Growth in Them Thar Hills

My first glimpse of a mine was, appropriately enough, from Mines View in Baguio City when I was a young teen. Having no interest in tacky souvenirs, I chose to spend my time on the observation deck while my family did their tourist shopping. (Me, I was saving my money for the used books on sale at the public market.)

As the cool breeze wafting over me heightened the idyllic mood that afternoon, I gazed idly upon the mining colony in the distance that gave the place its name, and I imagined I could hear the clink of pickaxes on rock. (I had not known at the time that I was looking at abandoned mines . . .)

As I turned to go I saw something that made me think I was hallucinating.  On the side of a large mound not far from the tourist shops was a hole that was large enough for me to walk through standing up. Odd: I didn’t think there were any mines that close. Stupid kid that I was, I went inside.

As I squelched in the mud (thereby effectively nullifying the shoeshine I had earlier) I advanced down a tunnel, all the while fantasizing that I was exploring some cave from my Dungeons & Dragons pencil and paper game. There was a faint light a few meters away and I made my way towards it until I heard voices. Still in my fantasy world, I edged closer to try to listen in on what they were saying without being spotted. . .

Unfortunately, they were speaking in the local dialect, so I decided it was time for me to head back. I wasn’t afraid of being captured by orcs and fed to trolls or even of a cave-in, but more of being hauled off to the precinct for trespassing.

That semi-adventure imbued in me some silly belief that I could tolerate, if not thrive in, a life under the earth. I often fantasized digging some unidentified ore from the cave walls and getting rich off it.

Aside from an occasional mention in our Social Studies class, mining didn’t enter my consciousness again until many years later when I was working for a call center. To establish rapport with my customer, I learned that he was into buying gold. He wanted to know what gold mining was like in the Philippines, and I said something about it being the domain of small miners.

Years later I ran into a former classmate from my Diplomate in Teaching class. She was to meet a fellow teacher who, it turns out, taught at the Philex Mines Elementary School in Padcal, Benguet. My mind returned to that day on the rugged hewn slopes of Mines View. I pictured a rough and ready pioneer schoolmarm with ropy arms and calloused hands amidst those slopes. When she finally showed up I had to conceal my surprise as I greeted her. (I apologize for not recalling her name.) She looked so delicate and tiny – sorry, petite – that a stiff breeze would have blown her away. I felt self-conscious as my classmate and I held our sandwiches while Teacher cut hers daintily with a knife, primly dabbing her lips at every bite.

My friend remarked how Teacher hadn’t changed since the last time they met more than three years ago. “Must be the mountain air,” I piped in, feeling all-knowing.

“But look at me,” my friend lamented. “I’m looking older than my age. The job is okay, but life in Metro Manila will wear anyone out.”

“How is it with you,” I asked Teacher, as my mind’s eye saw her scaling muddy crags and crossing rickety bamboo footbridges every morning to get to school.

As it turned out, Teacher made residence within the same Philex Mines compound. She showed me a small photo album (no Instagram then) of the employee’s residence, a two-storey concrete affair. As I thumbed through her album she pointed out the various features. In addition to the elementary school there was also the Philex St. Louis High School which has graduated more than 40,000 students since it began in the 70s. (Philex Elementary graduated more than 100,000 since the 60s.) Far from being ramshackle structures, they were not much different from the private school I attended in the city. She didn't have to travel very far for other needs, either, because the nearby Padcal community had everything residents needed.

I thought that was impressive enough until I remembered why my classmate was meeting Teacher. They needed to coordinate for Philex’s Adopt-a-School program. In addition to their own schools, Philex assists in the upkeep and rehabilitation of other schools in both host Padcal as well as neighboring communities.

Fast forward to the present. While doing research for the region where I was stationed I happened across the list of Human Development Index in the Philippines. HDI, to put it simply, is a measure of how well one’s needs are met as far as basic necessities go, or as the United Nations Development Programme puts it, is “a summary measure of average achievement in key dimensions of human development: a long and healthy life, being knowledgeable and have a decent standard of living.”

I expected Metro Manila to be at the top of the list but it wasn’t. The frontrunner, the region with the highest and most complete standard of living is – Benguet! (Data as of 2009/)

Seriously?! All that from strawberries and wooden figurines in barrels? No, it was from Mining. (The ‘perfect score’ for HDI is a 1. Benguet is 0.883 and Metro Manila was second at 0.837).

Here I learned about the so-called multiplier effect, which is basically the benefits that a business generates reaching the surrounding areas. Economist Bernardo Villegas a professor and senior vice-president at the University of Asia and the Pacific (UA&P), the Chairman of the Center for Research and Communication, a member of the Board of Trustees of the Makati Business Club, reveals that the benefits of mining to national development are not only from the minerals dug up, not even from tax revenues and export earnings. He points out that mining also means employment generation, which in turn fuels small and medium scale industries to cater to those wage earners’ consumption of goods and services. Mining communities like Philex typically have advanced educational, livelihood and medical facilities (Many of Teacher's pupils had been born in the Philex-run Sto. Nino private hospital in Padcal). Villegas compares mining to the outsourcing industry with links to other industries and even infrastructure, (Before Philex, there were no roads and no electricity going to those far-flung communities, Teacher had said.)

