BWorld 212, Commodities competition and the mining debate

* This is my article in BusinessWorld on May 15, 2018. The chart is added here as it was not accommodated in the column due to space constraints that day.

Commodities competition as defined in this piece refers to companies that are producing certain commodities and are competing for investors. Thus, energy companies are those that plan to attract more investors and expand operations when world energy prices are high as compared to those companies producing agricultural, industrial, and other commodities.

This is a continuation of a series of pieces about competition.

Last week we discussed overall competition and the role of the Philippine Competition Commission (PCC), electricity competition and the role of Philippine Electricity Market Corp. (PEMC), innovation and the role of IPR protection.

Endless competition also leads to endless innovation and this results in disruption in global economic balance or imbalance, which, among others, would be discussed in BusinessWorld’s Economic Forum 2018 that carries the theme: “Disruptor or Disrupted? The Philippines at the Crossroads.”

Currently, energy prices especially oil are rising again as the supply from OPEC-Russia remains constricted and US shale oil production expands but insufficient to cope with high world demand. But this rise in energy prices do not represent disruption in the global energy balance yet.

I visited the Commodities section of Trading Economics, https://tradingeconomics.com/commodities, and checked which of the many commodities have “disrupting”prices over the last five years.

The commodities are divided into five groups: (1) Energy (crude oil, natural gas, naptha, propane, uranium, etc.), (2) Metals (gold, silver, manganese, palladium, rhodium, etc.), (3) Agricultural (rice, corn, coffee, cheese, lumber, sugar, soybeans, wheat, etc.), (4) Livestock (poultry, cattle, hogs, beef), and (5) Industrial (coal, copper, cobalt, steel, nickel, lead, aluminum, etc.). There are about 50 commodities in total.

What is surprising is the eminence of certain metallic products.

Four commodities have incurred disruptive price hikes — cobalt, rhodium, palladium, and lumber. Zinc and lithium also have rising price trends but not as steep as these four. The rest of the commodities have up-down-up cycles, or declining prices like uranium.

Cobalt is mainly used to produce high performance alloys and rechargeable batteries. Thus, companies producing batteries for mobile phones, electric cars, motorcycles and buses would be scrambling for limited cobalt supply in the world as Congo is the dominant supplier but politically unstable. Cobalt is found in copper and nickel ores and the Philippines is a major nickel producer in the world and an average copper producer.

Rhodium is a silver-white metallic element that is highly resistant to corrosion. Thus, it is mainly used in automobiles as a catalytic converter, changing harmful unburned hydrocarbons, carbon monoxide, and nitrogen oxide exhaust emissions into less noxious gases. It is found in platinum or nickel ores and other metals, and again, the Philippines is a major player in global nickel production and exports.

Palladium is used in catalytic converters, also in jewelry, dentistry and surgical instruments, watch making, aircraft spark plugs, ceramic capacitors, among others.

High lumber demand is experienced as there is a new trend in building construction using treated wood instead of cement and steel. Innovations in wood treatment allow them to be fire-resistant. Demand for “eco-friendly” packing materials and related products also experience rising demand.

And this brings us to the endless mining debate in the Philippines.

The trend is there — rising if not disruptive price hikes in many metallic products — so why make mining production highly politicized and bureaucratic? Why is that DENR circular that suspended or closed several mining companies issued by a former secretary who believes she can fly still not lifted until now?

Not content with bureaucratic licensing and monitoring of mining companies, mining excise tax has been doubled in the TRAIN 1 law of 2017 and there are moves to further raise this tax in TRAIN 2 bill now in Congress.

A better alternative for Congress would be to ban “small-scale” mining as almost all such mining actually use heavy equipment such as backhoes, bulldozers, and huge trucks. They should then be encouraged to pool their resources to become medium- to large mining corporations registered with SEC and subject to mandatory community projects as provided in the Mining Act of 1995.

Australia and Canada, among the biggest mining powerhouses in the world despite having major environmental NGOs, do not have “small-scale” mines that are harder and more time-consuming to monitor.

The Philippine government should be a partner and not a hindrance to more modern and responsible mining and allow us to take advantage of this upward trend in global metal prices.

The government should be an enabler of disruption, not a disruptor, in the clear potentials of metallic mining.

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See also:
BWorld 204, Mining attractiveness index and the Philippines, April 30, 2018

BWorld 209, Is the PCC a facilitator or a hindrance to business competition? May 15, 2018 

BWorld 210, Electricity competition, EPIRA, and WESM, May 16, 2018 

BWorld 211, Intellectual property, innovation, and prosperity, May 20, 2018

BWorld 162, Open pit mines and open economy

* This is my article in BusinessWorld on October 27, 2017.

Open pit mining (OPM) is not as scary and draconian as many activists would paint it to be. Thus the ban on OPM by the CA-rejected ex-DENR secretary Gina Lopez has little or zero technical basis, only emotional outburst.

The Mining Industry Coordinating Council (MICC), the multi-stakeholder body on the sector has finally decided that the ban on OPM should be abandoned and new DENR Secretary Roy Cimatu has said that he will soon issue a new department order for this.

