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Weak states like ours impotent to regulate mining

WE have to face reality, and review the past.

We have had, and continue to have such a weak state—its bureaucracy ridden with corruption and inefficiency—that we have been, and will be at least in the next decade unable to regulate mining. Without a strong state, unscrupulous miners, and there are many, will wreak havoc on our environment, and steal—yes, steal as I discuss below—our gold and other natural resources.

We should just leave it for future generations to benefit from the wealth of gold, nickel, and other mineral resources beneath our territory, when our state is strong enough to really regulate all, not just a few mining firms.

Mining, like logging, has unique, obvious features that make it extremely difficult for the state to regulate: Mines and logging operations are located in the hinterlands, where state authority, especially its police and military, are the weakest. This is because we don’t have the roads going to those areas, nor sufficient government personnel and transport equipment such as helicopters—as Australia and Canada have—to regularly patrol mining sites.

Do you think an employee of the Department of the Environment and National Resources’ regional office will really be able to monitor and make sure that all the gold on Mt. Diwalwal in Compostela Valley are sold to government, as required by law?

Notice that the Communist Party and its noisy propaganda arms have been mum over the debate on the mining industry. Logging used to be the New People’s Army’s major source of “revolutionary taxes”. When many of these folded up because of the government-declared moratorium on new logging permits, the mining firms have become the NPA’s biggest moneymaker. It is not a coincidence that mining sites like Surigao, Northern Samar, and the Compostela Valley in Davao are the main guerrilla fronts of the NPA, where they are even able to amass company formations.

A QUIRK: Protesters in 2012 against Philex Mining’s Padcal disaster; right, Environment Secretary Regina Lopez.

What “selective logging” was to loggers is now “responsible mining” for mining firms. Both merely allow the steady destruction of our environment.

Logging and mining
The analogy between logging and mining isn’t mine. It was President Duterte who first articulated the similarity between these two industries that plunder our natural resources when he pointed out back in August: “Mining is a sunset industry, almost. Including logging. It’s not even sunset time, it’s already too late.”

These two industries, often perceived as environmentally destructive, are sources of economic growth the country can do away with, added the President. “Ika nga (As they say), if there are 24 hours in one day, logging is on its 25th hour. Tapos na ‘yan (It is finished). We cannot have this,” he said.

A silly, old argument of pro-mining advocates is that we rely on products of mining all the time, and our iPads and iPhones are almost 100 percent built from materials mined from the earth; therefore we have to support the local mining industry. This is of course the same old argument of loggers, that we can’t live without furniture, desks, even toothpicks and matches.

It doesn’t need a second to figure out the fallacy of the mining argument. Of course we need materials dug from the earth, and civilization’s eras are even labeled from these stuff: the Iron Age and the Bronze Age.

But haven’t you guys heard of the global market? We buy these materials from countries which have been able to mine them while keeping their environment intact, with Australia, Canada, China, and the US now the world’s biggest producers of iron ore and gold. We don’t even process the gold, nickel, and aluminum that are used as materials for our cell phones.

Will we ever suffer from a deliberate embargo by these nations of their output of metals? Probably, but that would mean a total global economic conflagration, as most countries don’t mine and process these materials. Japan and all of the Asian Tigers—South Korea, Singapore, Taiwan, and Hong Kong—of course had practically no mining industries, yet became industrialized countries in a generation.

The nature of a country’s state is important. I agree with the Netherlands’ legalization of pot and even prostitution, but in the Philippines with a weak state and with millions impoverished, it will only mean the legalization of the biggest crime syndicates.

Very bad cases
There are several very bad cases that indisputably demonstrate that because we have a weak state, it will be impossible to regulate the mining industry.

