No to Mining? Ah, basta . . .

One afternoon in my younger years I accompanied my father to purchase a treadmill for the family. The address in the newspaper clipping led us to a private residence. Since the gate was open we walked right in and knocked on the screen door. There was no response. Several repeated attempts brought no result.  Even calling out accomplished nothing. We knew we had the right place because of the sign at the door.

Finally, I pulled the screen door open and walked in, calling out. Eventually the owner emerged and we made our purchase.

On the way out my dad was furious. “You don’t just walk into other people’s houses!” he snarled.

“But no one was answering,” I protested.

“Well, you just don’t do that!” He shot back.

“So what should I do, then,” I asked.

Instead of a reply my dad growled something unintelligible under his breath, then angrily muttered: “What should I do…what should I do…” in that unique mocking tone older people use when the only rejoinder they can think of is to mimic you.

I came away from that experience with a mixture of vindication and frustration. With all due respect to my father, may he rest in peace, I felt a young punk's smugness at the time because I was apparently in the right even if my father would not admit to it. On the other hand, I was sick and tired at the realization that I live in a society that is all the time telling me what I SHOULDN’T do but hasn't the foggiest idea what I SHOULD do.

In an opinion piece in the Philippine Daily Inquirer entitled Forbidden, author Michael L. Tan believes ‘We are a nation of “bawal” (“do not”).  Look around and see how we are surrounded by bawal signs: Bawal pumasok, bawal umihi dito, bawal manigarilyo, even bawal mag-istambay (Do not enter, do not urinate here, do not smoke, do not “stand by”).

Tan attributes this to our history under a puritanical church and a succession of authoritarian governments since colonial times, so it is no wonder we are a ban-happy nation. We even have seasonal bans, like liquor and gun bans during election season. (Though apparently perpertrators of election-related violence didn't get the memo...)

Well and good. I’m all for greater order. I have often fancied that I would be a model Filipino citizen in Singapore with all its bans, modesty aside.

But it would seem this fascination for forbidding instils the idea that banning something is the be-all and end-all. The ban mentality is by no means limited to people in authority. The daily news carries a regular staple of protestors carrying signs with words like Ibasura (Junk), No to.., and Out now. Even calls for such and such person to resign is demanding his or her junking.   

So are all these bans for a good cause? To answer that, I apply one simple Rule of Thumb born out of that experience with my late father:

CAN YOU PRESENT A PRACTICAL ALTERNATIVE?

It is not enough to say Ah, basta . . .  (a Pilipino expression which defies any literal English translation. Roughly, it means: Just don't...)

Sometimes alternatives are available. No smoking? Well smoke somewhere else or quit. No jaywalking? Use the crosswalk, Einstein. Gotta pee? Find a washroom or seek cover (or just cross your legs…).

But as we get less personal and more general in our objections, things get a little more complicated. I’ll support any call to stop corruption or military/police abuses. But other issues are less clear-cut.

Ban old jeepneys? They are one of my daily irritants, but unless someone can come up with a solution to our chronic lack of efficient transportation, then we're stuck with these dinosaurs and their equally troglodyte drivers.

Junk the Visiting Forces Agreement because of supposed abuses by visiting foreign military personnel? Okay, but what do we do if China or some rogue nation comes knocking? Fight them off with our military castoffs? Yes, the outrage against abuses is valid, without question. But the alternative is leaving the entire country nearly defenseless.

I was reminded of this mindset when Philex Mining recently bagged top honors among 263 Publicly-Listed Companies in Corporate Governance in the 2015 ASEAN Corporate Governance Awards.

And quite predictably, among the laudatory posts on social media came the cries of No to Mining!

Mining, the detractors claim, is responsible for environmental destruction and violation of human rights, especially those of the indigenous people.

Without question, there are some catastrophes where mining was involved. The recent tragedy of a powerful mudflow from an iron mine in Brazil is such an example. Even the much-lauded Philex Mining, long held as the standard bearer for responsible mining, was not spared when its tailings pond was breached by unprecedented torrential rains in August of 2012.

But to say that mining caused these evils would be like saying cars cause accidents. As a survivor of a hit and run, I do not blame the vehicle but the brain-dead primate who had been driving it.

The award for best in Corporate Governance doesn't just mean Philex was profitable. Here are some of the categories in the ASEAN Corporate Governance Scorecard:

Excerpts from ASEAN Corporate Governance Scorecard

Clearly, the ACGS takes the environment and communities very seriously, and in these, a mining company excelled over more than 200 other business establishments of different kinds in the entire ASEAN region. In addition, mining is a major contributor to inclusive growth and social benefits.

