Mining in the Philippines - Concerns and Conflicts

The fact-finding team requested economic models providing projections of income from mining from
government agencies, the World Bank and the Chamber of Mines. Apart from the NEDA / MGB
figures for the 23 priority mines, none were forthcoming. Philip Romualdez, President of the
Chamber of Mines and CEO of Benguet Mining Corp, accredited with ‘almost single handedly
spearheading the revival of local mining through aggressive road-shows’ 98 was asked, during a
meeting with the fact-finding team and others at the British embassy, what the economic benefits to
the country and local people were. He replied that it was ‘impossible to answer’ and could be known
only once mining had been carried out. It would appear that in effect the people of the Philippines are
being asked to risk their natural resources, biodiversity, livelihoods and culture with little indication
of what the benefits will be and no estimation of the costs for them.
The Supreme Court, in overturning its original decision declaring provisions of the Mining Act as
unconstitutional, 99 based its decision on claimed economic benefits of FTAAs, which allow 100%
foreign ownership, on the argument that the additional government share of net mining revenues
compensates for the low tax rates and high incentives. However, there is widespread skepticism that
this will yield the revenue sharing expected by the Court. 100 A manifestation of this skepticism was
seen in the Rapu-Rapu Fact Finding Commission report which recommended an investigation of
Lafayette Philippines Incorporated ‘for possible underreporting of ore/processed’ 101 which the
Commission claimed had impacted on the tax due. The DENR committed to following up on the
Rapu-Rapu Commissions recommendation by forwarding the request to investigate the alleged
underreporting of ore to the Bureau of Internal Revenue 102 .
On the evidence available to it, the fact-finding team has strong grounds to believe that:
• Large-scale, technologically sophisticated mining appears unlikely to lead to job creation.
There is considerable basis for the fear that more livelihoods will be destroyed (through
damage to agricultural land and fisheries, and displacement of small-sale miners) than new
jobs created.
• It seems clear that revenues to the state, once incentives have been accounted for, will be
substantially less than expected.
• Based on all past experience, affected poor and indigenous communities on site and
downstream will be worse off. The fact-finding team was not convinced that royalty payments
would adequately offset such impacts. They remain concerned that the management of
royalty payments was lacking in transparency and participation, and might become a source
of corruption and conflict.
3.9.1. Alternative economic and sustainable development models
The above economic analysis does not address the potential negative impacts of mining. Damage
caused by pollution and mining disasters, if a cost can be fully estimated, could run into billions of
dollars. Nor does the macro-economic analysis look at the alternative sources of revenue available to
the Philippines, a country rich in renewable natural resources. The World Bank has identified tourism
and agriculture as being major potential growth areas. It has also stated that, for this potential to be
realized, environmental protection is essential. To put this into context, the World Bank estimates that
the damage currently being done to the Philippine economy as a result of water pollution alone, is
about $1.3 billion a year. 103 This is prior to mining expansion. There is a serious need to revise existing
policies, programmes and projects, in particular those pertaining to mining, to bring them into line
with sustainable development commitments. (see Appendix 10 Maps of Marine and Terrestrial
Conservation Priorities and Appendix 11 Gross Value Added in Agriculture, Fisheries and Forestry).
The Long-Term Philippine Development Plan (LTPDP), 2000-2025 (Plan 21), if effectively
implemented, would require sustainable development programs to be integrated into the decision-
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