OPM is done and practiced in many countries including developed ones like the US, Australia, Germany, Sweden and Canada. Mining firms and their stockholders get good income, governments get huge tax revenues, many workers get long-term high-paying jobs, and consumers worldwide enjoy continued supply of electricity, gadgets, appliances, cars, steel bars and numerous other products of mining. (See table)

Now that the uncertainty of OPM banning has been removed, existing mines should be able to continue their production without fear of policy reversals. The image of the country as having fickle, atras-abante investment policies should be somehow corrected.

New, big prospective mining projects in the Philippines will hopefully see the green light for their operations. Two of those big potential projects are (1) the $2-billion MVP-led Silangan gold mine in Surigao del Norte, and (2) the $5.9-billion Tampakan gold-copper project in South Cotabato. The latter is actually the Philippines’ single biggest foreign investment project and is expected to bring huge income for the locals and the government, national and local.

Many local anti-mining groups vehemently oppose the Tampakan project citing thousands of hectares of land that will soon be wasted. That is an outright exaggeration. The copper-gold ore extraction in just one area is projected to be about 2.5 kms. wide, 3 kms. long and about 0.8 km deep, after 17 years of operation. This is significantly smaller than the Hibbing and Bingham Canyon in the US, among other big OPMs in the world.

Government should simply set the parameters and criteria for business to follow based on existing laws, like the Mining Act of 1995. Once government has given its permit and approval for a mining project, it should simply monitor the players that they comply with the laws and penalize violators, not change rules midway and in the process, violate the laws that it is bound to follow and implement in the first place.

The rule of law applies not only to businesses and regulated entities but also to the government. The rule of law applies to both governors and governed, both administrators and administered, both regulators and regulated. If governors and regulators want to exempt themselves from the law and make their own instant rules, that is the rule of men with arbitrary powers circumventing the rule of law.

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See also:
BWorld 151, Mining taxes per hectare of land, September 22, 2017
BWorld 159, Electoral reforms and the President, October 19, 2017 

BWorld 160, A high carbon tax is irrational, October 25, 2017 

BWorld 161, The sin of smuggling and corruption in the Sin tax law, November 02, 2017

Mining 52, Regulations and bureaucracies, the mining communities

Two news reports from the Manila Times last month about the ugly result of continuing business bureaucracies and heavy political intervention in the mining sector.
 

The news on Regulations further said,

With this, it said foreign investment in the mining sector in the Philippines will be limited due to policy discontinuity, severe government intervention and strict environmental laws…

“The Philippines scores 45.1 out of 100 in our Mining Risk/Reward Index, where the average for Asian countries is 55.6,” it added…

It said any tightening of environmental regulations in the Philippines will have limited effect on actual production from the country, despite acting as a deterrent to potential new investment. Nickel ore output growth seen averaging 2.4% in 2017-2021.

The second paragraph is an assurance that the existing local and foreign players are digging up and continue their business. It’s the potential players that are being discouraged.

The news on DMCI  further reported,

In a disclosure to the Philippine Stock Exchange (PSE), DMCI said 980 jobs were cut as of March 31, 2017, which translates to 240 left from the original count of 1,220 personnel. This does not include the thousands of subcontracted and seasonal workers hired during production ramp up.

CA-rejected Gina Lopez did not and does not care about these job losses in the sector. One clear problem when one-track-minded zealots and activists are irresponsibly given high government positions.

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I revisited these two reports from Manila Standard.

 

In the story hikes household incomes,

Chito Gozar, senior vice president for communications and external affairs, said more numbers can disprove the belief that mining causes poverty incidence. He said the contention of environmental groups is not true because precisely mining’s end is creation of wealth that would eliminate poverty…

The UPLB study pointed out that the major change in the economy of Didipio village was due to the presence of OceanaGold in the village. Peviously, Didipio is an agricultural settlement and that farming was the primary source of household income.

In the story propel GDP growth,

David is the DoST executive director of the Philippine Council for Industry, Energy and Emerging Technology Research and Development (DoST-PCIEERD), and concurrently, Stratbase ADR Institute (ADRi) trustee.

“Hence we see the urgent need to partner with the mining industry in a series of research projects to develop a long-term national road map that will integrate the development of mining, steel and other downstream industries,” he said. 

Nice two articles. Mining-rich areas tend to be marginal and inappropriate for high-value agriculture or forestry because of the poor soil quality. By harvesting the minerals and metal ores, greater value and income for workers and staff, directly or indirectly employed by a mining firm, can be enjoyed and optimized.

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See also: 

Mining 49, Ma'am Monsod on poverty in mining areas, April 12, 2017 

Mining 50, Canada mining taxation, April 21, 2017 Mining 51, Gina Lopez, Roy Cimatu and rule of law, May 14, 2017

BWorld 129, Open pit mines and the DENR Secretary, May 12, 2017

Mining 51, Gina Lopez, Roy Cimatu and rule of law

When Gina Lopez was finally rejected as DENR Secretary by the Commission on Appointments (CA), lots of conspiracy hypothesis were flying. And one thing I notice about these comments and opinions is that it seems all of the people who spread such opinions did not watch the 2 1/2 hours CA hearing of Gina last May 02, 2017.

