Ecological and social consequences of large-scale mining

Since it is cheaper, mining in the Philippines increasingly means open pit mining, even though it consumes 50 times more land and is more damaging to the environment than underground mining. Whole mountains are blown up and levelled to the ground – with disastrous ecological and social consequences: deforestation causes erosion, land slides and desertification. Rivers silt up and the silt makes fields and land infertile. Rivers and the groundwater are poisoned by cyanide and quicksilver (which is needed to extract the gold from the rocks). The waste water ditches, which are actually supposed to detain the toxic water, are leaky at times (or they even crack and consequently poison whole rivers and the abutting land, like what happened on Marinduque Island in 1996 and in Sipalay, Negros in 1997). The ground water level sinks, meaning springs and wells dry up and the water supply for the house and field becomes imperilled. The ground plummets and houses are destroyed.

Quake-like concussions caused by dynamite explosions disturb inhabitants and cracks form in their houses. Village communities are dispelled from their land. This occurs either immediately because the land will then be used for the exploitation of minerals and the construction of necessary production buildings, or step by step, because the surrounding land can´t feed them anymore, their water supply is destroyed or because their homes collapse. Village communities disintegrate; because they either argue about the projects, or because they break apart due to emigration. This poses a problem especially for indigenous people, who are directly linked to their land and their traditional communities. Countless people, who are exposed to metallic toxins released due to mining activities, get sick. Nonetheless there are Environmental Compliance Certificates (EEC). Because the vague promise exists (and the legal regulation), that mining companies renaturate everything when they are done with their operations.

Source: Niklas Reese & Rainer Werning (ed.): Handbuch Philippinen. Horlemann Verlag.

The Equator Principles

PREAMBLE

Project financing, a method of funding in which the lender looks primarily to the revenues generated by a single project both as the source of repayment and as security for the exposure, plays an important role in financing development throughout the world.1 Project financiers may encounter social and environmental issues that are both complex and challenging, particularly with respect to projects in the emerging markets.

The Equator Principles Financial Institutions (EPFIs) have consequently adopted these Principles in order to ensure that the projects we finance are developed in a manner that is socially responsible and reflect sound environmental management practices. By doing so, negative impacts on project-affected ecosystems and communities should be avoided where possible, and if these impacts are unavoidable, they should be reduced, mitigated and/or compensated for appropriately. We believe that adoption of and adherence to these Principles offers significant benefits to ourselves, our borrowers and local stakeholders through our borrowers’ engagement with locally affected communities. We therefore recognise that our role as financiers affords us opportunities to promote responsible environmental stewardship and socially responsible development. As such, EPFIs will consider reviewing these Principles from time-to-time based on implementation experience, and in order to reflect ongoing learning and emerging good practice.

These Principles are intended to serve as a common baseline and framework for the implementation by each EPFI of its own internal social and environmental policies, procedures and standards related to its project financing activities. We will not provide loans to projects where the borrower will not or is unable to comply with our respective social and environmental policies and procedures that implement the Equator Principles.

SCOPE

The Principles apply to all new project financings globally with total project capital costs of US$10 million or more, and across all industry sectors. In addition, while the Principles are not intended to be applied retroactively, we will apply them to all project financings covering expansion or upgrade of an existing facility where changes in scale or scope may create significant environmental and/or social impacts, or significantly change the nature or degree of an existing impact.

The Principles also extend to project finance advisory activities. In these cases, EPFIs commit to make the client aware of the content, application and benefits of applying the Principles to the anticipated project, and request that the client communicate to the EPFI its intention to adhere to the requirements of the Principles when subsequently seeking financing.

STATEMENT OF PRINCIPLES

EPFIs will only provide loans to projects that conform to Principles 1-9 below:

Principle 1: Review and Categorisation

When a project is proposed for financing, the EPFI will, as part of its internal social and environmental review and due diligence, categorise such project based on the magnitude of its potential impacts and risks in accordance with the environmental and social screening criteria of the International Finance Corporation (IFC).

Principle 2: Social and Environmental Assessment

For each project assessed as being either Category A or Category B, the borrower has conducted a Social and Environmental Assessment (“Assessment”) process2 to address, as appropriate and to the EPFI’s satisfaction, the relevant social and environmental impacts and risks of the proposed project. The Assessment should also propose mitigation and management measures relevant and appropriate to the nature and scale of the proposed project.

Principle 3: Applicable Social and Environmental Standards

For projects located in non-OECD countries, and those located in OECD countries not designated as High-Income, as defined by the World Bank Development Indicators Database, the Assessment will refer to the then applicable IFC Performance Standards and the then applicable Industry Specific EHS Guidelines (“EHS Guidelines”). The Assessment will establish to a participating EPFI’s satisfaction the project's overall compliance with, or justified deviation from, the respective Performance Standards and EHS Guidelines.