To express it in the simplest mathematical terms, said Villegas, for every P1 demanded of the mining industry, P2.60 goes into the national economy. That’s more than double and a half return of investment! Others like Canada, South Africa and even Malaysia have built their industry around mining. We can surely match that. If mining in this country is fully developed, we have a good chance of eradicating poverty and the damage done by this administration and others within this generation!

The mining industry is currently governed by the Mining Act of 1995 which covers all aspects of the industry from taxation to even environmental protection. (I remember one of Teacher’s photos which showed her and other Philex employees participating in their regular greening project. Not only did they perform tree-planting in mined-out areas, but they went so far as to plant in areas that never had trees.)

I was astounded to further learn that the Philippines has the second largest untapped gold deposits in the world. Our little archipelago with all that gold! (Philex mines in Padcal mines both gold and copper. Hardly the small outfit my uninformed mouth blurted out long ago.)

But now there is some tarnish in that golden future. In 2012 President Benigno Simeon Aquino, Jr, signed Executive Order 79 which in effect taxes mining twice. This scheme was the brainchild of the Mining Industry Coordinating Council created by Aquino based on the belief that the 2% excise tax of mining is too little. Despite the name, MICC is actually a multi-sectoral group which includes not only representatives of the mining industry, but also those from non-governmental organizations associated with militant mass action (read, leftists) and cabinet members who are more politicians than technocrats and who have no knowledge of mining.

Predictably, the bleeding-heart leftists played the environment card, and predictably, the populist Aquino administration whose hunger for brownie points is only matched by its lack of technical expertise, jumped at the chance. The environmentaleftists attacks are predicated on the centuries-old tactic that it’s easier to attack the law abiding miners who follow environmental laws (or even those who go one better, like Philex greening new areas) than it is to arrest illegal miners (no longer small-scale with their heavy equipment) who pay no taxes and ignore the environment and are protected by corrupt local officials. With all the energy they expend in protest actions, the radicals have not once spoken out against the illegal miners, their favorite targets being the registered mining companies like Philex, Atlas, Lepanto, etc.. C'mon, these self-styled environmentalists haven't even planted a single tree! Our government totally devoid of political will is only too willing to take this lazy way, too of penalizing the law-abiding..

Executive Order 79 or for that matter, any mining legislation under Aquino only spells disaster for the industry. He blindly believes the radicals' claims of environmental destruction at the expense of - get this - tourism. Tourism in a country riddled with corruption, rotten infrastructure and crime.  

Despite presentations of the industry representatives that the current Mining Act is on a par, if not better than comparable legislation worldwide in terms of environmental protection, community development, workers welfare and yes, taxation, their input was ignored by the politicians chairing the Council and the MICC plan railroaded through.

If there is anything wrong with the Mining Act of 1995, it is that like many Philippine laws, implementation is a joke, particularly in the prevention of illegal mining. And like other poorly-enforced laws, the kneejerk solution is to try to change it with a new law, which E.O. 79 threatens to do.

The plan, the miners say, will only result in taxing the industry to death. (It goes without saying that the illegal miners will remain unaffected.) But before that happens whatever benefits the multiplier effect distributed will wither away under the burden of punitive taxation. The mining industry is in a delicate balance as it is, requiring confidence in long-term investments in a market that could go either way at any time with the vagaries of world metal prices and currencies, among others. The last thing it needs is more taxes.

The leftists don’t really care about increased revenue or the multiplier effect. Taxing the industry to death is exactly what they had in mind. Their leftist dialectic demands the eradication of all private enterprise in favor of state control, which they will inevitably push for once private sector mining collapses. And there’s a good chance that they may get it.

Currently, there is an Aquino-initiated moratorium on all new mining. This and the impending catastrophe of EO 79 caused investors to shun Philippine mining.  The past few years have seen negative growth in the industry. Our vast, shining untapped wealth estimated at trillions of dollars remains hidden under the proverbial bushel.  And while Aquino likes to crow about the supposed increase in Foreign Direct Investments, he conveniently leaves out the part that our FDIs are still the lowest in all of Southeast Asia. Worse, a drop of 71% was noted this quarter.
  
It is the cruellest of ironies that one of the buzzwords of the Aquino administration was ‘inclusive growth’, yet the moratorium and his E.O. 79 threaten to strangle the multiplier effect.

The Chamber of Commerce of Canada has already warned against the passage of E.O. 79, which is now only awaiting Congress approval. It remains to be seen whether the Noynoy administration will finally be our economic Messiah and quash the EO or will it remain true to form as self-righteous Pharisees, blaming all but their own house.