I watched it in full and here are my impressions:

1. Simple questions answerable by Yes or No, Gina cannot answer. Her mind and mouth is full of emotions, little or nothing on specifics, numbers and law.

2. Three questions by Sen. Alan Cayetano: (a) how much of total PH land area is actively mined, (b) beach resorts, how much of total coastal land of the PH have beach resorts, (c) what are the standards and criteria for her recent orders on mine closure — she could not answer.

3. Questions on land multiple titles involving DENR corruption resulting in perennial land grabbing problem raised by 3 Congressmen, what she’s doing about it in her 10 months in office, she was clueless, no specific answer, only generalized ones like “we are cleaning up the department” or “we are computerizing things.” She can suspend or close down many mining firms that follow certain regulations but she cannot suspend or kick out any corrupt officials in her department the past 10 months.

4. Question on very dirty rivers like Marilao river, Pasig river, she answered “structural problems” daw, despite heading the Pasig river clean up commission. She has no specific plans to clean up these rivers.

5. Questions on unabated logging, she has no clear answer.

6. Questions on legal basis, what existing laws, as basis for her recent AOs (Administrative Orders) on P2M/hectare of “disturbed” agri land as deposit — no answer. She argued “my prerogative” as Secretary.  Congw. Josephine Sato who insisted on this issue is very specific in her points — “we are a nation of laws, not of men”. Our actions and policies should be based on existing laws, not on whims of men/women leaders. Bright legislator.

DENR work is more than mining. She’s very hard-working, very passionate, only in anti-mining campaigns. But she’s lazy on other mandates of the DENR. Gina's big problem is her big ego.

I liked Congw. Sato’s rejection of Gina’s “my prerogative as Secretary” answer to her question. Department Secretaries cannot legislate on their own, otherwise Secretaries of DA, DOTC, DPWH, DSWD, DAR, etc. can just issue dozens of AOs or Department circulars (DCS) creating new prohibitions and regulations, new fines and penalties, new subsidies and entitlements — all bypassing Congress as legislative body.

PDu30 made a mistake in appointing her as DENR Secretary even without fully scrutinizing her work ethics, her technical skills. Du30 corrected this mistake by not defending her at the CA.

People who oppose mining and argue “zero mining” are as confused as the people who say “zero fossil fuel”. These people should be riding bicycles or skateboards or just walking/running, or riding horses, cows, ponies. They should not ride cars, jeeps, buses, airplanes, ships because all these use fossil fuels 100%.

People who say “zero mining” don’t want to live in caves. Even barong-barong use mining products like nails, hammer, saw, bolo, etc. Hypocrisy always finds some scapegoats like the “oligarchs”, as if the Lopezes are not oligarchs.

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Last Monday, May 08, former AFP Chief Roy Cimatu was appointed as new DENR Secretary by President Duterte. A retired soldier, then labor diplomat in the Middle East, and now a DENR chief.

Perhaps near-zero official experience in managing an environment agency except in some tree planting activities of the AFP, his appointment is a guessing game for many sectors under DENR supervision — mining, forestry, solid waste, air pollution, coastal resources, rivers/lakes/sea water quality, land titling, etc.

Since all Cabinet posts are political appointees of the President, then it is assumed that the major policies of the appointed Secretary are also the policies of the President.

I am not a fan of “good governance” in a BIG government because it is a contradiction in terms. Big government almost always lead to bad governance because government would over-extend its power of coercion. Like creating a dozen new regulations on top of hundreds of regulations, laws and prohibitions that are already in place. That is what former DENR Secretary Gina Lopez did, creating new department regulations (administrative orders (AOs), department circulars (DCs), etc.) that pile up new requirements on top of existing ones, resulting in the closure and/or suspension of many mining firms.

The big question now is whether the new DENR Secretary will focus on the rule of law, enforce existing laws and regulations before creating new department orders or seek new laws in Congress. Like the laws regulating small-scale mines and quarrying equally implemented as the laws regulating large-scale metallic, non-metallic mines and quarrying.

This act alone of focusing on the rule of law will be a big improvement in the department and in the national government as a whole. A better situation of course is that many existing regulations that are “out of tune” are abolished, or consolidated with others so that instead of having 10 “out of tunes” AOs, DCs and other department orders, they are consolidated into one AO that is more “in tune” with the times.

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See also: 

Mining 48, Sec. Gina Lopez's rants, DENR inaction in other sectors, April 08, 2017 

Mining 49, Ma'am Monsod on poverty in mining areas, April 12, 2017 

Mining 50, Canada mining taxation, April 21, 2017 

BWorld 129, Open pit mines and the DENR Secretary, May 12, 2017

BWorld 129, Open pit mines and the DENR Secretary

* This is my article in BusinessWorld on May 02, 2017.

Department of Environment and Natural Resources (DENR) Secretary, Ms. Gina Lopez, created a stir with the issuance of DENR AO (Administrative Order) No. 2017-10, banning all prospective “open-pit method of mining for copper, gold, silver, and complex ores.”

