Can mining industry weather the policy storm?

OVER the past several years, the mining industry has experienced a policy storm—from the imposition of a moratorium on new mining permits and designation of “mining no-go zones” with the signing of Executive Order (EO) 79 under the Aquino administration, to a stricter mine-audit process that led to closure or suspension orders affecting more than two dozen mining operations, cancellation of 75 mineral production sharing agreements (MPSAs) and the ban on open-pit mining method all over the country within the first year of the Duterte administration.

President Duterte expressed his dismay several times over the environmental destruction caused by irresponsible miners, which, he said, are making huge profits but are not taking care of the environment and the affected mining communities.

Under a new leadership, the Chamber of Mines of the Philippines (COMP), an organization composed of the mining industry’s big players, is seeking to reverse these policies, hoping for a better policy environment that will see the industry grow and achieve its full potential.

Interviewed by the BusinessMirror, Gerard H. Brimo, president and CEO of Nickel Asia Corp. and a member of the Audit, Risk and Remuneration (Compensation) Committees of the Board, as the newly elected chairman of COMP, speaks his mind about the challenges faced by the industry as a whole and how the group plans to weather the policy storm.

Here is the transcript of the interview:

What is your perception of the challenges faced by the mining industry?

First of all, the extractive industry—and mining is extractive—is controversial all over the world because you are taking out a resource that cannot be replenished. The problems that we have here in our country on mining, in particular, are really no different than problems that you will find in other big countries.  And it is really the nature of the extractive industry. 

In countries where mining has taken place over many years, like in the Philippines, another problem is the so-called legacy mines, because years ago, before we all became environmentally conscious, there were not many prescriptions regarding mine rehabilitation, tailings dams, and so forth. 

If you go back to before the 1970s, and the laws in our country and many parts of the world, there were no requirements for tailings dams.  So tailings go into the river and nature will take care of it after over so many years. Certainly, there’s no requirement for rehabilitation. You mine, you finish mining, and you leave. That is the way it was done years ago. That has all changed as the world, in general, becomes more environmentally conscious; the laws have changed.  So today, you are required to rehabilitate, you are required to have tailings dams, and you are required to have social expenditures, and so forth. 

But, of course, if you want to criticize mining because there are mines that have remained unrehabilitated from years ago because there were no requirements, it is very easy to say: “Look what they have done?  This mine has not been rehabilitated!  That mine has not been rehabilitated!” We keep looking at the past when the laws are different. Legacy mines is another issue that has always been put at the forefront by those who are not sympathetic to the industry. 

Of course, there are examples of mines that don’t do a good job. But there are examples of responsible mining that are actually world class.  They follow world-class standards. But because we don’t sell products in the market, we don’t advertise.  We don’t communicate.  We are very poor at communicating. That has to change.

What are the COMP’s weaknesses as an organization and what will be its strengths under the new leadership?

One weakness really is that we don’t represent the entire universe of large-scale mines in our country.  There is also the Philippine Nickel Association.  Most nickel mines are actually not members of the chamber but are members of the Philippine Nickel Association. There are a few nickel mines that are members of the chamber and there are a couple of nickel mines that are members of both. We don’t represent the entire universe of large-scale mines. If there were more members, we can become more active, more committed, do more things. Not having that much membership is a problem. 

Also, in the area of self-policing, it is actually very hard for an association which is meant to support the members to police each other.  How do you do that?  It is really a difficult thing. The regulator is our government.  We already have the Department of Environment and Natural Resources-Mines and Geosciences Board (DENR-MGB) that regulates the industry, and that is where the policing should come in.  But there have been so many clamors for self-policing that we decided to do something about it. As you know, we have created the oversight committee under the board of trustees that is tasked to do investigations if there is an incident from one of our members, and is serious enough that the board of trustees says let us investigate it, then the oversight committee will get involved. Then third-party experts will carry out investigation and do a thorough report, which will be discussed with the member companies, and even the DENR. We are now moving toward that direction.

On mining’s contribution to the economy, what are the prospects of increasing the industry’s GDP contribution?

I really get tired of hearing people say that you only contribute less than 1 percent of GDP.  It is so tiring to hear. What do you expect? This industry has been under a moratorium on new mining permits for what? Seven years now? The industry is not growing. How can it contribute more than what it is doing now? It’s going backward. If you want the industry to contribute more, lift the moratorium on new mining permits.