The regulatory, permitting and public comment process requirements in High-Income OECD Countries, as defined by the World Bank Development Indicators Database, generally meet or exceed the requirements of the IFC Performance Standards (Exhibit III) and EHS Guidelines. Consequently, to avoid duplication and streamline EPFI's review of these projects, successful completion of an Assessment (or its equivalent) process under and in compliance with local or national law in High-Income OECD Countries is considered to be an acceptable substitute for the IFC Performance Standards, EHS Guidelines and further requirements as detailed in Principles 4, 5 and 6 below. For these projects, however, the EPFI still categorises and reviews the project in accordance with Principles 1 and 2 above.

The Assessment process in both cases should address compliance with relevant host country laws, regulations and permits that pertain to social and environmental matters.

Principle 4: Action Plan and Management System

For all Category A and Category B projects located in non-OECD countries, and those located in OECD countries not designated as High-Income, as defined by the World Bank Development Indicators Database, the borrower has prepared an Action Plan (AP)3 which addresses the relevant findings, and draws on the conclusions of the Assessment. The AP will describe and prioritise the actions needed to implement mitigation measures, corrective actions and monitoring measures necessary to manage the impacts and risks identified in the Assessment. Borrowers will build on, maintain or establish a Social and Environmental Management System that addresses the management of these impacts, risks, and corrective actions required to comply with applicable host country social and environmental laws and regulations, and requirements of the applicable Performance Standards and EHS Guidelines, as defined in the AP.

For projects located in High-Income OECD countries, EPFIs may require development of an Action Plan based on relevant permitting and regulatory requirements, and as defined by host-country law.

Principle 5: Consultation and Disclosure

For all Category A and, as appropriate, Category B projects located in non-OECD countries, and those located in OECD countries not designated as High-Income, as defined by the World Bank Development Indicators Database, the government, borrower or third party expert has consulted with project affected communities in a structured and culturally appropriate manner.4 For projects with significant adverse impacts on affected communities, the process will ensure their free, prior and informed consultation and facilitate their informed participation as a means to establish, to the satisfaction of the EPFI, whether a project has adequately incorporated affected communities’ concerns.5

In order to accomplish this, the Assessment documentation and AP, or non-technical summaries thereof, will be made available to the public by the borrower for a reasonable minimum period in the relevant local language and in a culturally appropriate manner. The borrower will take account of and document the process and results of the consultation, including any actions agreed resulting from the consultation. For projects with adverse social or environmental impacts, disclosure should occur early in the Assessment process and in any event before the project construction commences, and on an ongoing basis.

Principle 6: Grievance Mechanism

For all Category A and, as appropriate, Category B projects located in non-OECD countries, and those located in OECD countries not designated as High-Income, as defined by the World Bank Development Indicators Database, to ensure that consultation, disclosure and community engagement continues throughout construction and operation of the project, the borrower will, scaled to the risks and adverse impacts of the project, establish a grievance mechanism as part of the management system. This will allow the borrower to receive and facilitate resolution of concerns and grievances about the project’s social and environmental performance raised by individuals or groups from among project-affected communities. The borrower will inform the affected communities about the mechanism in the course of its community engagement process and ensure that the mechanism addresses concerns promptly and transparently, in a culturally appropriate manner, and is readily accessible to all segments of the affected communities.

Principle 7: Independent Review

For all Category A projects and, as appropriate, for Category B projects, an independent social or environmental expert not directly associated with the borrower will review the Assessment, AP and consultation process documentation in order to assist EPFI's due diligence, and assess Equator Principles compliance.

Principle 8: Covenants

An important strength of the Principles is the incorporation of covenants linked to compliance. For Category A and B projects, the borrower will covenant in financing documentation:

a) to comply with all relevant host country social and environmental laws, regulations and permits in all material respects;

b) to comply with the AP (where applicable) during the construction and operation of the project in all material respects;

c) to provide periodic reports in a format agreed with EPFIs (with the frequency of these reports proportionate to the severity of impacts, or as required by law, but not less than annually), prepared by in-house staff or third party experts, that i) document compliance with the AP (where applicable), and ii) provide representation of compliance with relevant local, state and host country social and environmental laws, regulations and permits; and

d) to decommission the facilities, where applicable and appropriate, in accordance with an agreed decommissioning plan.

Where a borrower is not in compliance with its social and environmental covenants, EPFIs will work with the borrower to bring it back into compliance to the extent feasible, and if the borrower fails to re-establish compliance within an agreed grace period, EPFIs reserve the right to exercise remedies, as they consider appropriate.

Principle 9: Independent Monitoring and Reporting

To ensure ongoing monitoring and reporting over the life of the loan, EPFIs will, for all Category A projects, and as appropriate, for Category B projects, require appointment of an independent environmental and/or social expert, or require that the borrower retain qualified and experienced external experts to verify its monitoring information which would be shared with EPFIs.

Principle 10: EPFI Reporting

Each EPFI adopting the Equator Principles commits to report publicly at least annually about its Equator Principles implementation processes and experience, taking into account appropriate confidentiality considerations.6

DISCLAIMER

The adopting EPFIs view these Principles as a financial industry benchmark for developing individual, internal social and environmental policies, procedures and practices. As with all internal policies, these Principles do not create any rights in, or liability to, any person, public or private. Institutions are adopting and implementing these Principles voluntarily and independently, without reliance on or recourse to IFC or the World Bank.