  

To be excluded in her AO are existing open-pit mining (OPM) of metals, existing quarries, and prospective quarries for non-metallic products like granite, marbles, and limestone.

The reason for the new order is that OPM by large metallic firms is destructive to the environment and that the method is already being avoided by many countries around the world.

This is not true, for three reasons.

One, almost all forms of deforestation or land conversion from forest to non-forest uses (agriculture, housing, commercial and industrial development, road construction, quarrying of non-metallic products, etc.) create damage to the natural environment and yet only large metallic mining is singled out.

Two, OPM concentrates metallic extraction in a few thousand hectares of land and spare millions of hectares of reservation from further disturbance and extraction.

Three, OPM continues to be practiced in many countries including developed ones like the US, Australia, Sweden, and Canada. Because mining firms and their stockholders earn substantial incomes, their governments get huge tax revenues, and many workers get long-term high-paying jobs.

What Ms. Lopez will likely do among others, if she is confirmed by the Congressional Commission on Appointment (CA) as DENR Secretary:

1. Enforce and implement the closure of 22 large metallic mines and continue hiding the results of their so-called “audit” as basis for such closure order. This is because the Mining and Geosciences Bureau (MGB) conducts a quarterly review of all mining firms based on technical criteria and its 4x a year assessment produce no recommendations of large-scale mine closure while the Secretary’s “audit” seems to be based on emotional criteria, hence it remains hidden.

2. Continue turning a blind eye on plenty of small-scale miners which operate more destructive open-pit mines to extract gold. About 80% of all gold purchases by the Bangko Sentral ng Pilipinas (BSP) are sourced from these small scale mines as gold output by large metallic mines is limited owing to regulations and prohibitions, if not outright closure orders.

3. Enforce and implement DENR AO 2017-10.

4. Create new AOs in the future that will ban and close existing OPM, producing another round of “audits” justifying such closure orders.

To avoid these and other uncertainties in the industry, the CA should consider rejecting her appointment. Let the President appoint a new DENR secretary.

The main purpose of government is to lay down rules and implement laws that apply to all, to institutionalize the rule of law that apply equally to unequal people and players,that exempt no one and rulers are prevented from making exemptions. Giving rulers and in this case a Cabinet secretary, the power to make exemptions is tantamount to the rule of men that despise the rule of law.

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See also: 

BWorld 122, Six more myths in the mining debate, April 13, 2017 

BWorld 126, Why mining is appropriate for certain areas and provinces, May 06, 2017 

BWorld 127, Economic freedom in Asia means faster growth, lower prices, May 07, 2017 

BWorld 128, The quest for more stable and cheaper electricity in the ASEAN, May 08, 2017

BWorld 126, Why mining is appropriate for certain areas and provinces

* This is my article in BusinessWorld on April 21, 2017.

Biodiversity of living things is more common in the tropics compared to those in the northern and southern hemisphere. Geological diversity of nonliving things is more common in the Pacific countries as there are more volcanic and earthquake movements in the “Pacific Rim of Fire” than the rest of the planet.

That is why for almost all commodities -- copper, gold, molybdenum, silver, nickel, bauxite, zinc, lead, etc. -- countries in the Asia-Pacific Economic Cooperation (APEC) are the dominant suppliers and exporters. Volcanic gases and molten rocks are the main producers of mineral products below the ground.

There is a good study on the mineral potentials of APEC economies published more than two years ago. Some definitions of the terms used in the table below:

1. Mineral rent is the difference between the value of production for a stock of minerals at world prices and their total costs of production.

2. Mining Contribution Index (MCI) is calculated based on aspects of mining and metals contribution to national economies, composite for three variables: (a) Mineral export contribution in 2010 as percent of total merchandise exports, (b) Increase/decrease in mineral export contribution 2005 to 2010, and; (c) Mineral production value as a percentage of GDP in 2010.

The above numbers show the following:

1. Countries on the “ring side” of the Pacific Rim generally have higher MCI -- Australia, Chile, Papua New Guinea, Peru -- than those a bit far from the Rim. Thus, while China has the biggest mining rent in 2013, it has low MCI.

2. The Philippines’ low mining rent and output is mainly a result of the policy and taxation environment that is generally not attractive to more big corporate mining but the country has high MCI. It is the world’s 2nd biggest producer of nickel, next only to Indonesia.

3. Employment in mining is generally low relative to total population because the industry is very capital intensive. Workers hardly use spades and other manual tools; they use huge trucks, loaders, bulldozers, and other machines. Thus, the Philippines’ 0.22% that is being looked down by many anti-mining groups as being “not job-creating enough” is actually higher than those in Indonesia, Canada, Mexico and USA.

The Philippines is one of the most mineral-rich countries in the planet, the archipelago being largely a product of volcanic movement rising from below the sea millions or billions of years ago. Thus, mining potential is very high even utilizing only a small portion -- less than 1% -- of the country’s total land area.

Recently, DENR Secretary Gina Lopez has launched a series of lectures and public fora advocating “more investments in biodiversity than in mining.” This is after she ordered the closure of 22 mines and suspended five others, and ordered a P2-million bond by mining companies per hectare of “disturbed” agricultural lands before they can haul their mineral stockpiles.

