. Deceptive tactics are a disservice to readers and only reveal the desperation of the pro-Rapu-Rapu mining group. Our readers are, therefore, warned.

Matthew 7:16 - You will know them by what they do. Thorn bushes do not bear grapes, and briers do not bear figs.

Matthew 7:20 - So then, you will know the false prophets by what they do.

The creeks are crucial to the condition of fishing grounds

around Rapu-Rapu. They connect the mine site to Albay Gulf. The current severe decline in fish catch in the gulf is blamed on the mining operation in Rapu-Rapu. The decline started in 2005 as reported by fishermen; that's the same year when Lafayette began full operation. That is also the same year when the first two major fishkills started (October 11 and 31). The toxic spills came from the mine site and reached the surrounding body of water via the creeks. The contamination in those creeks will always damage the corral reefs in Albay Gulf. The effluent coming out of the mouths of the creeks prevents the entry of migratory fish from the Pacific Ocean into the gulf.

The joke is that there will no longer be any fishkill - because there are no more fish to kill.

The fish that allegedly died off the coasts of Linao and Binosawan during the fishkill reported by island residents and the parish on May 8, 2011 could be the migratory species from the Pacific Ocean attempting to enter Albay Gulf via the gap between Rapu-Rapu and Prieto Diaz. Linao is a village facing the ocean and Binosawan, the gap.

The MGB V Photographs and "Bathing" in the Creeks of Rapu-Rapu

MGB V Director Reynulfo A. Juan wrote to SARA Spokesperson Virgilio S. Perdigon, Jr. on April 15, 2011:

"With reference to your challenge to take a bath in the creeks, we have done just that. some members of the MMT and personnel of Rapu-Rapu Polymetallic Project (RRPP) went to a picnic and took a bath at Pagcolbon Creek on March 29 and April 3, 2011. We are attaching pictures for your reference. These pictures indicate the current status of the creeks."

In reply, Mr. Perdigon writes:

The good Director says he believes the contamination data but he is not among those “bathing.” Someone is shown sitting on the rocks (obviously not bathing) but the face is not recognizable (number 10).

While this Mayon creek is almost crystal clear, yellowish coloration is evident in the creeks emanating from the mine site in Rapu-Rapu photographed by MGB V. The MMT report is silent about results of sampling for heavy metals and freshwater organisms. Allowing us free access and surprise visits would have revealed if there are even snails in the creeks. The armed guards under the Special CAFGU Active Auxiliary (SCAA) base are very strong evidence that something is being hidden in the Rapu-Rapu creeks.

Then and Now: What Difference? What Improvement in the Creeks?

According to RRPP, the coloration of the creeks has improved. However, during the Technical Conference with the Environment Management Bureau Region V and Save Rapu-Rapu Alliance on April 26, Engr. Rogelio Corpus, President of RRMI, said that the difference between the pictures then and now is not significant. He requested the Presiding Officer, Engr. Henry Lopez of EMB V, for permission to present RRPP pictures taken on April 25. The RRPP pictures, however, cannot be verified independently because the mining companies do not want "free access and surprise visits" to the creeks. They do not want to withdraw the armed guards "to protect their interests." As an environmentalist organization, SARA wants to protect the environment. It follows that the interests of RRPP are contrary to those of the environment.

Below, we are presenting ALL pictures in the Annex to the EMB V Investigation Report dated March 8-10, 2011. Those on the left are the pictures we have been showing to authorities which were taken from 2006 to 2009; those on the right are alleged to have been taken in the same spots on March 8 to 10, 2011 by EMB V and the mining companies. You be the judge if there is any improvement.

Tuesday, March 11, 2008

Improving Transparence of Payments and receipts in the Mining Industry

A rather interesting "strategic document" at the basis of the Chamber of Mines attempts to Improve Transparency of Payments and Receipts in the Mining Industry. Read on and let your diligence be rewarded.

