Alernative Policy Solutions for the Mining Issue in the Philippines

Policy Alternatives on the Mining issue in the PhilippinesBY: LAWRENCE LERIAS

1.1 Situational AnalysisA number of countries such as Canada, Brazil, Chile, Australia grew their economies because of mining.

Mining is a great economic booster. By attracting Foreign Direct Investments, Government can earn from the Mining Industry (excise tax) and at the same time create jobs right in the door steps of local communities.

However, for the past years that mining activities had been in operation, no substantial benefit for government and the local community has been realized.

Instead of development and positive benefits, government was left to deal with environment degradation and rehabilitation of local communities.

The dilemma in the Mining Sector is as broad as it is intertwined with corruption in government, economic development and cultural impact in local communities.

Boac River. Marcopper Mining Disaster, 1996

1.1 Situational AnalysisWhat brought about the problem?(Cause)

What brought about the issue is the public clamor for government to address the problem of; Environmental degradation Social injustice to local communities/indigenous people Corruption in government regulation/monitoring Lost revenue potential due to inefficient government policy Inequality in the playing field of mining sector (private enterprises)

1.1 Situational AnalysisWhat is the necessity of solving the issue? (Effect/Impact)

Government should address the issue with urgency to; Prevent further deterioration of environment. Bring about community development to affected areas of

mining activities. Prevent alienation and abuse of indigenous communities.

Promote development of the mining industry. (To realize the potential of responsible mining as an economic

booster.)

1.2 Stakeholder Analysis Who are the people/sectors involved?

Large Scale Mining

Companies

Small-scale miners

(informal mining)

Indigenous Communities

The Government Bureaucracy

Due to the relevance of the Mining Industry to our National Development, many are involved and affected with this issue. Hence, urgency is needed from the government to come up with the correct Public Policy.

LARGE SCALE MINING COMPANIES• They are the investors (of billions of Pesos) who will be greatly

affected by government policy. They took the risk in investing with prospects of earning profit.

• They entered into a contract with government to pay excise tax, provide social services to the local community, and rehabilitate the environment where they are extracting.

SMALL-SCALE MINERS• Informal miners that are relatively small relative to Large scale

miners.• A good number of small-scale miners are illegal, and proliferates

due to backing of local politicians.

How are they involved?

How are they involved?

Local Community/Indigenous People• The local residents of the area of mining activity.• They are the recipients of the social service the government

mandated the large scale miners to provide with.• Jobs in the mining are created for them.

The Government Bureaucracy• Both national and local governments will be revamped to

eradicate corruption.• More stringent policy means stricter procedures in regulation,

and aggressiveness in support and promotion of the mining industry.

1.3 Alternative Policy Solutions (APS)What course of action and/or policies should be pursued to address the problem?

APS # 1• Total Ban on Mining Industry.

APS # 2• Enact a new law.

APS # 3• Maintain Status quo.

1.4 Criteria: Efficiency and Cost-Benefit AnalysisWhat courses of action/policies should be pursued to address the problem?APS # 1 TOTAL BAN ON MINING INDUSTRY With the disasters of Marcopper Mining in Marinduque and Philex

Mining in Benguet. It is safe to say that Government have been negligible in the regulation of the Mining Industry.

In 2006, the former UK Secretary of State for Overseas Development, Clare Short, MP, lead a fact-finding mission to the Philippines and these are some excerpts from their findings:

“(The Philippines), In its attempts to woo foreign direct investment, appears willing to circumvent its own laws protecting the environment and human rights and reduce standards below acceptable international practice…”

“The Philippines has relatively strong laws designed to protect the environment, communities and indigenous peoples.

The reality, however, is that where investments are concerned the law is too often viewed as a mere technicality to be overlooked or circumvented.

Human rights abuses and misreporting are clearly associated with some current mining activities. It is of concern that those in government and international agencies seem to lack the capacity or inclination to challenge and end such misconduct.”

From these findings, we can conclude that for years, the Philippines has not benefitted from mining activities and is now worse because of it.

Corruption is a serious problem in the Philippines and it can be expected that plans for extensive mining operations in remote areas requiring regulation and monitoring will make it worse.

A total ban on Mining will ensure its efficiency. No amount of corruption can circumvent a policy on total ban on mining activity.

