Mining: illusory economic gains

Resistance against large-scale mining is gaining ground (Photo from ucanews.com)

On Mar. 3 (Saturday), anti-mining advocates will mark the anniversary of the Philippine Mining Act (enacted on Mar. 3, 1995) with a protest march from the University of Sto. Tomas (UST) to Mendiola Bridge in Manila. Participants will include delegates from various regions nationwide who are attending the two-day National People’s Mining Conference which starts today (Mar. 1). The protest march is the culmination of a weeklong series of activities against mining plunder organized by environmental and anti-mining groups.

New mining EO

The intensifying resistance from local mining communities to national organizations and support groups has forced the Aquino administration to promise a supposedly new mining policy. But Malacañang has yet to release the executive order (EO) for the new policy which was expected by end-February. Apparently, strong lobbying from the mining industry led by the Chamber of Mines, Philippine Mining Exploration Association as well as the Joint Foreign Chambers of Commerce is delaying the issuance of the EO whose initial draft reportedly contained unfavorable provisions for mining investors. What is clear is that the new policy is still framed within the neoliberal Mining Act, as assured by Executive Secretary Paquito Ochoa, and thus dims hope that the plunder, destruction, and maldevelopment that mining perpetuates will be substantially addressed.

P37-trillion mineral wealth

Meanwhile, as if to add to the pressure not to reverse current mining policies, the US State Department in its background note on the Philippines released last Jan. 17, 2012, noted that the country has about $840 billion (about P36.64 trillion at P43.62 per US dollar) worth of mineral wealth. However, such resources that include some of the world’s largest gold, copper, and chromate deposits remain untapped with the State Department noting that the Philippine mining industry is just a fraction of what it was in the 1970s and 1980s. It also said that while the Supreme Court (SC) upheld the constitutionality of the Mining Act in a Dec. 1, 2004 decision, some local government units have banned mining in their areas.

Increased mineral exports

Proponents of the Mining Act argue that since the SC allowed the operation of 100% foreign-owned mining companies, the industry has seen a jump in foreign investments and export earnings. Indeed, mineral exports grew by 27.9% every year from 2005 to 2010 while the annual growth rate in its share to total export earnings also grew by almost 21.1% during the same period. These numbers are a dramatic improvement from negative growth rates recorded in the 1980s and 1990s. (See Charts 1 & 2)

Growing foreign investments

Foreign equity has also climbed both in value and as a percentage of total paid-up investment in the sector. Although lower than its average in the 1990s (202.77%), the annual growth rate of foreign equity in mining remained robust in the 2000s (130.9%), especially in 2005-2008 (146.04%). Meanwhile, the annual growth rate of foreign equity’s share to total paid-up investment in mining increased from 76.69% in the 1990s to 317.74% in the 2000s (and in 2005-2008, to 237.12%). Also, the percentage share of foreign equity to total paid-up investment in mining improved to 14.25% in 2005-2008 from 9.7% in 2001 to 2004. FDI data from the Bangko Sentral ng Pilipinas (BSP) show that from an annual average of $20.99 million in 1999-2004, FDI in mining and quarrying jumped to $104.32 million in 2005-2010.

Insignificant share to economy

However, despite these supposed “developments”, mining continued to fail to contribute to industrialization. The contribution, for instance, of mining’s gross value added (GVA) to the country’s gross domestic product (GDP) even declined this decade compared to its long-term average from the 1960s to 1990s and did not show significant improvement even after the SC declared the Mining Act constitutional in 2004. (See Chart 3)

Chronic trade deficit

Though exports of mostly raw minerals grew substantially, the Philippines continued to rely on the importation of processed mining-based products for our own industrial needs, resulting in a perennial mining trade deficit. Data from the BSP show that from 1990 to 2010, the balance between Philippine mineral exports and imports of mining-based products (i.e., metalliferous ores, non-metallic mineral manufactures, iron and steel, non-ferrous metals, and metal products) averaged a negative $1.17 billion a year. (See Chart 4)

Negligible job creation

Other much-hyped economic benefits like employment and government revenues, meanwhile, were also negligible especially when measured against the social and environmental costs of large-scale mining operations. Data from the MGB and the Department of Labor and Employment (DOLE) indicate that the employment in the mining and quarrying sector is growing by a small 1.17% annually in 1990-2008 as compared to the yearly growth in total employment in all industries of 2.53% during the same period. Employment growth in mining and quarrying, however, did accelerate in 2000s at 5.41%, and especially in 2005-08 with 7.65 percent.

But as a percentage of total employment, mining and quarrying declined from 0.49% in the 1990s to 0.40% in 2000s, although in 2005-10, its share to total employment is higher (0.47%) as compared to its 1990-2004 average (0.44%). In the past two decades, mining and quarrying employment has only contributed an average of 0.44% to total annual employment. (See Chart 5)

Meager government revenues

Data from the MGB and the Department of Finance (DOF) show that the share of revenues from fees, charges, and royalties collected by Department of Environment and Natural Resources (DENR)-MGB; excise tax collected by Bureau of Internal Revenue (BIR); taxes collected by national government agencies; and taxes and fees collected by local government units (LGUs) to total state revenues remained insignificant at just 0.5 percent.