1 Project finance is “a method of funding in which the lender looks primarily to the revenues generated by a single project, both as the source of repayment and as security for the exposure. This type of financing is usually for large, complex and expensive installations that might include, for example, power plants, chemical processing plants, mines, transportation infrastructure, environment, and telecommunications infrastructure. Project finance may take the form of financing of the construction of a new capital installation, or refinancing of an existing installation, with or without improvements. In such transactions, the lender is usually paid solely or almost exclusively out of the money generated by the contracts for the facility’s output, such as the electricity sold by a power plant. The borrower is usually an SPE (Special Purpose Entity) that is not permitted to perform any function other than developing, owning, and operating the installation. The consequence is that repayment depends primarily on the project’s cash flow and on the collateral value of the project’s assets.” Source: Basel Committee on Banking Supervision, International Convergence of Capital Measurement and Capital Standards ("Basel II"), November 2005. http://www.bis.org/publ/bcbs118.pdf.

2 Social and Environmental Assessment is a process that determines the social and environmental impacts and risks (including labour, health, and safety) of a proposed project in its area of influence. For the purposes of Equator Principles compliance, this will be an adequate, accurate and objective evaluation and presentation of the issues, whether prepared by the borrower, consultants or external experts. Depending on the nature and scale of the project, the assessment document may comprise a full-scale social and environmental impact assessment, a limited or focused environmental or social assessment (e.g. audit), or straight-forward application of environmental siting, pollution standards, design criteria, or construction standards. One or more specialised studies may also need to be undertaken.

3 The Action Plan may range from a brief description of routine mitigation measures to a series of documents (e.g., resettlement action plan, indigenous peoples plan, emergency preparedness and response plan, decommissioning plan, etc). The level of detail and complexity of the Action Plan and the priority of the identified measures and actions will be commensurate with the project’s potential impacts and risks. Consistent with Performance Standard 1, the internal Social and Environmental Management System will incorporate the following elements: (i) Social and Environmental Assessment; (ii) management program; (iii) organisational capacity; (iv) training; (v) community engagement; (vi) monitoring; and (vii) reporting.

4 Affected communities are communities of the local population within the project’s area of influence who are likely to be adversely affected by the project. Where such consultation needs to be undertaken in a structured manner, EPFIs may require the preparation of a Public Consultation and Disclosure Plan (PCDP).

5 Consultation should be “free” (free of external manipulation, interference or coercion, and intimidation), “prior” (timely disclosure of information) and “informed” (relevant, understandable and accessible information), and apply to the entire project process and not to the early stages of the project alone. The borrower will tailor its consultation process to the language preferences of the affected communities, their decision-making processes, and the needs of disadvantaged or vulnerable groups. Consultation with Indigenous Peoples must conform to specific and detailed requirements as found in Performance Standard 7. Furthermore, the special rights of Indigenous Peoples as recognised by host-country legislation will need to be addressed.

6 Such reporting should at a minimum include the number of transactions screened by each EPFI, including the categorisation accorded to transactions (and may include a breakdown by sector or region), and information regarding implementation.

http://www.equator-principles.com/

German Money for Philippine Gold

How German banks co-finance large-scale-mining in the Philippines


Since the Philippine government has made the promotion of mining one of its priorities, hardly a year goes by without “Mining Roadshows” aiming to attract mining investors from countries like China, Great Britain, France or Australia. Until now promotion events of this kind have not taken place in Germany, but yet German banks are involved in mining projects in the Philippines as shareholders or finance providers.

By Maike Grabowski
Maike Grabowski is Social Anthropologist and staff of philippinenbüro


The Philippine mining industry is mostly controlled by foreign companies.

Since mining in the Philippines stagnated for many years, the year 1995 saw the adoption of the Mining Act, that provides foreign companies with a total right of possession (before 1995 it was only possible for them to have a 40% share) as well as ample facilities.

Given that, foreign companies are now able to lease up to 81,000 ha of land for 25 years, while Philippine companies can only lease 8000 ha per province and only 16,000 ha in total (cf.mgb.gov.ph/asomm/policy.htm).

In the face of economic incentives, foreign mining transactions are virtually tax free during the first five years. Moreover these foreign companies have preferential access to water and wood, and the Philippine government committed itself to removing every obstacle which could hinder the mining process.

Furthermore foreign companies are allowed unchecked and unbounded return on their earnings and promised protection from dispossession. According to Mining Act restraints, the local population has to be consulted and asked for permission (Free and Prior Informed Consent – FPIC) and environmental standards have to be observed. But the government inadequately observes the implementation of these restrains and in most cases companies are not held accountable for their violations (Reese 2006). With license revenues of approximately six billion US-Dollar annually, the Philippine government expects a boost for the cash-strapped national budget.

According to mining critics, however, foreign mining companies contribute only six percent to the national income, while causing 57% of the total damage to the environment (cf. nordis.net).

