Yinglong illegal mining: A microcosm of our national quagmire

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ILLEGAL nickel-ore miner Yinglong Steel’s lies in its full-page ads in this newspaper and The Philippine Star last week are as stunning as its brazen disregard for the Constitution itself, as well as for our country’s laws on mining and those governing business contracts.

My interest in this controversy that I’ve written three previous pieces on, was ironically piqued by a Yinglong PR operator who tried to sell me a story that the company was the victimized party, that its experience if not corrected will portray the country as a bad site for foreign investments. However, because of my SOP of always getting “the other side,” the more accurate picture that emerged was the opposite. I also hate it when people think they can easily fool me.

This episode is a case study of the characteristic situation in our country, that instead of the rule of law, it is the rule of the corrupt, from the local levels of government and possibly even to the highest, coddling unscrupulous businessmen bold enough to bribe officials to get what they want. It’s been years since documented details of a controversy that reveals the corruption involved has been made available — ironically thanks to the legal documents filed by the protagonists themselves.

Yinglong had a copy of Ebdane’s letter to me before I even received it: Its ad in The Philippine Star January 23 containing Ebdane’s letter which I received only that day.

For starters, Yinglong in its paid full-page ad on January 18 in this newspaper in its very first sentence says that it “is 70 percent Filipino-owned.” Its Chinese owners most probably scolded the PR operator who published it, as in another ad on January 23 in The Philippine Star, that “70 percent Filipino-owned” claim was deleted. It instead referred to the company as a “Filipino corporation.” This however is still grossly false.

In this digital age, an online check on who the owners of an SEC-registered company in the country are is just a few clicks away, but expensive. Yinglong’s amended articles of incorporation submitted June 2022 showed that going by shares subscribed and actually paid, it is 60 percent-owned by four Chinese citizens: Ming Ying Shi, Hanping Shang, Haibo Shang and Jiangang Zhang. The Constitution under Article XII, Section 2 and detailed in the 1995 Mining Law, limits foreign equity in mining firms to 40 percent.

Violation

Despite this gross violation of our most fundamental law, the Department of Environment and Natural Resources (DENR) has not been able to close down Yinglong’s nickel-mining operations, enabling the company in April 2022 to ship out 200,000 metric tons worth P250 million of nickel ore.

I don’t think such shipment could have been undertaken without the local government looking away.

Zambales Gov. Hermogenes Ebdane appears to be backing Yinglong. He even inadvertently revealed this in his letter to me questioning my first column on Yinglong as inaccurate. However, he did not even mention in that letter that Yinglong was 60 percent owned by Chinese citizens, already a violation of the Constitution and mining laws that he cannot ignore.

Ebdane’s letter itself reveals that he is collaborating in some way with Yinglong. The letter was delivered by his personal messenger to The Manila Times on January 23. This was the very day that Yinglong came out with its full-page ad in The Philippine Star, half of which consisted of Ebdane’s letter. This means that Yinglong had a copy of the letter even the day before so it could submit it to the newspaper for publication the following day. Or maybe he gave it to the Chinese firm a week before, going by the date of the letter, January 17.

Letter to me

Why would Ebdane send a private letter to me to Yinglong, which was the subject of my critical column that came out January 16, if not to tell the Chinese firm that he was not just taking the cudgels for it, but publicly disclosing such support? That public announcement is obviously critical in that Yinglong’s operations are in Candelaria, Zambales, Ebdane’s hometown, his baluarte so to speak, where he reportedly has one of his residences.

Ebdane’s letter is also very revealing of his backing for Yinglong in that it portrayed Westchinamin [the company that sold its rights to the mining area to Yinglong on August 2] as double-crossing the Chinese firm. Ebdane wrote: “For reasons known only to Westchinamin, it became interested in taking over the mining operations of Yinglong.”

Ebdane is not telling the whole truth. In fact, the root cause of this episode is that Yinglong double-crossed Westchinamin in their deal under which the Filipino company sold to it for $20 million (P1 billion) its rights to the nickel mining tract in Zambales in March 2021. Yinglong however did not pay Westchinamin: All its nine checks purportedly for paying the amount were dishonored by the issuing banks, with only two for P47 million cleared. That is just 5 percent of the P1 billion agreed price. This fact is well known in the DENR and the mining industry, as it was a brazen double-crossing of a deal.