Having said that, if you look at the statistics nationwide, 1 percent nationwide is not big. But if you look at the regional GDP.  Look at Caraga and Mimaropa and contribution of mining to their GDP is big. It is over 20 percent. 

When you averaged out all of the provinces, not all provinces have large-scale mines, you get the low percentage. If we get too big, what are you going to hear, there is a resource curse. That you depend on one particular industry and forget about the other industry. 

There will be criticisms. If you are too small, you will be criticized for not contributing enough, but if you become too big, you will be criticized for having resource curse. It’s ironic. If it’s small, it’s contributing enough. It’s not growing precisely because of the moratorium on new mining permits. But look at a couple of regions, mining is the major economic driver in those regions.

Taking over as new chairman of COMP, where will you start working to achieve COMP’s vision as an organization and for the industry?

There are world-class mines in our country. Last Monday [September 4, 2017], I invited the media to come and we showed pictures [for them to] see how world-class mines are run. We need to prove that. It is one thing for me to say that and it is another thing to prove it. 

So there’s a couple of things that we are going to do that and even up the standard of mines that are not yet world-class. Number one is, adopt a program that is developed by the Mining Association of Canada on sustainable mining called Toward Sustainable Mining. In Canada, if you want to become a member of the mining association, you need to subscribe to the Toward Sustainable Mining and follow the protocol. 

We are looking to adopt it and make it mandatory to our members. Of course, it is not mandatory to companies that are not our members. 

It is a set of protocols and social prescription. It is a self-assessment process. 

In Canada, every three years. Here, we will make it every two years. There will be an audit by a panel of experts that will be formed, most of which will be independent of the chamber, and the industry, to verify the self-assessment reporting mechanism. That is part and parcel of the initiative that we want to do. That is one initiative that we want to do. 

I have already talked about the oversight committee. 

Another thing we want to do quite clearly is we need to talk about our successes more. We need to communicate more and a lot better. There are successes only that we don’t talk about it. We need to communicate more about our successes. Those are the initiatives that we are looking very closely.

Former Environment Secretary Regina Paz L. Lopez has left with a lot of policies in place and COMP is seeking reversals. Of these, what is COMP’s priority?

I think the most damaging policy that she instituted is the ban on open-pit mining. I think that is very clear. She would say that it is disadvantageous to everyone; that it is a legacy for life and so on and so forth. Of course, she would always say that it will affect the farmers and fisherfolk, you know, it is her standard pitch.

If open-pit mining was so damaging, why is it allowed in even developed countries that are highly environmentally conscious, like the US, like Canada, like Australia? Everywhere in the world where there is mining, you will find open pits.  An open pit is a standard form of mining.

If the deposit is near the surface, it is the only way to mine.

So what drives the decision, whether you mine a deposit from the surface or from underground, depends on the shape of the deposits and the nature of it. So if it is gold veins that are dipping underground, you use the underground method. If it is near the surface you mine it from the surface. If it is a dipping copper deposit, and quite narrow at that, you mine it underground, coupled, of course, with the economics. She [Lopez] was saying this morning that it is the cheapest way of mining. There are some deposits that you cannot mine underground, you have to mine them from the surface. So if all countries allowed open pit mining, and that is an established mining method, why would you go against it?

If the open pit generates acidity, there are technical ways how to deal with it. 

There’s TVI’s Canatuan Mine, which is almost fully rehabilitated now, and the Rapu-Rapu mines on the Island of Rapu-Rapu. Nickel, per se, is not a big open pit, but it can be categorized as a series of small pits. But there are good examples how to rehabilitate it.

No mine is allowed to disturb the water. If there is a mine and there’s a community downstream or there’s agriculture land downstream, no mine is allowed to disturb the water. It is impossible to do mining if there are communities who will be affected downstream. We even sometimes provide water facilities, electricity [and] road[s]. That is the whole package of Social Development Management Program (SDMP). The open-pit ban is most unfortunate. It is completely wrong again if it takes place in Canada, Australia and the US. It is surely not disadvantageous and there are ways of dealing with it.

What else are COMP’s priorities?