The Secretary has not produced any realistic numbers of biodiversity investments while the Chamber of Mines of the Philippines (CoMP) has projected at least $30 billion of big mining investments in the next 10 years if the policy environment has improved and stabilized.

In my agro-forestry farming experience in a farm in Bugallon, Pangasinan since two and a half decades ago, I saw how mahogany trees we planted would grow well in a relatively rich soil but would have stunted growth, many even die, just about 50-100 meters away in land with high silica deposit and potentials. This further shows that mineral-rich lands and mountains are generally less conducive for agriculture and even for forestry because the soil has very low nitrogen and phosphorous levels.

The government should optimize the high mining potential of the Philippines -- to create more jobs, generate more exports and economic output, give more community projects that mining companies are mandated to provide.

Big government presence in mining is justified only in laying down rules that apply to all, big and small-scale miners. Big mining companies in particular are expected to strictly follow existing rules especially those provided by the Mining Act of 1995.

Beyond that, there should be less government interventions and taxation, there should be less political harassment and business uncertainty, especially with many mining closures and suspensions.

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See also: 

BWorld 122, Six more myths in the mining debate, April 13, 2017 

BWorld 123, Drug-related murders and criminal justice in Asia, April 23, 2017 

BWorld 124, On Grab, Uber, traffic and LTFRB, May 05, 2017 

BWorld 125, On the retail competition and open access (RCOA) and EPIRA, May 05, 2017

BWorld 122, Six more myths in the mining debate

* This is my article in BusinessWorld last March 29, 2017.

A piece that I wrote for this space, “Seven myths in the mining debate” (March 15), has attracted attention from many readers, expressing either support or disagreement. One even sent an angry comment via e-mail. So I will add additional myths in the continuing debate on the issue.

To review, here are the seven myths discussed in the earlier article:

1. Mining contributes small, only P70 billion a year in gross value added (GVA).

2. Mining tax payment is small at only P3 billion a year.

3. Employment share of mining is very small at only around 100,000 workers.

4. Very small benefits, better stop all mining activities.

5. Open pit mining must be banned anywhere.

6. Closure of many mining firms means better investment environment.

7. Mining is entirely useless, we should have none of it.

HERE ARE ADDITIONAL MYTHS.

1 Large-scale mining covers a huge area of the Philippines.

Wrong. Only 2.3% of the Philippines’ total land area is covered by mining permits composed of 319 Mineral Production Sharing Agreement (MPSA) and five Financial or Technical Assistance Agreement (FTAA). Of this figure, only 0.27% of land area is actively mined, the rest are for roads, offices, houses, hospitals, schools, other community projects; mined out and rehabilitated areas, or for future mining. (See table.) 

What made the impression of “huge mining areas” include those under small scale mines (SSM) like in Mt. Diwalwal.

2 Large-scale mining is the biggest cause of soil erosion.

Wrong. Very often, it is deforestation or conversion of forest land into pasture land, agriculture land, or simply the endless cutting of trees in public forests.

The DENR is not exactly known to efficiently address these problems because it prefers to take more political noise in mining.

3 More mining areas result in more poverty.

Generally wrong. The top 20 poorest provinces in the Philippines and their poverty incidence are: (1) Tawi-Tawi 78.9%, (2) Zamboanga Del Norte 63.0%, (3) Maguindanao 62.0%, (4) Apayao 57.5%, (5) Surigao Del Norte 53.2%, (6) Lanao Del Sur 52.5%, (7) Northern Samar 52.2%, (8) Masbate 51.0%, (9) Abra 50.1%, and (10) Misamis Occidental 48.8%.

(11) Agusan Del Sur 48.7%, (12) Oriental Mindoro 47.1%, (13) Sulu 46.5%, (13) Occidental Mindoro 46.5%, (15) Kalinga 45.8%, (16) Surigao Del Sur 45.4%, (17) Mountain Province 45.0%, (18) Sarangani 44.8%, (19) Lanao Del Norte 44.1%, and (20) Negros Oriental 43.7%. (Source: NEDA, Philippine Development Plan 2017-2022).

Of these, only five host big mining companies (with an area of at least 4,000 hectares): Zamboanga del Norte (2 firms), Surigao del Norte (5 firms), Surigao del Sur (3 firms), and Mindoro Occidental and Oriental (2 firms).

These 21 provinces hosting big mining companies (at least 4,000 hectares) are not in the Top 20 poorest:, Zamboanga del Sur (Siennalyn Gold, TVI, 168 Ferum, Vilor), Sultan Kudarat (GRCO Isulan), Agusan del Norte (Agata), Davao Oriental (Hallmark, Austral-Asia Link, Dabawenyo Minerals, Sinophil, Oro East), Dinagat Islands (East Coast), Compostela Valley (Napnapan), Sarangani (Hard Rock).

