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Candidate Roxas’ mining cronies

This is the second part of an article in the blog “Thinking Pinoy,” which I felt is so enlightening that it should be read by more Filipinos as possible. I would emphasize, though, that I am not the author of such well-researched piece, which is a testament to citizen-journalism.

Start of Part II of Thinking Pinoy article:
My research on presidential candidate Manuel Roxas 2nd’s mining links and its implications terrified me so much, I actually fervently prayed that I am wrong.

Eric Gutierrez (whose planes and helicopters Roxas has been using in his campaign sorties), owns San Roque Metals Inc. (SRMI), one of the largest mining companies in the country.

Interestingly, reports indicate that Liberal Party spokesperson Edgar Erice is a business partner at SRMI and that Erice’s son is an SRMI shareholder. LP’s Erice also served as SRMI’s chairman in the mid-2000’s.

Through a memorandum of agreement with the Lumads of Tubay town, SRMI engaged in “small-scale mining” of 572 hectares of land in Tubay, Agusan del Norte.

With the “small-scale” tag, SR Metals was able to bypass several environmental and legal restrictions imposed on large-scale mining operations.

In the shadows: Left, candidate Roxas, and Liberal Party spokesman Edgar Erice, part owner of a controversial mining firm the DENR found violating mining regulations
In the shadows: Left, candidate Roxas, and Liberal Party spokesman Edgar Erice, part owner of a controversial mining firm the DENR found violating mining regulations

Small-scale miners are allowed to extract not more than 50,000 metric tons of ore annually, in contrast to the large-scale miners’ higher limits, albeit with more financial, legal, and bureaucratic restrictions.

A decade or so ago, environmental non-profit Caraga Watch formally sued SRMI for vastly exceeding its extraction limits, causing massive environmental damage.

A simple Google satellite image shows the extent of SRMI’s over-extraction and its effects on the otherwise pristine Tubay environment:

The Small-Scale Mining Act (RA 7076) defines small-scale mining as “mining activities which rely heavily on manual labor using simple implement and methods and do not use explosives or heavy mining equipment.” This is the same definition used in RA 7942, the Philippine Mining Act.

Eventually, DENR ordered the closure of the three mining sites in 2006. The agency also ordered the collection of P7 million in fines, or 0.25 percent of P2.9 billion that SRMI earned in 2006-2007, a mere slap on the wrist.

Some reports indicate that SRMI earned P29 billion instead of P2.9 billion, but to give SRMI the benefit of the doubt, let’s just consider the smaller amount.

DRMI defies SC
Despite the DENR order, SRMI continued its mining operations in Tubay, pending a Supreme Court (SC) decision.

That’s why in 2010, Agusan del Norte’s provincial officials and the Tubay townsfolk urged PNoy to halt SRMI’s Tubay operations on the following grounds:

• SRMI failed to pay municipal taxes and business fees (100 million).

• SRMI did not pay extraction fees (120 million)

• SRMI did not pay 1 percent royalty fees to the lumads, identified as Accredited Tribal Sectoral Leaders of Indigenous Cultural Communities of Tubay.

LP Spokesperson Edgar Erice, SRMI’s chairman at the time, argued that his mining company, a “small scale miner,” is “exempted from paying extraction fees under the Mining Act or R.A. 7942.

SRMI’s Tubay mining site: 5 square kilometers, twice the size of Pateros. The yellow area surrounded by lush green forests, equivalent to about 570 hectares, shows the extent of SRMI’s “small-scale” mining activities. That’s twice the size of the municipality of Pateros.
SRMI’s Tubay mining site: 5 square kilometers, twice the size of Pateros. The yellow area surrounded by lush green forests, equivalent to about 570 hectares, shows the extent of SRMI’s “small-scale” mining activities. That’s twice the size of the municipality of Pateros.

A little more math reveals a different and even more disturbing story.

Based on Mining and Geosciences Bureau (MGB) data, SRMI earned P2.9 billion in the 15 months leading to December 2009. Hence, the royalties due (1 percent) is about P29 million.

The 2007 market rate for nickel ore is US$30 per metric ton. Using Jan 2 2007 USD:PHP exchange rate of 1:48.86, P2.9 billion translates to about 1.98 million metric tons of nickel ore.

That is, aside from non-compliance with financial obligations, SRMI appears to have over-extracted ores from Tubay, mining almost 40 times their annual 50,000-metric ton limit.

SRMI continued its Tubay operations and on an even larger scale. The SC affirmed DENR’s 2006 order in June 2014. However, the SC did not penalize SRMI for its operations from 2007 to 2014.

To make matters worse, Bondoc’s sources said the SRMI mines still operate today.

PNoy and mining
Since 2010, PNoy’s LP Administration did nothing to contain SRMI, despite incessant calls from genuine indigenous peoples’ groups.

For example, the DENR’s Mines and Geosciences Bureau reported that for the year 2014, SRMI paid 45.3 million in royalties to Tubay’s Lumads, representing 1 percent of SRMI’s total mining review for that fiscal year.