Marketing for mining

The aim of the Philippine government in regard to the mining industry is highly ambitious: just recently it has raised the amount of projected foreign direct investments until 2011 from 6.5 billion to 11.4 billion US-Dollar.

2007 has been declared the “take-off” year for the mining industry and the list of national mining projects, which are to be separately sponsored, has been expanded from 24 to 30 projects (the list of projects can be found at: mgb.gov.ph/miningportal/home.htm).

Since 2004 foreign mining companies have been investing 879 million US-Dollar in order to explore new mining sites and to modernize old ones.

According to the government, the country has mineral resources worth one trillion (cf. Mining investments goal now $ 10.4 billion, Business World, 17.10.2007).

The Department of Environment and Natural Resources has received more than 2000 applications for mining licences (Stankovitch et al. 2007).

Foreign exchange is the motto

Despite political risks, foreign companies have increasingly invested in the Philippine mining sector. The first half of 2007 alone saw a foreign direct investment flow of 103 billion US-Dollars (Business World, 17.10.07). In doing so, investors haven’t been bothered by the massive protests from the local population.

The Philippines regularly endure so called mining-related environmental accidents, which have severe consequences for the ecological balance and the local population. Recently large numbers of fish were mysteriously killed in a gold and copper mining area in Rapu-Rapu owned by the Australian company Lafayette Mining.

German banks in the Philippines

Since state-owned and private financial backers were increasingly criticised in the 1990s for not caring enough about the observance of ecological and social standards while granting credits, most German banks today bring attention to their sustainable strategies. The Deutsche Bank for example wrote: “Sustainability for us means future viability – with the aim of passing on a healthy environment and stable economic and social conditions to future generations. We consider social, ethical and ecological aspects over and above legal regulations in our daily business routine” (deutschebank.de/csr/nachhaltigkeit.html).

But with these words, which may sound like music to one’s ears, one must add the fact that out of all the German banks, only the Dresdner Bank and the WestLB signed the voluntary agreement of the Equator Principles (see box). This speaks another language. Moreover it makes one wonder, that despite all of their sustainable strategies, the Deutsche Bank , the Dresdner Bank, as well as the Allianz AG, all invest in controversial mining projects. These projects trigger massive protests from the local population, because they often go hand in hand with significant environmental damage and negative impacts on the local population.

The Allianz AG in Nueva Vizacya

Holding 10.2 percent of the shares of the British company Metals Exploration, the Allianz AG is its biggest shareholder. Metals Exploration, which also appears in the Philippines under the names FCF Mining Company or MTL Exploration Company, collaborates with the Philippine mining company Philsaga Mining Corp.

Their mining and exploration sites are located mainly in Nueva Viscaya (in Puray, Runruno, Dupax, Sulong, Capaz).

Due to recurring protests from indigenous people, putting up a fight against the mining companies ´ presence on their ancestral grounds, Langley Segundo, the commissioner of the National Commission for Indigenous Peoples (NCIP) for Cagayan Valley, now finally advocates a revision and reevaluation of mining licenses in the region (cf. gascon.wordpress.com/2008/01/11/secondlook). There are protests in Runro, one of Metal Exploration´s exploration sites, by the local Kalanguya, Ibaloi and Ifugao. Various attempts by governor Luisa Cuaresma and the Sangguniang Panlalawigan (provincial council) to stop the renewal of expired exploration permissions and to renaturate the area have not been successful.

Instead the exploration permission was extended by former Environment Secretary Angelo Reyes (cf. Move to oust mining firms gains ground in Vizcaya, PDI, 25.10.07).

Protests in the affected areas keep on taking their toll: the executive director of the Runruno Landowner Association (RULANAS), Josie Guillao, who questioned the legitimacy of the exploration permission because of a surreptitious agreement by the local population, was arrested on October 17, 2007. Activists now have to contest an action for slander sued by Metals Exploration. The antimining-activist and coordinator of the national environment network KALIKASAN, Clemente Bautista, called the arrest of Guillao a classic example of the SLAPP- (Strategic Legal Action Against Public Participation) process (cf.kalikasan.org). This means that there are civil disputes, which are mostly filed by powerful juristic people against financially disadvantaged critics, in order to intimidate them through long and expensive legal fights and to silence them. The Allianz AG, which has its own environment foundation warning of the risk of carelessness in regards to natural resources its website, has not yet made a public statement about this situation (allianzumweltstiftung.de/stiftung/allgemein/index.html).

Credits of German banks recapitalize mining companies

The Deutsche Bank is also involved in the Philippine mining sector.

In January 2008, the Deutsche Bank granted a 40 billion US-Dollar credit to Platinum Group Metals to help support the acquisition, rehabilitation and development works at the company’s two ferronickel smelter plants (cf. Deutsche signs trade deal with Philippine mining company, Finance Asia,22.1.08).