The cost for the government for a total ban is enormous. Loss of income from taxes from mining companies, and the potential of economic growth brought about by mining exploration.

The benefit would be the preservation of the environment, the security of food supply for the upcoming generations and that is unquantifiable.

APS # 2 ENACT A NEW LAW Brazil, Chile, Australia and Canada all saw their economies grow

thru mining. It can bring wealth and jobs to the country. Chamber of Mines President, Philip Romualdez, argues that the

mining sector recorded an outflow of P10Billion in mining investments since 2011(because of EO79) and will lose another $4Billion in investments if there will be a total ban on mining .

Repeal RA 7942, Mining Act of 1995. Enact a new law more stringent in regulation of the mining industry, that would protect the interest of local communities and the environment.

Institutionalize a system of transparency with participation of NGOs and reputable independent private organizations to further regulate the mining industry.

Define the focus of DENR as the protector environment and regulator of the Industry while DTI as promoter, supporter and encourager of the mining sector.

The efficiency of this alternative policy depends on how much government is willing to be transparent. Corruption plays a major role in the delivery of government services. Many can be said how much deviance can go in the regulation of the mining industry. It all bogs down to political will and leadership.

The cost for government is high. With corruption at all levels of government we can assure that a good number of politicians will try to circumvent law to earn kickbacks from mining. There is a good chance this would fail if not managed properly. And we would be left with a deteriorated environment.

The benefit for the economy should this be successful is worth the risk. With responsible mining, we can bring in wealth to the country, create jobs in rural areas, provide social development and management programs for the local community. Add to that the technology transfer, management skill and foreign link exposure the industry would be receiving.

APS # 3 MAINTAIN THE STATUS QUO Extend EO 79, which suspends the Mining industry at its present state. No

new mines will be allowed to open. Devote further time in research, in order to formulate a more viable solution. We can wait until government bureaucracy has done away with corruption. We should defer extensive mining indefinitely. The National patrimony will

always be there. Let the next generation decide what to do with it. Efficiency of this solution is already in effect. The cost for government is the loss in potential income that should have

been earned, the loss of jobs that should have been created, and the loss in opportunity for rapid economic growth.

The benefit is viable as it allows our denuded environment to recuperate. This policy solution will give us more time to come up with the correct approach to enforce compliance from mining companies.

APS EFFECIENCY COST BENEFIT

1. TOTAL BAN ON MINING

VERY EFFICIENT HI-COST HI-BENEFIT

LOST EARNINGS/OPPORTUNITY

SECURED THE ENVIRONMENT

2. ENACT NEW LAW/EXTENSIVE MINING

UNKNOWN EFFICIENCY

HI-RISK SHOULD IT FAIL

HI BENEFIT OPPORTUNITIES IN

IT WILL COST US OUR ENVIRONMENT

ECONOMIC DEVT.

3.MAINTAIN STATUS QUO (EO 79)

EFFICIENT HI COST HI BENEFIT

LOST EARNINGS/OPPORTUNITY

SECURED THE ENVIRONMENT

1.5 POLICY RECOMMENDATION The cost benefit analysis all has the same weight. The costs

are high, the risk is great, but the gains are worth it. Although the prospects of opening the country to extensive

mining are good. We cannot undermine the previous experiences of environment disasters and human rights abuses to our own indigenous people.

A new law does not guarantee efficiency in the mining industry. But we cannot totally shy away from the advantages of a strong mining industry.

The national patrimony would always be there waiting. We should wait for the right time to extract it. Let’s wait for the right time when the government becomes politically mature, so the majority of the population would benefit. .

We cannot totally ban mining as it is hypocritical, according to Peter Wallace. Every new technology is due to mining, computers and cellphones included.

Opening the country to extensive mining is a high risk gamble. We should not gamble the future of the next generation. We should enter into extractive mining when we have full control in regulation and monitoring. The time when we can see responsible mining companies comply to international standards and practices in mining, that would be the day.

Therefore it is recommended that we Maintain Status Quo until such time that we can address the major issue of corruption. Extend EO 79 until the time, that we can see momentum in leadership and political will.

PICTURE COURTESY BY: WARNER BROTHERS