Capiz and Iloilo (Teresa Marble, Parvis Gold,), Samar (Alumina, Bauxite), Leyte (Explosive Consult., Fastem Construction, Strong Built), Palawan (C. Palawan, Palawan Star, Pyramid Hill, Narra Nickel), Quezon and Camarines Sur (VIL Mines), Benguet (Philex), Zambales (Mina Tierra, Eramen), Cagayan (Peniel, JVDC, T&T, J&M), Nueva Vizcaya and Quirino (Oceana Gold), Ilocos Sur and Pangasinan (Altamina Exploration).

4 Mining can stop in the Philippines but continues in other countries.

Wrong. Mining is either good or bad; if bad then mining should stop worldwide, the same way that anti-coal campaigners want all coal power plants to close worldwide, not just in the Philippines. If mining is good abroad then the good practices should be adopted here. The law in post-Marcopper mining disaster in Marinduque, the Philippine Mining Act of 1995 has been hailed by many countries as the one of the world’s first stringent mining laws.

5 Open pit mines are destructive and not done in developed countries.

Wrong. Six of the 10 biggest and deepest open mines in the world are found in the US (Bingham Canyon, Hull-Rust-Mahoning), Canada (Diavik Diamond), Australia (Super Pit) and Russia (Mir Diamond Mine, Udachny Diamond). The other four are found in S. Africa (Kimberly Diamond), Indonesia (Grasberg Mine), and Chile (Chuquicamata Copper, Escondida Copper).

6 DENR Secretary’s closure of mining firms follows the rule of law.

Wrong. Secretary Gina Lopez has disregarded procedures and even the recommendations of her technical staff. As pointed out by Rep. Josephine Sato, “We are the legislature; if you’re not happy with the law tell us we will review and revise if necessary but you can’t legislate on your own...”

Mining practices that follow international and national regulations should continue and contribute to economic modernization and job creation. Those that violate these laws deserve suspension or closure.

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See also: 

BWorld 19, Taxation and regulations in PH mining industry, September 24, 2015

BWorld 119, Seven myths in the mining debate, April 07, 2017

BWorld 120, Five myths of solar-wind energy, April 08, 2017 

BWorld 121, The PH tax reform bill and tax policies in East Asia, April 10, 2017

Mining 48, Sec. Gina Lopez's rants, DENR inaction in other sectors

The other day, DENR Secretary Gina Lopez was recorded belittling a BWorld reporter as ...

http://www.bworldonline.com/content.php?section=Nation&title=denr&8217s-lopez-defends-new-mining-directive-as-she-accuses-ibwi-reporter-of-&145being-bought&8217&id=143441

http://www.gmanetwork.com/news/story/606173/news/nation/gina-lopez-recorded-telling-reporter-you-re-just-a-f-ing-employee

http://interaksyon.com/business/138315/quizzed-on-mining-directive-gina-lopez-vents-ire-on-bw-reporter-youre-just-a-f---ing-employee

The issue is Sec. Lopez's new order requiring mining companies to pay P2 million/hectare for farmlands that are affected by mining, the BWorld reporter asked her about this and related issues and the Secretary lost her temper.  I did not see the new order but offhand, how can the DENR prove which farms are "disadvantaged", at what extent or level, vs those that are not adversely affected?

When this was reported in the news, she was upset, or angry. Well, she is angry that her hypocrisy is recorded and publicized. In public she portrays herself as a caring person but in private she can be a b__c but people should not record and report it. But reporters always record their interviews whether in a formal press conference or informal "press ambush" while walking.

Here is the backlash.

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Other DENR concerns that Ms. Lopez seems to ignore.

These are the mountains in western Pangasinan (municipalities of Aguilar, Bugallon, Labrador), I took this photo just 2 weeks ago. Is Sec. Gina Lopez going there making video behind those bald mountains asking "what have we done for the future, the future?"

No, of course. Why? Because there are no big mining companies to blame there. The DENR and LGU people are not doing enough to stop the regular cutting and stealing of trees in public forest land.

A mountain just behind the NGCP station in Labrador, Pangasinan, photo also taken 2 weeks ago. This is a "public forest land", no big mining or big logging activity there. Would the "passionate" Lopez  go there and record a video lambast the people who regularly steal whatever regenerating trees there? Nope, no media mileage or political pogi point kasi walang mining firm na pweding birahin at sisihin.

Another non-work of "passionate" Lopez. Manila Bay, Paranaque area, article dated February 18, 2017, file photo June 8, 2013.

http://www.telesurtv.net/english/opinion/We-are-Turning-the-Oceans-into-Plastic-Waste-Dumps-20150218-0052.html

Marilao river, Bulacan. Date of article May 24, 2016. Would the Secretary go there and make a video attacking some companies? Nope, there are no mining firms to blame for siltation-pollution-environmental destruction of the river.

http://2016.mb.com.ph/2016/05/24/its-time-marilao-meycauayan-rivers-are-cleaned-up-says-gov/

This is a river in our barrio in Cadiz City, Negros Occ. Until about 25 yrs or more, the river width was 2x to 3x its current width. Large-scale soil erosion due to sugarcane farming upstream. Because of the narrower river, there is frequent flooding in the area, yearly, several times a year flooding.

This is obviously outside the work of DENR, this is DA, DPWH and LGU work. But it shows that large-scale soil erosion can be caused by agriculture, frequent tilling of land. I took this photo last month.