First, investigative reports by the British news agency, Reuters, and by the Asian Sentinel, a region-wide news site that has won journalism awards, exposed in 2012 the massive smuggling of gold and other mineral resources by Chinese mining firms in the Philippines. A comparison of Philippine data on shipments of gold to Hong Kong and those by Hong Kong authorities showed that only 3 percent of gold produced in the country were sold, as required by law, to the Bangko Sentral ng Pilipinas. The remaining 98 percent were smuggled to Hong Kong and then to the Chinese mainland.

An indication of the miners’ hold on President Aquino’s administration and the media as well, no government investigation of the allegations was made, and media hardly reported the articles.

Second, even mining firms you would expect to be so careful, and with the finances to be so, in complying with environmental laws have had episodes of severely damaging the environment:

In 1996, the Canadian firm Marcopper Mining Corp.’s copper mine resulted in the largest mining disaster in the country, when its toxic mine waste spilled into the Makulapnit-Boac Rivers in Marinduque, poisoning it.

In 2012, the Padcal mine in Benguet province of Philex Mining, a stock market-listed firm controlled by the Indonesian magnate Anthoni Salim, spilled 20.6 million tons of toxic tailings into water bodies. In terms of volume, the spill though less toxic was 10 times larger than the Marcopper disaster, according to the Environmental Justice Atlas.

(It was Philex Mining chairman Manuel Pangilinan who in March 2012 made a scene at a forum when he called Lopez “a liar” for saying that mining sites are ugly, and implied that his firm’s Padcal mine site was a nice place to live in. The Padcal mine disaster occurred a few months later in August.)

Philex chairman Pangilinan in March 2012 telling Lopez (foreground, back to camera) to her face that she is a liar. SCREEN CAPTURE OF VIDEO

If these firms couldn’t comply with regulations to protect the environment, what would you expect of the smaller, less capitalized firms, especially those operating in the country’s hinterlands?

Third, a number of mining firms have violated the Constitution’s 40 percent limit on foreign ownership. Can you expect them to comply with the regulations of a mere department? Little discussed is the fact that probably two-thirds of the country’s mining firms now plotting to remove Environment Secretary Regina “Gina” Lopez are owned by foreigners from opposite sides of the globe, North America and China.

In 2014, the Supreme Court itself issued a decision that found three mining firms which had claimed to be majority-owned by Filipinos were actually majority- owned by a Canadian firm, MBMI Resources, Inc.: Narra Nickel Mining and Development Corp., Tesoro Mining and Development Inc., and McArthur Mining. MBMI used a corporate layering scheme to hide the fact that its ownership of the three firms was at least 60 percent.

Layering scheme
This is the same kind of corporate layering scheme used by Philex Mining, the biggest mining firm in the country. Through several intermediate firms, the Indonesian tycoon actually owns 44 percent of Philex Mining. (Details in my book Colossal Deception: How Foreigners Control our Telecoms Sector, available in local bookstores as well in amazon.com.)

But the illegal foreign ownership of the four mining firms was disclosed only because of a court suit brought against them by a Filipino-owned competitor that wanted to get its hands on the mining rights that the Department of Environment and Natural Resources (DENR) had awarded them.

How many more firms would be exposed as foreign controlled, in violation of the Constitution, if court suits were brought against them, or if the DENR also audited their ownership? I suspect many of the new mining firms with Chinese equity (even names!) are really controlled by them, with their purported Filipino partners —a few even former government officials—being mere dummies.

Just as we have a very unorthodox President willing to take on the ruling elite, we are lucky that he appointed a probably more unorthodox person as environment secretary, Lopez.

Only a person with Lopez’s unique background—a missionary of the meditation-social service cult Ananda Marga (“Path of Bliss”) for over 20 years that included 11 years in the most squalid conditions in Africa—could be not only so detached from the elites of the mining industry, but also devoted to saving the environment.

Such a quirk of fate for a weak state to have an island of strength in Secretary Lopez. Duterte appointed her to the post on impulse, probably getting bored when Lopez lectured him on environmental concerns when she visited him in Davao right after the elections, and told her to just shut up and head the DENR. That is certainly lucky for this unlucky country.