In May 2007 a credit of 100 million US-Dollars was granted to the mining company Carmen Copper Corporation, an affiliated firm of the Philippine Atlas Consolidated Mining & Development Corp., in order to reopen the mining site of the Toledo Copper Project in Cebu (cf. Manila Standard, 29.5.07). According to unconfirmed information, the Deutsche Bank also functions as a broker for the international Swiss raw material company Xstrata. Xstrata conducts – despite the expiration of its exploration license on August 17 2007- test drillings in a gold-, silver-, and copper-mine in Tampakan/Mindanao (cf . Xstrata/Indophil – ›Expose SMI-Xstrata‘s lies of responsible mining‹, Davao Today, 6.10.07). Almost the whole water supply of Central and Southern Mindanao is dependent on five rivers located in this region, which face the imminent danger of becoming polluted by mining activities. Mountains would be ablated by open-pit mining. Here too, protests mount.

Dresdner Bank – “Not like any other bank”

So the slogan at the end of each TV-commercial from the Allianz-offshoot Dresdner Bank. And yes, it is not like any other bank indeed, that the Dresdner Bank signed the Equators Principles. Yet they still appear as financier of Lepanto Consolidated Mining Company. The company is infamous in the Cordilleras for its neglect of indigenous rights, as well as environmental and health related problems. Moreover, Lepanto is well known for its massive labor legislation violations. Activists of the Save the AbraRiver Movement (abrenian.com/starm) consider Lepanto to be the main suspect in an incident that killed large numbers of fish in the municipalities association Luba in the Abra province in the year 2006.

The Teresa Gold Project of Lepanto is located in Benguet, but the Abra River passes through three provinces as far as Abra. Inhabitants along the river report a strong smell and a dark tinge to the water. Water tests, conducted on a regular basis, point to conspicuously high amounts of cyanide, plumb, quicksilver and chrome. The waste water substances, a further study found, give rise to slagging river beds and the salination of neighboring rice fields (cf. abrenian.com/starm/resources). Besides water pollution, one can also observe geological and sanitary effects. Furthermore the mining process causes ground subsidence and land slides. Moreover a medical examination, conducted in 2003, of the inhabitants of Paalaban and Batbato in Makayan, a mining site of Lepanto, shows that they are exposed regularly to mining waste waters. Coughing (48.5 percent), irritation of the nasal membrane (31.6 percent), skin irritations like rashes, itchiness or cauterization (31.6 percent), irritation of the eyes (16.5 percent) and vomiting (10.5 percent) are the symptoms most often diagnosed resulting from contact with the waste waters. Randomly obtained blood samples have shown that these people have higher concentrations of cyanide, plumb, and copper in comparison to people without contact to mining waste waters.

State project- and export funding

On June 28 2007, a commemorable meeting took place in the bank building of the KFW IPEX-Bank in Frankfurt: together with the Philippine Ambassdor Delia Domingo Albert – who at the same time is the Philippine special envoy for mining – the KFW IPEX-Bank invited more than 30 representatives from the finance, economy and science sector to promote credit grants and investments for the Philippine mining industry. Heinrich Heims, executive director of the KFW IPEX-Bank, optimistically expressed in his opening speech that the KFW IPEX-Bank, which today is already one of the biggest mining project financiers in Latin America, will also expand its activities to the Philippines (cf. philippineembassy.de). Should this be the case, the danger is looming that the investments and credit grants from Germany, which will after all be co-financed by a state-owned development bank, will not contribute to the benefit of the environment and the people.

Capital needs control

The international finance market is nontransparent and it is hard to backtrack global financial streams. Project financiers are often consortiums minimizing political risks or the risk of prize losses. They found affiliated companies with new names and shuffle enormous amounts of money from one place to another. In this way it is often difficult for German investors to reconstruct what is happening with their money. Organisations like the Dachverband der kritischen Aktionärinnen und Aktionäre (umbrella organisation of critical investors) demand a general mandatory disclosure of all relevant ecological and social data regarding each financed business project. “The banks”, they state, “must reveal each credit deal, how they examined the projects´ effects on people and the environment and on the basis of which facts they consider the credit grant responsible!” Considering the involvement of German banks in the Philippine mining sector, this requirement can only be emphasized. To put it in the words of attac, an organisation critical of globalisation: Capital must be controlled! Cases like that of the WestLB, which withdrew from a controversial mining project in Indonesia, raise hopes. It seems that the banks’ withdrawal can be ascribed to massive pressure from civil society in Germany and to the resistance by local groups in North Sulawesi (cf. http://home.snafu.de/watchin/). This pressure on the banks mentioned above, that are active in the Philippines, needs also to be put on them here in Germany.


This Article appeared in the magazine südostasien
Volume 24, Issue 1, March 2008.
Translated by Anica Hackmann.

DENR assures crackdown on anti-environment local officials

We decided to post this article from the Philippine News Agency if only for its rather interesting title. But who will crack down on whom when it is the national government and DENR officials whose practices are anti-environment? On a sadder note, we have also seen the DENR thwarting the initiatives of pro-environment LGUs, esp. on the issue of large-scale mining.

"Responsible mining" will go down in history as this generation's most infamous lie that the mining industry and the DENR have foisted on the Filipino people.

In Albay, we have a new acronym for the DENR: Destroyer of the Environment and Natural Resources.