Technical Report

Improving Transparency of Payments and

Receipts in the Mining Industry

by Nelia Halcon, Team Leader, Ed Coronel, and

R.S. Bernaldo and Associates

Prepared for Chamber of Mines of the Philippines

Submitted for review to

USAID/Philippines OEDG

July 2007

Economic Modernization through Efficient Reforms and Governance Enhancement (EMERGE)

Unit 2003, 139 Corporate Centre, 139 Valero St., Salcedo Village, Makati City 1227, Philippines

Tel. No. (632) 752 0881 Fax No. (632) 752 2225

FINAL REPORT

IMPROVING TRANSPARENCY OF PAYMENTS AND

RECEIPTS IN THE MINING INDUSTRY

Executive Summary

The emergence of mining as one of the major drivers of the Philippine economy at the turn of the twentieth century has prompted industry stakeholders to evaluate the means of reforming a sector that is continuously beleaguered by a plethora of controversies despite exhibiting potentially large economic and social returns to local communities.

The Philippine mining industry and localized governance

Revitalizing the mining industry requires a substantial consideration of the growing role of local government units in resource planning and management in order to address their distinct development issues. One manifestation of this trend is the proposed General Appropriations Act (GAA) of 2006 which incorporates a provision that allows mining companies to directly pay the local government units (LGUs) in mining areas their share of taxes. Ideally, the provision will facilitate LGU access to these revenues, allowing them to initiate programs benefiting local communities. However, these payments are highly vulnerable to abuse due to the absence of an appropriate mechanism for the public disclosure of large potential payments from mining companies and the utilization of mining taxes by LGUs. This is currently the main threat to reforms introduced in the industry. Estimates show that on an annual basis, mining revenues may reach up to US$1.2 billion.

Industry reforms and pilot project

To achieve greater accountability and transparency in the industry, the Chamber of Mines of the Philippines is spearheading the adoption of the Extractive Industry Transparency Initiative (EITI)[1], an implementing system that institutionalizes a mechanism of disclosure from both mining companies and their host governments of the legitimate payments the former make to the latter.

A technical assistance for a pilot project was provided by EMERGE for the improvement of transparency of payments and receipts of mining taxes and other payments. The project’s objectives were: (1) to develop a template for conducting an EITI-aligned audit of tax payments by mining companies; and (2) to stimulate the audit and reporting process for a single mining operation. The Philex Mining Company’s Padcal mines in Itogon, Benguet and the Rio Tuba Nickel Mining Company’s operations in Bataraza, Palawan were selected as subjects. Both companies are home-grown, hence, unrestricted by any influence or pressure from a foreign partner or majority owner.

The project was implemented in two phases. The first entailed the development of a reporting template and audit plan in agreement with the mining company, the LGU, the national government[2] and where necessary, the civil society. The reporting template and audit plan attempted to: (1) investigate the existence and role of all financial payments required by the Mining Law and its Revised Implementing Rules and Regulations (IRR)[3] and (2) incorporate all benefit streams from the mining operation including payments made to the national and local governments and other Filipinos. The second phase involved the preparation of reports, reconciliation of company submissions with the government submissions, and analysis of information with regard to any gaps and discrepancies. A series of public consultations were held in the capital of Benguet and Palawan and were attended by the host LGUs and officials of the subject mining companies.

Marketing the EITI

The main issue that surfaced during the project implementation was crafting a marketing program founded on incentives that would convince companies and governments to commit to the practice.

The EITI’s success would largely depend on what it can offer for the parties involved – what’s in it for mining companies, LGUs, the National Government and civil society. Once the answers are firmed, the actual promotion, selling, testing, expanding and refining of the EITI’s processes and procedures will logically follow.

The following factors are vital in effectively marketing EITI:

1. Product Positioning. Requires strategic positioning vis-à-vis the needs of its target market arising from the distinct nature of the industry.

a. Demand - what is it responding to and who should be spearheading its promotion?

b. Transparency - as a “transparency” product, correct incentives must be given to companies to transform their defensive position into a public relations value.

c. Governance - as a governance tool of mining companies adhering to global standards within an environment of government regulatory agencies saddled with corruption reaching up to levels of institutionalized rent-seeking politics.

d. Industry segmentation - recognition of the industry’s segmentation (the big players, the “juniors”[4], the cross-over “juniors”[5] and the home-grown mining companies) and articulating the incentives corresponding to their distinct behaviour.

2. Price. Includes weighing the cost-benefit implications of doing the process and the actual cost of committing to the EITI.

3. Promotion. Clear communication of the EITI’s goals and objectives as well as the benefits and responsibilities that come along with the commitment to the process.