Starting August 2022, Westchinamin began writing to DENR Secretary Maria Antonio Yulo Loyzaga asking her department to close down Yinglong’s operations for brazen noncompliance of its deal with the Filipino company. Loyzaga has not acted on the complaint.

Ebdane

Ebdane’s letter to me defending Yinglong is also revealing in that it did not mention at all that Yinglong did not have an environmental compliance certificate (ECC), the most crucial document any mining firm needs to get from the DENR. Required since 1978 under Presidential Decree 1586, the ECC declares that a particular project will not have any adverse impact on the environment. It is in fact required for any project that may affect the environment in the remotest possibility, such that a cottage industry has grown for consultants who work to get such clearance from the DENR. Even golf courses, residential subdivisions and gas stations are required to obtain such ECCs.

A Yinglong representative claimed that the firm does not need to have its own ECC since it can use that of Westchinamin, which leased only a portion of the entire area on which it has an ECC. However, the DENR’s Environmental Management Bureau in three separate decisions rejected Yinglong’s argument. Yinglong in its ad at The Philippine Star admitted that it doesn’t have an ECC, and that the EMB had not acted on its demand to issue it one, “for reasons only known to EMB.”

That latter part is another lie: the EMB had informed Yinglong that ECCs are issued not for particular projects, but to the proponent of such projects as only this would ensure accountability if there is environmental damage.

What is revealing of the character of the Chinese company is that its representative filed a case with the Ombudsman in November 2022, claiming that it had given a DENR official a year earlier P3 million, out of the P10 million the official said was needed for the company to get all the necessary clearances from the department. The complainant, one Eugene Co, said he was the interpreter of Yinglong’s principal Mingying Shi who gave the bribe in a check. He even submitted to the Ombudsman images of the check encashed by the official who allowed the bank to even copy his driver’s license.

Encashment

The Yinglong official claimed that “despite encashment of the check, our applications (to secure the required mining and export permits) were not approved.”

The DENR’s Mines and Geosciences Bureau (MGB) chief ordered Yinglong to stop its operation starting March, the documents show, with several cease and desist orders issued up to November 2022.

But then out of the blue, the deputy executive secretary for legal affairs (Desla), Anna Liza Logan, on December 23 blocked that last MGB order, agreeing with the Chinese firm’s claim that it needed to dispose of the stockpiled nickel ore, or it could pollute the Uacon river. Six days later, on December 29, despite the Christmas partying season, the head of the DENR’s Region 3 office, one Alilo Ensomo, issued an export permit to Yinglong.

Because of the order, Yinglong managed to load its nickel iron ore on a vessel bound for China. MGB chief Wilfredo Encano, invoking the approval of two DENR secretaries, countermanded that order January 12, and ordered Yinglong to stop its mining and exports. On the basis of that order, the Coast Guard on January 16 confiscated the vessel and its nickel-ore shipment reportedly worth P250 million. (Ensomo resigned January 13. Why?)

Logan recalled her order dated January 17 after I made public her order in my column of January 16, claiming the “environmental issue had been resolved.”

Broad strokes

So there are broad strokes: the involvement of government entities that allowed a Chinese firm to operate illegally in Zambales, and very nearly shipping out a second shipment of nickel ore it extracted, because of an order issued by an office 250 kilometers away in Malacañang.

Obviously because of the high price of nickel (due to the Russian war against Ukraine), which means big money, Yinglong’s efforts haven’t stopped. It filed a case at the Zambales Regional Trial Court January 14, asking it to order the DENR to allow it to continue its nickel mining operations in Zambales. Never say die, or is it just its lawyers?

This episode is a microcosm of the quagmire the country has been in for decades that continues today, which is a major reason why we are still a poor country. And the Yinglong ads’ spin — disguised as appeals to President Marcos — is that “there should be ease of doing business” in the country. Amazing gall.


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This Post Has One Comment

  1. Dorina Rojas

    Unbelievable but not impossible, and it was the ease of doing business that made it possible for Yinglong to pull through. This story is one for the books and telenovelas.

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