That is, SRMI 2014 revenues from their Tubay site were at 4.53 billion. The 2014 market rate was US$41 per ton. Using the Jan. 2 2014 USD:PHP exchange rate of 1:44.49, P4.53 billion translates to about P2.48 million tons of ore mined in 2014.

Again, that’s almost 50 times the 50,000-ton annual limit for small-scale miners.

Moreover, in 2012, while the Lumads (“David”) battle SRMI (“Goliath”), President Noynoy Aquino issued Executive Order (EO) No. 79, which forbids granting of new large-scale mining contracts, pending the passing of a new law that would overhaul revenue sharing of revenue between mining companies and the government.

The caveat: As of May 2015, Congress, dominated by the Liberal Party, has yet to conduct a single hearing on this mining bill.

EO 79 covers only new mines, and not the old ones. That is, contracts held by SRMI, along with the contracts held by Roxas’ mining companies, were left untouched. Hence, this EO allowed existing mining companies to collectively hold a de facto monopoly because of the lack of new competition.

Again, quid pro quo: SRMI is an avid supporter of the PNoy Administration from start to finish.

In 2010, then-Presidential candidate Noynoy Aquino used a Gutierrez-owned plane for his campaign sorties, said Bondoc.

In 2012, Rappler reported that Gutierrez accompanied President Aquino in his official 2012 US and UK trips, where he was included in the group of “Top 26 Filipino businessmen” that comprised the official Philippine delegation.

In 2014, an aerial footage of SunChamp’s Batangas farm was captured using a Gutierrez-owned helicopter, according to the United Nationalist’s Alliance. The footage was used in the senate hearings concerning corruption allegations against Vice-President Jejomar Binay.

And then came 2016, when Gutierrez leased his entire Air Juan fleet to Roxas and the rest of Daang Matuwid.

The story of Gutierrez’s SRMI is just a glimpse into how cozy the LP’s relations are with mining companies. Add to that the fact that LP’s Roxas is a shareholder in at least seven mining companies, the future seems brighter in a Roxas presidency for SRMI and friends.

How exactly will a Roxas presidency benefit SRMI and friends?

Roxas presidency a boon to his miner friends
First, Roxas runs on a platform of continuity, i.e. he’s bent on preserving the new status quo created by the PNoy Administration. Roxas has never criticized PNoy’s decisions, and this includes EO 79. In a Roxas presidency, there is no reason to speculate the reversal of EO 79. Coupled with chronic absenteeism in Congress, we can expect the mining monopoly to last until 2022.

In particular, despite falling nickel prices in the past few years, this monopoly will come in handy as nickel prices are expected to shoot up after Indonesia decided to implement a nationwide export ban on mineral products. Bloomberg says this is great news for Philippine nickel miners like SRMI.

Second, Roxas isn’t likely to pass the FOI. LP has never been able to pass the Freedom of Information (FOI) under PNoy and there’s no reason to believe that Roxas, who’s weaker than Aquino, will manage to rally congress to pass this during his term. Roxas and PNoy dropped FOI like a hot potato as soon as Congress insisted on the right of reply provision. They didn’t fight for it. They didn’t even certify it as urgent.

This way, the common people, including citizen journalists like Thinking Pinoy, will still find it extremely difficult to discover anomalies like SRMI’s Tubay operations. For example, it took Thinking Pinoy several days of research for this article. If FOI existed, Thinking Pinoy could have just requested documents from the SEC, the MGB, the BIR, Customs, and every other related government agency and consequently write a more detailed, more authoritative report. But it isn’t the case.

Third, the final version of the Bangsamoro Basic Law (BBL) is morely likely to favor SRMI and Friends under a Roxas presidency. Under the original version of BBL, the Bangsamoro government will have jurisdiction over mining permits in their area (House Bill 4994, Sec. 3, Item 29). This doesn’t sit well with SRMI and Friends whose owners hail from either Luzon or the Visayas.

The ARMM has significant oil and natural gas reserves. Major deposits have been discovered in Liguasan Marsh in Central Mindanao, and various points in the Sulu Sea. Of course, Gutierrez and friends want a stake in that, and of the four presidentiables, LP’s Roxas is their best shot.

If Binay wins, he will want revenge: SRMI will have hell to pay. If Poe wins, she will obviously want revenge too, after the LP-led disqualification cases that she’s still battling right now, where she even had to dig up graves just to prove she’s qualified to run. If Duterte wins, his Federalism will work in a similar way as the original version of BBL in as far as Bangsamoro mining is concerned. That is, SRMI and Friends will lose their throne.

And these benefits just came off the top of my head. There may be other more sophisticated benefits, and I leave it to the reader to figure them out, if any.

Regardless, it’s quid pro quo: Gutierrez helps Roxas become President, Roxas helps Gutierrez in his business. Quid pro quo, to the detriment of the regular Filipino.

Another presidential candidate asked, if this is not corruption, what else do we call it?

Let me answer that: if it isn’t corruption, it’s sheer stupidity. If coddling the corrupt is Roxas’ intent, then it’s corruption. If it isn’t his intent, then he’s a moron.

End of Thinking Pinoy article.