If government is to be strict in its environmental laws, it should be strict in all sectors and sub-sectors: big and small-scale mining, big and small-scale logging, tilling of farmlands, protection of rivers from solid wastes and huge soil erosion, and so on. Government should not pick just a few sectors for strict compliance and ignore the others.

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See also:

Mining 45, Presentation at UP Diliman, October 02, 2015

Mining 46, The new DENR Secretary and other watermelon activists, July 07, 2016 

Mining 47, JB Baylon on the DENR Secretary, March 01, 2017

Mining 47, JB Baylon on the DENR Secretary

I am reposting here two of JB Baylon's facebook postings about the new DENR Secretary Gina Lopez and the mining industry. These 2 papers were posted by JB last February 26. 

For me, there are two issues here in the on-going controversial policies of Sec. Lopez: (1) heavy government regulations and taxation of the mining industry, and (2) rule of law, when government revokes the mining/business permits that itself has granted.

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AN OPEN LETTER TO THE CBCP

It seems that some members of your ranks are raising the flag of LAUDATO SI to call for the confirmation of the DENR secretary designate.

Please ask these individuals to make sure they have read it and read it well.

Because if they did they should have noticed this:

1. The Holy Father mentions mining directly ONLY ONCE - on Paragraph 51 where he rails against the harm caused by mercury pollution in gold mining and sulphur dioxide pollution in copper mining.

That's in one line in one paragraph out of 246.

2. But the Holy Father mentions "impulsive and wasteful" consumption (par 162), "scandalous level of conusmption" (par 172), the need to modify consumption (par 180) over THIRTY TIMES!!

That's THIRTY TIMES versus ONCE.

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WHY SHE IS A BAD CHOICE EVEN IF SHE IS A LOPEZ

(Or maybe because she is one?)

SHE SAYS: : mining is damaging our environment! If you love your country, really really love your country, you should be against mining. The environment is more important than the money the miners make!

THE TRUTH: mining covers less than 3% of our TOTAL LAND AREA - so if as she claims that mining does damage the environment in 3% of the country. who inflicts the damage on the rest, on the 97%???

But more importantly RESPONSIBLE MINING means PROGRESSIVE REHABILITATION... and over the last five or so years mining firms have planted over 20 MILLION TREES nationwide.

Not to mention coral reef rehab.

Finally she has not acted against illegal mining especiallly the small scale operations that pollute the environment, are not required to rehabilitate their mining areas and do not pay taxes properly!

SHE SAYS: Mining makes communities poor. Look at Caraga it remains the poorest region in the country!

THE TRUTH: Mining communities are far better off with responsible mining that brings electricity, schools, Clinics, scholarships, roads and other businesses. Mining firms spend BILLIONS to fill the void that Government misses in remote areas. Without mining, the residents of these otherwise remote communities will have to fall back on subsistence farming or subsistence fishing. Most mining areas are inhospitable areas or areas whose soil is not loam soil that is perfect for agriculture.

Without mining they won't be poor - they'll be dirt poor!

SHE SAYS: There is no such thing as RESPONSIBLE MINING.

THE TRUTH: On her first day in office (July 1) she was told by Leo Jasareno that all mining firms had to undergo ISO 14001 certification which is the HIGHEST international standard. She hailed ISO 14001 as "another way of saying responsible mining." But maybe the next day she found out that most mining operations obtained their ISO 14001 certifications - so she scrapped that and conducted her own audit. But if ISO 14001 is the HIGHEST standard, then her audit has LOWER STANDARDS, yes?

SHE SAYS: Embrace Laudato Si, the Papal Encyclical on Climate Change! Those against mining use Laudato Si to condemn the industry.

THE TRUTH: Laudato Si is made up of 246 paragraphs. The Holy Father only mentions mining ONCE, in paragraph 51. But he lambasts wasteful and shameful consumption more than 30 times and points out that MEDIA fuels the consumption mindset.

She should be LAUDED for her passion.

But she should be REJECTED for the position she aspires for because her PASSION colors her MINDSET.

Just because she is passionate and a Lopez do not make her a good choice to be Secretary of the Environment and Natural Resources.

We need a better one/ someone who knows the Law, is incorruptible, has a fear of God and is no-nonsense. Like lawyer Tony LaViña or geologist Caloy Arcilla. You cant run circles around either of them even if you tried.

Reject Gina Lopez.

Let the DENR's loss be the ABS CBN Foundation's gain!

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See also:

Mining 44, Presentation at the Mining 2015 Conference, September 17, 2015 

Mining 45, Presentation at UP Diliman, October 02, 2015

BWorld 19, Taxation and regulations in PH mining industry, September 24, 2015 

Mining 46, The new DENR Secretary and other watermelon activists, July 07, 2016

Energy 42, DENR's anti-coal alarmism and PH power demand realities

A weird news about the DENR last week. It says,

Environment and Natural Resources Secretary Ramon J. P. Paje said yesterday that he wrote a letter to the DoE seeking a halt to approvals for coal-fired projects.

