Is the Filipino Mining Policy Unworkable?

By Ellsworth Dickson

Philippines president Rodrigo Duterte

Duterte takes his oath of office as the 16th President of the Philippines at Malacañang Palace while his children look on, June 30, 2016

Canadian mining companies operating in the Philippines have a right to be concerned with the policies of new President Rodrigo Duterte and his recently appointed environment chief, Regina Lopez, an outspoken critic of mining.

Although Duterte has been quoted as saying, “Lopez is an ardent [advocate] for responsible mining”, statements she has said betray her lack of understanding of the science and engineering of mining.

For example, she has told the media that “Open pit mining, as in the use of explosives, is horrific for the environment. It’s a cheap way to extract. And for the top-most country vulnerable to climate change its madness to even consider it.”

These statements don’t even make sense. Whether a mine is an open pit operation or underground, generally speaking, explosives are the only way to break up the billions of interlocked crystals that make up a mineral deposit. Does she know of a better way?

Lopez must think some robber baron in a far off glass tower is thinking of “cheaping out” by building an open pit mine. It doesn’t work that way. Low-grade ore bodies must be open pitted to be economically viable. Higher-grade ore deposits can be mined by the more expensive underground mining methods. How can responsible foreign mining companies wishing to operate in the Philippines deal with an environmental minister with such a lack of basic mining knowledge?

Even more concerning is President Duterte’s comment that he prefers that mining assets be owned by locals, rather than foreign companies. Just what does he mean by this? Is he saying that after a mining company raises millions of dollars to find, explore, build and operate a mine that it will be nationalized or given to locals? How could locals possibly afford to buy a multi-billion dollar mine?

Perhaps Duterte is unaware of the long, expensive and complicated process to get a mine in operation – they don’t just suddenly appear. Here in Canada, over many decades the mining industry has built the “star-making machinery” behind the mine building process, to use Joni Mitchell’s phrase. This comprises Canada’s excellent universities and technical schools that train geologists, geophysicists, corporate lawyers, accountants, auditors and mining engineers and consultants. Then there are the mining-friendly stock exchanges such as the TSX, TSXV and the CSE, environmental consultants, assayers, diamond drilling companies, mining technicians and more. It is this sophisticated and interlinked ‘infrastructure’ mainly based in Toronto and Vancouver that has resulted in Canada being the world’s leading mineral explorer and mine builder.

Perhaps Duterte is saying that once a promising mineral showing is discovered, the locals will somehow raise millions of dollars for exploration and development of this “mining asset”? This hardly seems possible – never mind the lack of professional talent and the behind-the-scenes mining infrastructure noted above. Or will locals be handed a viable operating mine once it has proven successful? This scenario is enough to scare off any mining investment by a foreign company.

Of course Duterte is right in that mining in the Philippines must be carried out in an environmentally responsible manner. And Canadian companies are doing exactly that, for example, B2Gold’s successful Masbate Mine on the island of Masbate, 360 km southeast of Manila. Canadian mining companies do more than mine minerals responsibly. At the Masbate Project, B2Gold has supported the development of vegetable farming in areas that did not traditionally support this activity. So far, over 940 people have benefited from B2Gold’s efforts to alleviate poverty in a sustainable manner with agricultural projects, fishing, sewing and livestock production.

The islands of the Philippines are host to valuable mineral deposits that can be developed and mined in an environmentally responsible manner while providing well-paid jobs for thousands and generating significant taxes and royalties for the government. It would be a shame if Duterte’s stance on mining drives these real economic opportunities away.

Filed in: Business, Industry, Resources

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