360° Analysis

Mining for Answers: A Philippine Case Study – Part 2


October 03, 2012 04:57 EDT

A crucial step in understanding the debate over mining is to examine the costs involved. Economics will help uncover the true benefits of the mining practices as it stands while evaluating any potential growth factors.

Mining operators are required to set aside funds to compensate for damages and assume the risk of any potential adverse impacts. Since the same affected or at-risk stakeholders also share in mining revenues, there should be a net economic benefit to them; conflicts regarding costs should be negotiated not only for measurable economic losses, but also for environmental and social costs that are immeasurable in monetary terms.

While conducting cost-benefit analyses, damage assessment and compensation, regulatory analyses, and natural resource accounting, among others, are essential to maintain good relationships amongst all parties. There is no single valuation technique that can be applied to the Philippine mining sector, considering the diverse nature of the interactions between the economy, the environment, the mining industry, and the Filipino communities. Furthermore, data gathering has been irregular and the worth of social and environmental costs are still undetermined. According to data from the NSCB in 2010, the cost of negative mining environmental impacts steadily increased from 1992 to 1999, but incomplete and outdated information prevents a full assessment on the financial value of these negative environmental impacts.

On social costs, decision-makers must account for the changes in a person’s lifestyle, their well-being, and their personal and property rights. These are especially important considerations given that over half of the mining sites in the Philippines are found in socially vulnerable areas and in areas where conflict is ongoing, such as the island of Mindanao. History shows that there is an undeniable and unstable conflict between mining activities and the culture of local peoples. For instance, a UN report in 2007 found that the Kankanaey and Ibaloy, who had been displaced from their ancestral lands and livelihood, have become illegal occupants in the Cordillera region; the mining activities occupy lands traditionally used to cultivate and raise livestock.     

In many coastal provinces as well, such as Negros Occidental and along the Ilocos coastline, local governments and local communities are at risk and must invest hundreds of work hours in protecting the coastal ecosystem. The Mines and Geosciences Bureau opened up these vulnerable areas for magnetite mining, adversely affecting tourism and economic activity.

A Future for Philippine Mining: A Policy Approach

The combined efforts of the government and the private sector are essential in order to enhance national growth in a way that safeguards the environment and the rights of affected communities. The law mandates several environmental and social work programs to act on the issues posed by industrial mining: the Environmental Work Program, the Environmental Protection and Enhancement Program, the Final Mine Rehabilitation-Decommissioning Plan and the Social Development and Management Program, as well as financial assurances, the Contingent Liability and Rehabilitation Fund, Mine Rehabilitation Fund, and Mine Wastes and Tailings Reserve Fund. Still, due to the unreliability and insufficiency of available monitoring data, it remains unclear whether these mechanisms are adequate or enforced effectively throughout the country. There is still no definitive document or legal framework from the government that clearly and specifically details the conditions and expectations for responsible and sustainable mining. While mining has the potential to become highly profitable and beneficial to all stakeholders, it will take a while to formulate and implement an effective socio-economic policy.  

The Philippines, and many countries in South-East Asia, can refer to some case studies of good mining practices and engage in information sharing through regional conferences. Increased mining safety and efficiency will be essential, and should go hand-in-hand with the support and development of the local communities. Copper-gold producer Oxiana strengthened its public relations with the affected parties by almost exclusively covering the community initiatives in connection with its Sepon mine in Laos. Oxiana’s efforts to alleviate poverty in the vicinity of the Sepon mine are extensive and rely on the use of local suppliers where possible, particularly in the procurement of essential foodstuffs and materials in the immediate area. Most notably, Oxiana trains local staff not just for their work at Sepon, but also in important transferable skills that can contribute to their local economy. Many regional mining conferences have identified that the regulatory climate for mining investment in their respective countries should be emphasized and strengthened.      

For decades, the shortcomings in governance and inadequacies in regulation and inconsistencies in policy management have revealed that dialogue must exist for all to benefit. The cost-benefit economic analysis has shown that The Philippine government may want to reconsider its position on the mining industry and impose even stronger regulations (with the appropriate checks and balances) on those wishing to tap into Philippine natural resources. Corruption should also be addressed, especially with third-party contractors who might engage in underhanded negotiations with mining companies in an effort to make more profit, which can take away from the expected gains and benefits of mining. If the Philippine government and society do not gain from the current mining system, modifying the system and status quo would be highly justified.

The views expressed in this article are the author's own and do not necessarily reflect Fair Observer’s editorial policy.













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