The irony is that those who attack mining on social media do so with laptops, PCs, tablets, cellphones and so forth, all items produced from the fruits of the very industry they malign, like copper, palladium, nickel, platinum, and even gold. Ditto with the microphones and bullhorns they use in their street protests. There's the iron for the nails and steel bars for the buildings they live and work in in and for the vehicles that brought them to the rally. With new technology, new uses for these minerals are discovered. Again, I pose the basic question:

If we ban mining, where do we get our minerals?

Get our minerals from other countries? There’s just two things wrong with that. One is that we use up valuable foreign reserves, not only paying more to have them shipped here, but enriching another country's economy instead of our own. Secondly is that this is an example of not in my backyard mentality: We ban mining because of the destruction it causes our country but it’s all right to patronize the industry (and thus, advance the supposed destruction) in other countries. Hypocrisy.

Nationalize the industry? (The leftists' answer to everything if not their ultimate aim.) How does government control make mining suddenly less prone to accidents? Moreso with this government which has thus far displayed an unprecedented level of ineptitude and corruption.

(In fact, a high-profile official in the ruling party is allegedly protecting a small-scale mining company engaged in over-extraction of nickel ore.)

To ban mining because of the carelessness and corruption of a few would be like banning kerosene lamps and candles because of fires. If we do ban mining then frankly, the only alternative I can think of is what Pol Pot of Cambodia had in mind: Move out of the urban areas and live like peasants in huts made from indigenous materials. If the haters of mining are prepared to do this, to discard their cellphones, computers and vehicles, then I salute them.

But in my experience, when you press the anti-mining forces for a viable alternative, all they can do is continue to rattle off a litany of the 'ills' of mining, topping the whole pile of non-sequitirs and sloganeering with their automaton-like mantra: No to Mining! Classic Ah, basta... mentality. Repeating the same thing over and over does not strengthen your argument, people. 

I don't doubt for a moment that there are mining companies less law-abiding than Philex. These are more often than not the illegal small-scale mining companies who are not the artisanal pick-and- shovel operations prescribed in RA 7076 Small Scale Mining Law, but major operators with heavy equipment. But being classified as small-scale grants them exemptions from the restrictions imposed upon major mining companies. The big mining companies comply with the Mining Act of 1995 which among other things provides for environmental and social protection and improvement. Philex even goes the extra mile of planting trees not only in mined-out areas as required by the Act but in places where trees never grew. 

Revised Implementing Rules and Regulations of the Mining Act of 1995
(Images by Jilyn Amoroso)

Yet these illegal companies that flout the law and do not pay proper taxes if at all are ignored not only by the authorities but by the anti-mining activists. There is more political currency in the populist line of attacking big business, tossing about inflammatory buzzwords like 'oligarchs' and 'destroyers of the environment', attributing the crimes of the illegal companies as representative of the entire industry. And predictably, the Aquino administration in its constant pursuit of popularity points swallows it whole by drafting Executive Order 79 which freezes all new mining contracts. It also promotes a revenue sharing scheme that increases taxation on mining which is already paying enough taxes, royalties and permits comparable to other mining countries. The new scheme would impose taxes that would eventually kill the industry, so the Canadian Chamber of Commerce of the Philippines warns. Mining is a high-risk venture for investors; it requires not only massive capital over an extended period of time but a long wait before the profits start coming in.  Even then, the market is extremely volatile. As of this writing, the industry is suffering from depressed metal prices in addition to restrictive legislation. To make it even more unpalatable with punitive taxation will drive away already wary investors.

(Check out this video on the stringent requirements imposed on major mining companies to keep them responsible.)

By all means, if a mining company, big or small, breaks the law, prosecute them. Even though Philex Mining was eventually cleared of negligence for their accident, they were still fined P189M, which they paid without complaint and ahead of schedule in addition to the P4B for cleanup and rehabilitation. Unsatisfied, the aforementioned activists declared the spill toxic, a claim debunked by reputable scientists (not the bogus one presented by the protestors). The leftists even went as far as to accuse the company of causing 'zero fish catch' in nearby Balog Creek while conveniently forgetting to mention that Balog Creek was not a fishing ground to begin with.

Don't punish the industry with lies, deception and generalization. Punish the perpetrators. We must break free of that mindset that when a law is poorly enforced, the answer is to draft more laws that will just burden the law abiding and be ignored by the lawbreakers. In effect, anti-mining legislation only clears the field of competition for the illegal miners and actually encourages the violations.

Enforcement of the existing law is the key. This goes for anything, be it mining, smoking, traffic, VFA abuses, etc.

With the Philippines being third in the world for gold reserves, and with US$840 Billion in untapped mineral wealth as per the US Department of State  , to say that we are sitting on a gold mine doesn't even begin to describe it. 

(Image from Chamber of Mines of the Philippines)

All that wealth just laying there untouched out of ignorance and promotion of political agenda will go a long way to paying our burdensome debt as well as enriching our nation.

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.