Let us stick to open pit.  Maybe I can say a little bit more about her [Lopez].  I think it has become clear that Gina has an ideological difference with the industry. It’s become clear. It is clear in her pronouncements like when she would say that mining areas are poor. She says that many times. That was debunked by Sen. [Miguel] Zubiri during the Commission on Appointments hearing. And he read all the statistics. Look at the examples in areas where there is big mining. The Municipality of Bataraza, it is a first-class municipality and of more than 20 or 22 municipalities, Bataraza is number one. It is, frankly, a biased pronouncement. Look at the Municipality of Claver in Surigao del Norte, the same thing. A first-class municipality and number one in terms of income. 

Frankly, it is a biased pronouncement. It is made to make us all look bad.  And it is completely wrong. The SDMP funds of the mining companies make a big difference in the communities. There are studies on that. Quite a number of studies. 

Despite all those mining benefits, there is  a strong opposition to mining. How do you plan to convince the people that there’s such a thing as responsible mining?

If they are ideologically opposed to the industry for whatever reasons, there is not much we can do about it. The people who came here, I am not sure if they are from Pangasinan, Pampanga or Central Luzon. If they are opposed to it, it is because they are not yet feeling the benefits of mining. Or, they are being induced by other parties to go against it.

The law says if you want to mine, you have to get their consent. Why do IPs agitate against mining when they have the power to say no? If they don’t want you there, they can say. And it is a process supervised by the National Commission on Indigenous Peoples. They have the power to say no. They have their destiny in their own hands. The IPs in our areas that get the benefit will not come here to rally. They get the royalties, they get housing, education. 

As chairman, what will be your strategy in dealing with government and other partners?

By engaging them. By discussing things with them. By dialogues and by mine visits and tackling issues.  There’s no other way. 

There has been too much misinformation about the industry and there’s a lot of misconception that comes out of it. We know the President has flown over parts of Surigao. When you fly on top of the mountain ranges and you look at the mountain, you realized that there is little forest cover. The reason is that entire mountain range is full of laterite. It is lateritic soil that is full of iron. If you have that kind of soil, there’s not much nutrient. But that is not because of mining. That is the natural state of that area. That is because it is a mineralized area. It is called Surigao Mineral Reservation Area. The mines that are operating there pay 2-percent tax and 5-percent royalty for operating in that area. 

In a lateritic area, whether you mine it or not, there will be siltation. The siltation is very visible. To what extent is that caused by a mining operation or is it caused by lateritic soil? That has to be answered. We are now in a situation where an area is experiencing siltation, whether or not we are at fault, we really have no choice but to clean it up.  A lot of us are really cleaning it up although that is occurring for hundreds of years because of the siltation of the lateritic soil. That is why we invited the President for him to please see the mines. I have brought many people to our oldest mine of Nickel Asia, which is Rio Tuba, and I have yet to see anyone who doesn’t like what they saw. We have actually had Archbishop Palma of Cebu because the parish is celebrating its Ruby anniversary. And there are priests there who joined. He was very happy. He appreciated our efforts. 

Gina Lopez came to our mine site. She visited our schools, our hospitals, our rehabilitated areas and she congratulated us. On the other breath, she criticizes the industry. I don’t know where she is coming from. 

Wrapping up, what can we expect from COMP and how can the industry weather the policy storm?  

Well, we need to, as I mentioned, we need to dialogue with the government a lot more intensively, and seriously,  and make our sentiments known and understand their side as well. 

I am confident that at the end of the day, we can sort out a lot of the issues that are causing the problems. We have to realize that there’s no mineralized country in this world that has put a stop to mining. None. Not one mineralized country has put a stop to the industry. Whether we like it or not, the world needs metals that are done [obtained] only through mining. Be honest with yourselves, to our critics, keep an open mind about this. And to the media, I am inviting them. It is one thing to talk and talk about it and another to prove it. The economic benefits and the care of the environment, it is all there to see. We have to organize more tours, not only on Rio Tuba but other mines as well.  There are responsible miners and there are world-class mines in the Philippines.   

Brimo is also the president of Rio Tuba Nickel, Taganito Mining Corp., Cagdinao Mining Corp., Hinatuan Mining Corp., Cordillera Exploration Co. Inc., Newminco Nickel Mining Corp. and Newminco Pacific Mining Corp. He previously served as president of the COMP from 1993 to 1995, as chairman from 1995 to 2003, and a director until his election as chairman in August.

Image credits: nickelasia.com | Uzunov/Dreamstime.com


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