What happened at Rapu-Rapu

NATURE FOR LIFE By Anabelle E. Plantilla What happened at Rapu-Rapu Saturday, February 16, 2008

This is the conclusion of Sorsogon Bishop Arturo Bastes’ statement on the 20th anniversary of the CBCP Pastoral Letter, “What is Happening to our Beautiful Land?” He writes in detail his experience as chairman of the Rapu-Rapu Fact-finding Commission which investigated the environmental violations of Lafayette, an Australian mining firm. “Given all of the above, the Board of Lafayette met on Dec. 18, 2007, and being of the view that they no longer had reasonable grounds to believe that the Company could meet its obligations as and when they fell due resolved to voluntarily appoint Messrs Sutton and McCluskey of Ferrier Hodgson to the role of Administrator. In making this appointment, the Board expected that the Administration process would allow all options for either the sale of the Project or a restructure and recapitalization of the Lafayette group to be fully explored.” (Directors’ Statement) A very neat way of saying they had gone bankrupt! “What we feared would happen has now happened. The flagship mining foreign investor of this country, certified so by no less than DENR Secretary Reyes, was all along a financial bluff. “Those of us from the area, together with Albay Gov. Joey Sal­ceda, are asking a new DENR, if “new” it can be called since Reyes is no longer there, and Atienza has taken his place, to PLEASE, finally, suspend the mining operation of Lafayette Mining Corp. in Rapu-Rapu following the firm’s move to go under voluntary administration—a euphemism for declaration of bankruptcy. DENR should immediately suspend the permits to mine, mill and transport chemicals granted to Lafayette. The firm’s financial distress is absolute proof of bad management and could sacrifice or compromise environmental standards. We and the Albay Governor are asking: who will maintain the mines tailing pond once the mining firm seizes to operate? Who will pay the people of Rapu-Rapu the P16 million arrears in social development programs? “The DENR has the responsibility for the integrity of the mine’s facilities to prevent any mishap especially if some mining chemicals are misplaced. Given the poor track record of Lafayette, we ask the DENR Environment Management Bureau to conduct compliance audit on all environmental concerns—NOW. “We know that Carlos Domin­guez, chairman and president of Lafayette Philippines, has filed a petition with the courts for rehabilitation to continue “normal” operations to protect all its stakeholders. The courts may then instruct all creditors and suppliers to continue their services and transactions with the local companies for as long as they are paid on cash basis. How much cash do they have? How long can they last? Understandably they will have to have a fire sale—sell whatever they can to have the cash they need till a knight in shining armour rides in. Meantime, courtesy of a kindly local court, payment for existing debts will be suspended until a rehabilitation plan can be agreed on what will fairly settle all outstanding debts to give hope for continued operations. “But has the important lesson been learned? A company that fails to obtain and retain a social licence to operate, in other words one that operates without community approval, is simply not viable—even if one has the Reyeses’ and whole armies’ arbitrary license to be illogical and insane, as clearly happened in the Lafayette Rapu-Rapu experience. “The Lafayette mine is more than a financial mess. It is an environmental and social failure. How many of us forewarned the Administration and the DENR that the project is not socially, technically, environmentally and financially feasible but, still, they allowed it to proceed. Should they not be held accountable along with Lafayette to rehabilitate the island and compensate the local residents for the damages done by the mine? They also must ensure that enough rehabilitation funds are available for the affected people in the Island. “Will not ANZ and the other banks that have signed the Equator Principles use this opportunity to demonstrate their commitment to social and environmental responsibility? Sharing responsibility would be the Banks that now operate the mine through their Administrator. These banks include the consortium of lenders (ABN AMRO, ANZ, Investec, SC First Bank, Standard Chartered, Standard Bank), LG International and KORES, Korean state companies, and Lafayette’s shareholders. ANZ and the banks that supported Lafayette should show the communities of Rapu-Rapu, who will live with the consequences of the failed investment, what “corporate social responsibility” means in practice. They can demonstrate this by ensuring that sufficient funds are set aside for the environmental rehabilitation of the mine and a sustainable development program for the communities of Rapu-Rapu. “To date, the company has not been required by DENR to set aside money for the final rehabilitation of the mine. Cannot this terrible Reyes negligence be remedied by Atienza now? Madame President, it’s your turn to speak.”