MANILA, May 16 (PNA)-– Department of Environment and Natural Resources (DENR) will continue cracking down on local officials who are remiss in their duty of protecting the environment.

“This campaign won’t spare anyone as we’d like to see more of them land in jail,” DENR Secretary Lito Atienza said.

He said gave such assurance after DENR charged with graft before the Ombudsman this week Ceciron Cawaling, mayor of Aklan province’s Malay municipality where world-famous Boracay Island is located.

DENR implicated Cawaling in alleged construction irregularities there and charged he demonstrated gross neglect of duty and gross incompetence by failing to control building activities, particularly in part of Boracay’s forestland.

The agency is concerned unabated construction will degrade Boracay’s environment.

“This is the first of such case DENR filed against a local official,” Atienza noted.

He said local officials must be at the forefront of environmental protection as communities under their respective jurisdiction will ultimately benefit from such action.

”Local government units must be part of the solution,” he said.

In the complaint she filed on the agency’s behalf, lawyer and DENR Undersecretary Mary Ann Lucille Sering noted Cawaling favoured a private developer when he delayed signing of Resolution 042 which calls for a moratorium on new construction of commercial and residential structures in Boracay.

This developer, J. King and Sons Company Inc., is behind Boracay Crown Regency Hotel and Convention Centre there.

Sering also said building official Elizer Casidsid, who acted under Cawaling’s authority, issued on October 10 last year, or two weeks before the mayor signed Resolution 042, permits for building, electrical, sanitary and plumbing activities for this project.

”This is pure and simple banditry,” Atienza noted.

In its complain, DENR attached a copy of its Region VI Regional Executive Director Lormelyn Claudio’s March 7, 2008 letter to Cawaling calling his attention to reported water pumping in part of the island’s wetland where the project is so he can stop such.

DENR also included in the complaint its Region VI office’s April 2008 certification that 4,898.01 square meters of the developer’s 8,508-square meter project site falls within forestlands for protection forest.

The complaint likewise included a May 2, 2008 DENR inspection report on the project which said continuous hauling and unloading of soil excavated from the project site’s elevated portion reduced the wetland area already.

“Disappearing wetland can only happen with the good mayor’s consent and authority,” Atienza said.

Earlier, DENR overruled an order of Nueva Vizcaya province Governor Luisa Lloren Cuaresma for OceanaGold to stop alleged quarrying within its mining site in Didipio municipality there and to pay local tax on such activity.

“I ordered the company to proceed with developing its planned processing facility as it can’t be delayed by the governor’s illegal order,” Atienza said.

He clarified OceanaGold is undertaking earthworks to prepare the area for this facility’s construction.

“OceanaGold isn’t in quarrying as it’s putting up a plant so such activity isn’t taxable,” he said.

DENR already notified Department of Interior and Local Government, Philippine National Police and other mining authorities about the matter, he continued.

Atienza admitted feeling “feeling disappointed and frustrated” about developments in Didipio, particularly as he said DENR has been pushing OceanaGold to commence next year gold and copper commercial production.

OceanaGold’s estimated average annual copper and gold production is two million metric tons annually.

Atienza also said OceanaGold is duty-bound to provide education, health and other social development assistance to the community where it operates aside from paying taxes due.

“If we stop at this point in time, it’ll be a loss to all,” he said. (PNA)

LOR/CJT/utb

DENR seeks bishops’ help in drive vs. illegal mining

Anthony Vargas

Manila Times

Wednesday, May 14, 2008

THE Department of Environment and National Resources (DENR) sought the help of the Catholic Bishops’ Conference of the Philippines (CBCP) in the campaign against destructive mining activities.

Environment Secretary Lito Atienza sought the CBCP’s help during Tuesday’s regular media forum organized by the Catholic Media Network in Intramuros, Manila .

“We welcome the CBCP no less to be involved on the issues concerning mining. With the Church’s help, we can fight more the abuses on our environment,” Atienza said in the forum.

The secretary, a former Manila mayor who “ordered” the cutting of trees at the historic Arroceros Park years ago, said partnership with the CBCP would bolster the campaign against illegal mining, especially small-scale ones.

Manila Auxiliary Bishop Broderick Pabillo said on the part of the CBCP that they are open to the idea that was being proposed by the DENR secretary of forging a partnership for responsible mining.

“The Church is not against mining because it’s impossible not to have mining… what we want is to be very careful in mining and that only us [Filipinos] should benefit from it,” Pabillo said in the forum.

Pabillo is the nationwide chairman of the CBCP’s Episcopal Commission on Social Action and Peace (ECSAP) and of the National Action for Social Justice and Peace (Nassa).

The Manila bishop said the role the Church would play in the partnership being offered by the government is to become the voice of the people that would be affected by mining activities.

“Sometimes they will make it appear that a consultation has been made among the people, but it would turn that there’s no approval from the people and mining would be allowed, it should not be like that,” Pabillo said.

The CBCP in the past has made public its stand against the present mining law in the country as it had asked the Arroyo administration to scrap all mining applications nationwide due to its negative effects.