“I have my letter to the Department of Energy urging them not to grant any more” permits, Mr. Paje said during the budget briefing of the Department of Environment and Natural Resources (DENR) at the House of Representatives.

“Our position is that in any country, the power mix must not go beyond 35% or 33% of one power source. If they continue pursuing coal, according to the secretary of DoE herself, she said it can go up to 70%.”

This means that the Philippines has no right to cheaper and more stable electricity sources? We have the second highest electricity prices in Asia already, next to Japan, and coal power is cheap compared to oil and the renewables, so why should that power source be restricted?

It is a wrong move or policy by the DENR. It is not possible for the Philippines to grow faster if its electricity prices remain expensive and there is regular power disruptions and brown outs, especially in Mindanao.

Here are some recent reports about power development in Mindanao and the Visayas.

 From the August 17 report,

“The share of fossil fuels in the energy mix is rising from a mix of 45% fossil and 55% renewable energy (RE) in 2015 to 67% fossil and only 33% renewable energy-sourced power by 2017,” said Romeo M. Montenegro, director of investment promotions and public affairs of the Mindanao Development Authority (MinDA). The other fossil sources are diesel-powered generation plants.

And from the February 04 report,

The entire plant is slated for commercial operations in 2018.

The project site for the project was acquired in December 2011 and an environmental compliance certificate for the plant was secured in May 2013.

Therma Visayas, the project proponent, is majority owned by AboitizPower with its 80% interest.

Vivant Energy, a subsidiary of listed Vivant Corp., on the other hand, holds the remaining 20%.

Government, through the DENR, DOE, local government units (LGUs) and other agencies, should step back from imposing more regulations as to what power plants should be curtailed and be subsidized. If the government is serious in having fast and sustainable growth, cheaper and stable electricity is among the most important prerequisites. Energy development precedes economic growth.
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See also: 

Energy Econ 38, Solar Power in Germany and in Cadiz City, Negros Occidental, June 15, 2015 

Energy Econ 39, the UPSE-Ayala forum on the PH power sector, July 25, 2015 

Energy 40, DOE Circular No. DC2015-06-0008, August 03, 2015

Energy 41, On low global oil prices, September 05, 2015

BWorld 15, The PH electricity market, August 15, 2015  

BWorld 17, More on the Philippine electricity market, August 30, 2015

Wasteful DENR Reforestations

When I was working at the House of Representatives (HOR) from 1991 to 1999, I would attend many Committee hearings. Among those that I followed in the early 90s was the implementation of various large-scale government (DENR, LGUs, etc.) reforestation programs in the country, funding and loans coming from the ADB, OECF (Japan government), World Bank and other foreign aid bodies. The impression I got then was that there was huge money involved, there were lots of  reforestation projects with little or even zero monitoring if the seedlings indeed became trees, or the planting was only for photo-ops, submit reports and get the money.

Year in and year out, decades upon decades, the cycle is repeated. Most or majority of DENR-implemented reforestation projects are wasteful. One example is the annual reforestation of degraded uplands adjacent to our farm in Bugallon, Pangasinan. Every year, no exception, there are tree planting there, for many years and decades since the 80s or even the 70s. And every year, the scene is the same -- degraded upland with more cogon and other tall grasses than trees. Most of the trees that survive are naturally-growing species and not planted.

Below are the "left-over" seedlings that may no longer be planted in the uplands. The DENR and its contracted cooperative or planters deposited these seedlings in our farm, to be transported and planted in the uplands. I took these photos last Friday, October 18, 2014. It is no longer advisable to do tree planting at this time of the year because the rainy season will end soon. The contracted workers who should carry these potted seedlings up to the hills and mountain simply pulled the black plastic along with the soil in it. They only carried the uprooted seedlings, so they will be lighter to carry. This practice immediately injures the roots of the seedlings and would endanger their survival in the harsh environment in the uplands.

The uprooted seedlings were either planted, or they may have been thrown away, no one knows except the contracted and paid workers. These were mostly acacia auri and kakawate or madre de cacao.

There are several hundreds, possibly a few thousands, of unplanted seedlings there. They will never be planted and even if these will be planted in the uplands, their chance of survival will be very low. The best months to plant would be in June-July as there are plenty of rains, allowing the seedlings to establish stronger roots and body. Assuming of course that the crawling and choking vines and tall grasses around them are cleared regularly.

I do not know how much money was spent by the DENR, or by some foreign aid agencies that give grants or lend money to the PH government to be implemented by the DENR and LGUs, for this project alone.

Despite annual government reforestations and tree planting programs (DENR, LGUs, other agencies) in the uplands of this part of the country for decades, the uplands and public "forest land" remain degraded. Photo below I took April this year, just adjacent to our farm.

Top tree killers in the uplands are (a) choking vines, (b) grass fires occurring almost yearly, and (c) people who steal and cut the trees for charcoal, firewood, lumber and other uses. Below, another part of the "public forest land".

Lots of spending and government borrowings, yes. Lots of new forest, no. Really inefficient and wasteful way to spend taxpayers' money.
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See also:
Free Market Environmentalism, June 17, 2014
http://sustaindevelopment.blogspot.com/