4. Place. Setting a clear set of procedures for companies undergoing an EITI audit.

Other Issues

There were also issues encountered during the pilot project’s implementation that may require administrative and pseudo-legislative actions. These issues include:

1. LGUs deprived from accessing to their “rightful share” from the company’s operations due to delayed releases of LGU allocations;

2. Tension between LGUs and medium to large-scale mining operations again due to the delayed release of LGU shares from the national government;

3. LGU-led promotion of the process;

4. Inclusion of an assessment as to whether mining-related revenues are actually utilized for what they are intended;

5. Emergence of other needs of stakeholders’ that the EITI may need to focus on; and

6. Utilizing the EITI as a government response to evaluating the effectiveness of a designated fiscal regime.

Recommendations

The EITI can play an integral role in revitalizing the Philippine mining industry. The pilot project was an exercise that allowed the prioritization of issues in order to refine the EITI and look at the possibility of expanding its capacity to address other concerns of industry stakeholders. There are seven broad areas that need attention in packaging a Philippine-adapted EITI process:

a. For product positioning, it is recommended that the EITI should be marketed as a voluntary initiative of the mining or resources industry but having the recognition by government as a seal of good housekeeping.

b. For promotion and expansion

§ package EITI adaptation in the Philippines as a joint government, NGO and private sector initiative by formulating the processes and instruments of a local EITI initiative through a consultative process involving key stakeholders; and

§ manage the initiative via a dedicated private sector Secretariat advised by a joint Government-NGO-Industry EITI Advisory Council

c. For improving national government releases to LGUs, the Department of Budget and Management (DBM) must observe the law mandating the automatic release of LGU share in taxes collected from national wealth.

d. For LGU capacity-building, they need to acquire training and the development of skills necessary to assess the proper taxes particularly those covered by real property tax.

e. For ensuring transparency on taxes paid and collection, a body must be created with the authority to examine the production report of the mining companies and at the same time review the books of the LGU on how they accounted for the receipt of their share.

f. For the growing demand to assess the real impact of mining payments, funding for mitigating measures and community development expenditures must also increase.

g. The effectiveness of the different monitoring mechanisms institutionalized by the Mining Act of 1995 must be measured to initially establish benchmarks and identify practical targets for companies and their host communities to commonly agree to.

[1] An initiative of UK Prime Minister Tony Blair, launched at the World Summit on Sustainable Development in Johannesburg in September 2002.

[2] Primarily the Department of Environment and Natural Resources/Mines and Geosciences Bureau and Department of Finance

[3] Contingent Liability and Rehabilitation Fund (CLRF) and its Technical Working Group, Rehabilitation Cash Fund (RCF), Monitoring Trust Fund (MTF), Environmental Trust Fund (ETF) and Social Development and Management Program (SDMP)

[4] Considered the “lifeblood” of the mining industry, the “juniors” are exploration companies that are born every time a group of investors launch for listing an exploration property in a remote location. A majority of their funding are sourced through the stock market.

[5] Evolution of a company from exploration to operation.

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Damaged pump on board the Lady Jacqueline

Greenspeak Advisory - Aug 4 2008

Upon the advice of our partners and concerned collaborators, we are closing the Greenspeak / Web messages section of this blog. Recently, instead of sensible discussions, we have observed a surge in vitriolic reactions and hate comments, mainly from pro-mining advocates and Lafayette employees. Anti-mining advocates have also responded in kind. So, much as we would like to keep the free flow of ideas - from both sides of the mining question - on how best we can help Rapu-Rapu, the partners feel that the Greenspeak section no longer serves its purpose. Thus, the decision to close it. We apologize, especially to our avid (and rabid) posters, both pro & anti-mining, for whatever feelings of disappointment or loss our decision may have caused them. Comments and reactions may still be posted at the comments section of the blog posts.

Book on Mining in Rapu-Rapu

To set the black propaganda straight, Dr. Emelina G. Regis never applied for any position at Lafayette, RRMI, RRPI, RRPP, or any of their subsidiaries. This book contains damning scientific research on the adverse impacts of mining to the island ecosystem of Rapu-Rapu. To date neither the DENR nor RRMI-RRPI responded to the evidence and conclusions of Dr. Regis' studies. The mining company opts instead to float the bogus claim that Dr. Regis is a disgruntled applicant at Lafayette. The book is published by Ateneo de Naga University (2008).

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The Final Verdict

RRPP Income from 2005 to 2012

RRPP Income in 2012

AND NOW THE END IS NEAR . . .

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RRPP Income and Taxes in 2011

RRPP Income and Taxes in 2010