CBCP open to help DENR promote responsible mining

First posted 21:40:07 (Mla time) May 13, 2008
Jeannette Andrade
Philippine Daily Inquirer

At “The Forum,” a CBCP-sponsored media discussion, Manila Auxiliary Bishop Broderick Pabillo said that with many of the country’s bishops advocating responsible mining, an agreement with the DENR to undertake measures in protecting the environment would be welcome.

He revealed that 30 bishops already wrote pastoral letters, some of which were sent to their local government units, to condemn destructive mining operations.

Pabillo pointed out that the CBCP could act as the “third party” or a witness to the social acceptability of mining operations in any given place where the consent of residents in the area would be valuable.

DENR Secretary Lito Atienza offered the proposal on Tuesday at the same forum, saying that he would prefer to work with the CBCP in environmental protection rather than other advocates because he was sure of the purity of the intention and none of the bishops could be bribed.

“Our part in the partnership is when they (DENR and the mining operators) obtain social acceptability, there is a third party who will ensure that social acceptability is properly acquired,” the bishop explained.

He added, “If they (DENR) are willing to allow us to look into that, then we are willing to testify whether the people agree or not or if there is fraud in obtaining consent, which has always been the subject of complaints. There we can step in to be a witness who will attest to whether the people want mining or not.”

Pabillo said bishops wanted to ensure “free and informed consent” by residents who would be affected by the quarrying.

The Bishops could also act as sentinels to determine if mining operations were destructive, if the operations would displace people and whether just compensation were given to displaced residents.

“We still have to talk about the mechanism and look into the issues,” the Manila auxiliary bishop maintained.

He said the people should be cautious about mining, saying it was far worse than logging. “We have to be careful in mining our resources which, when taken, can never be brought back. When minerals vanish, they can no longer be grown back, unlike logging where we can wait for several years to have trees again,” the bishop explained.

He said the mining industry still favoured the foreign firms. “I hope we benefit from our own resources. It is unfortunate for our small-scale mining operators that outsiders benefit. The law intends for small mining firms, the locals, to benefit, but outsiders, mostly foreigners, instead do. That means there is a problem with the law and it is not strictly implemented,” Pabillo pointed out.

The Manila auxiliary bishop further expressed hope for local officials to become responsible leaders, saying, “There could never be responsible mining if the officials were not responsible.”

Mining bill for LGUs urged

By MADEL R. SABATER
Manila Bulletin
Sunday, May 4, 2008


Mining experts are pushing for the enactment of the "Domogan Bill," which would enable taxes to be given directly to the local government units (LGUs) who, they said, should also benefit from mining operations in their area.

In a media awareness seminar on the mining and minerals industry the other day, Mines and Geosciences Bureau (MGB) Mineral Economics, Information, and Publications Chief Engineer Glenn Marcelo Noble said they are pushing for the enactment of the "Domogan Bill" for the benefit of LGUs. Its enactment is one of the plans of action of MGB.

The Domogan Bill, House Bill 3993, filed by Baguio Rep. Mauricio Domogan, seeks the automatic retention of the local government shares in mining taxes, fees, and royalties.

The bill has already certified as urgent by President Arroyo as it is expected to encourage more LGUs to support mining operations while being vigilant as watchdogs for irresponsible mining.

"We want it to be passed because LGUs are hardly getting their share from the national government," Noble said.

Noble said that it usually takes a minimum of two years before LGUs get their share of mining taxes, fees, and royalties from the national coffers. Sometimes, LGUs that are unaware of their benefits do not get to claim their share at all.

"It is a very lengthy process," he added.

"The bill aims for the retention of the LGUs’ share from the national wealth," Noble said.

"Hopefully, this bill will facilitate remittance of (mining) shares to the LGUs."

Mining is one of the priority sectors for research and development (R&D) by the Department of Science and Technology (DoST), particularly its Philippine Council for Industry and Energy Research and Development (PCIERD).

Environment: A Major Source of Corruption

The higher the level of corruption in a country, the greater the destruction of the environment; likewise, the lower the level of environmental sustainability.

By the Center for People Empowerment In Governance

Posted by Bulatlat (http://www.bulatlat.com)

Vol. VIII, No. 13, May 4-10, 2008

The higher the level of corruption in a country, the greater the destruction of the environment; likewise, the lower the level of environmental sustainability. This correlation comes not from an NGO or an anti-corruption watchdog but from the World Economic Forum (WEF), the Davos annual meeting of political and corporate leaders from all over the world.

The linkage between environment and corruption is ringing alarm bells not only in the WEF but in other multilateral organizations as well. This may not necessarily out of their concern for the environment, however, but because the funds granted many developing countries including the Philippines to combat corruption have yielded no promising results, worse, are embezzled through corruption itself.

There is another correlation: Developing countries that are highly dependent on extractive industries, such as mining, logging, and the export of resources, show the highest levels of corruption. The WEF, along with Transparency International (TI), Political and Economic Risk Consultancy (PERC), and other institutions see the Philippines as the second most corrupt country in the world and the first in Asia today.

Previously ranked as one of a few countries with the most diverse ecosystems, the Philippines is now facing an environment crisis. Only 17 percent of its forest cover is left and 50 of its 421 major river systems are biologically dead. Mining and other extractive industries threaten farm life, coastal and marine resources, access to water, and spawn epidemics and pollution of all types. Foreign mining firms have, since the 1970s, plundered as much as $30 billion worth of mineral resources from the Philippines . Moreover, some $2 billion is lost to environmental degradation every year.

The environment sector is a major source of corruption as well as political patronage. The plunder of natural wealth has been the material base of oligarchic politics that promotes and practices corruption. It is where the most coveted resources are, and it is where the money is. The mineral wealth alone that remains untapped is worth $840 billion; the first phase of the Arroyo administration's minerals policy was expected to generate $10 billion in investments.

Teeming with corruption

The large-scale exploitation and extraction of the country's natural wealth especially timber and mineral resources teems with corruption involving bureaucrats, powerful politicians and their cronies, on the one hand, and transnational corporations and their local partners, on the other. The maze and levels of corruption begin with the TNCs themselves – in their ¬countries business gives legitimacy to bribery.

In the United States , for instance, the Foreign Corrupt Practices Act (FCPA) does not prohibit bribing foreign officials through facilitating or expediting payment "the purpose of which is to expedite or secure the performance of a routine governmental action." On the other hand, the OECD's 1997 Convention on Combating Bribery of Foreign Public Officials in International Business Transactions ("OECD Convention") makes acceptable "grease payments," "speed money," "facilitating payments," or "expediting payments" that are made to ensure the timely delivery of goods and services, such as permits and licenses.

In Canada , the Corruption of Foreign Public Officials Act makes even more explicit about “grease" payments as legal if these are made to expedite or secure the performance by a foreign public official of any routine act that is part of the foreign public official's duties or functions, including the issuance of a permit, license, visas, and work permits.

As a result, foreign firms including mining TNCs offer bribes and allot revenues for grease money sometimes bigger than the normal 22 percent that Filipino business firms normally earmark to get government projects approved. Many TNCs whose mining operations have been banned or restricted in other countries because of pollution are willing to shell out bribe money in the Philippines allowing them to invest in mining exploration, extraction, and exportation while evading tight environment evaluation, monitoring, or even litigation. Awash with trillions of dollars in surplus capital, China 's corporations including ZTE-NBN are willing to offer as much as one-third of their investment capital to corner mining, telecommunications, road development and other major projects. These projects damage the environment, demolish communities, and make the people bear more tax burdens to compensate for losses in enterprises that do not benefit them at all.

The profit objectives of business in extracting billions worth of environment resources are facilitated through the enactment of laws and onerous treaties, the issuance of policies, transactions, permits, designation of areas for operation, sham environment assessments, and other papers. This bureaucratic and policy-making process involves all layers of government including the chief executive, Congress, and even members of the judiciary.

Legal mechanisms

Thus legal mechanisms are used to legitimize and process the plunder of natural resources. But it is the invisible hand of corruption wielded by the powers-that-be which makes this development aggression more expeditious. It is this same hand that protects profitable ventures, beneficiaries of corruption, and the wanton destruction of the environment at the expense of communities, their livelihood and property, and their future. Corruption makes environment laws unenforceable and violators to get away with their crimes. It also makes accountability toothless.

A case in point: When the Supreme Court ruled in December 2004 that the Mining Act was unconstitutional, the bureaucracy's top honchos flexed their muscle to support the Chamber of Mines of the Philippines' and the TNCs' lobby to have the ruling reversed. Millions of dollars were reportedly spent for this campaign. In less than a month, the high court did an about face. A jubilant House Speaker Jose de Venecia boasted before international mining investors in London in June 2005: "We mounted a strong campaign to get the Supreme Court to reverse itself. It was a difficult task to get 15 proud men and women of the Supreme Court to reverse themselves. But we succeeded."

Corruption is the secret agency that makes environmental destruction possible topped by civilian deaths, epidemics, and calamities. It has led to the depletion of the country's natural resources ranging from deforestation, slope destabilization, soil erosion, desertification, water resource degradation, defertilization, crop damages, siltation, alteration of terrain and sea-bottom topography, increased water turbidity and air pollution. It continues to threaten the country's food security.

Given the current propensity to reward corrupt officials while whistleblowers along with anti-corruption watchdogs are intimidated, corruption in the environment sector is here to stay and is sure to worsen. Horrifying will be day when the whole country degrades into a desert and the only life remaining is the social cockroaches – the corrupt oligarchs and crony capitalists.

Corruption breeds in a government dominated by oligarchs who craft development policies motivated by private gain and corporate greed. And yet environment constitutes public wealth and it is just for the people to make an assertion of this basic principle. In the short term, pending legislative bills that uphold transparency in government transactions such as the right to public information should be supported. Independent and impartial investigations of corruption cases and environmental plunder should take their course. In the long term, the campaign for environment conservation and the defence of patrimony should be linked to the overall struggle for land, against corruption, and toward democratic governance.