The minimal tax revenues and royalties that the mining industry yields are blamed on the Mining Act itself. It has been pointed out that the State, which supposedly owns all mineral resources in the country as stated in the 1987 Constitution, does not get any share in the profits of mining companies. The only government share is the 2% excise tax on metallic and non-metallic minerals (mandated under the Mining Act). In his dissenting opinion in the 2004 SC decision upholding the constitutionality of the Mining Act, Justice Antonio Carpio argued that “The excise tax is not payment for the exploitation of the State’s natural resources, but payment for the ‘privilege of engaging in business’… the State must receive its fair share as owner of the mineral resources, separate from taxes, fees and duties paid by taxpayers.  The legislature may waive taxes, fees and duties, but it cannot waive the State’s share in mining operations.” (As cited by economist Winnie Monsod in her Philippine Daily Inquirer column.)

Now, juxtapose these illusory economic gains from neoliberal, export-oriented mining to the well-documented and very real cases of environmental destruction and physical, cultural, and economic displacement of indigenous and peasant communities, not to mention the extrajudicial killings that are associated with large mining operations. Clearly, what we need is more than a new mining EO but a deep and far-reaching reorientation of the mining industry. #

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5 thoughts on “Mining: illusory economic gains”

  1. I was born, raised, educated in the mines. The reason why local communities oppose mining is not for “sentimental” environmental or nationalist concerns but to actually oust the corporations that are operating there so that they could take over. And can you imagine what will happen? Every household will be digging every mountain, unregulated. Thus, landslides occur at the outlying sitios where private mines are prevalent.

    A mining company employs at leat 3,000 employees and provide decent housing quarters and FREE utilities, not to mention FREE education. In contrast, small scale mining benefits at most 20 families. Bottom line, I would prefer a regulated corporation operate the mines over scattered small scale mining that are let alone by the government.

    To claim that mining does not contribute to economic growth is blind hypocrisy. Give me one nation that survives without mining. Or tell me from where did we get the materials to build the computer/tablet to post this anti-mining article. I suggest, you look at everything you use daily and say with a straight face that mining was never involved. We cannot be too radical if we cannot be open-minded. I am PRO RESPONSIBLE MINING.

    I don’t know about Gina Lopez whose meralco and abscbn is soooooooo heavily dependent on mining products.oh gosh, how can we stand hypocrisy.

    1. I was not born only yesterday. I am an Igorot and our ancestral territories and environment have been destroyed, grabbed from us, turned into open pit, tailings dams, some were buried alive as in the case of the massive Colalo landslide in Mankayan, schools and communities sunk as in Mankayan, rivers from the Cordillera to Ilocos through the Abra river system and to Central Luzon Agno river were silted and polluted. Lepanto Mining has been in Mankayan since 1936, in fact since the Spanish colonial period, Benguet Corporation since early 1900s, and Philex several decades ago. These communities remain marginalized until now, our rights historically violated. We are historic victims of corporate greed and plunder by these mining companies who earned superprofits at our sacrifice. All what you said like employment of at least 3,000 employees, free utilities, free education are total lies. Lepanto mining company has in fact almost terminated regular mineworkers with contractuals, their benefits and SSS contributions deducted from their partial and delayed wages have not been remitted. Mining affected communities have been militarized and terrorized because of the presence of these mining companies. Where there is large mining, there is human rights violations and terrorism. Under the Mining Act of 1995 and the current system of mining in the Philippines, there is NO RESPONSIBLE MINING. Don’t deny this reality. It has been the mining companies and their minions in government who have not been open-minded. They have not even listened to our call for justice, respect to our collective rights as indigenous peoples, to our free, prior, and informed consent, our right to self determination, etc. Now, you talk like as if you know what is responsible mining, as if mining companies have no blood in their hands, as if they have not been the primary destroyer and plunderer of our ancestral territories and environment, the culprit to environmental disasters and the climate crisis. I think you are one of them. Mining companies have no heart and soul, they are not humans. They are monsters and big capitalists only thinking of profit even at the expense our national economy, our lives, our ancestral lands, our environment, and human rights. If responsible mining exists in the context of genuine development for the people, national industrialization, respect of indigenous peoples rights and the environment, hindi sana tayo ganitong napakahirap ang kalagayan ng mga mamamayan tulad naming mga katutubo na matagal nang minina!

      I would like to emphasize that I’m against unregulated small scale mining. But you have to know that in reality they employ most workers than large mining companies do that you represent. And you should also understand that the main culprit in the environmental disasters and plunder of our communities are the large mining companies who have been destroying our communities since colonial period up the present! THIS SPACE IS NOT ENOUGH FOR ME TO TELL THE TRUTH. THERE IS NO LIFE IN MINING LIKE PHILEX AND THE MINING COMPANIES YOU DEFEND WHO ARE PLUNDERS, HUMAN RIGHTS VIOLATORS, CULPRITS TO CLIMATE CRISIS AS AN EXTRACTIVE INDUSTRY. ANG NAKIKINABANG AY MGA DAMBUHALANG MINAHAN AT IILANG MAYAYAMAN SAMANTALANG KAMING MGA KATUTUBONG MAMAMAYAN NA NAGMAMAY-ARI NG LUPAIN NA MINIMINA AY NANATILING MAHIHIRAP. ANG ATING BANSA HINDI UMUUNLAD, WALANG TUNAY NA INDUSTRALISASYON DAHIL ANG SISTEMA NG PAGMIMINA AY NAKATUON LAMANG SA PAG-EKSPORT NG MGA HILAW NA MINERALES AT PAGHUTHOT NG LIMPAK LIMPAK NA TUBO NG MGA GANID NA KAPITALISTA NG MGA MINAHAN KASAMA ANG KANILANG MGA ALIPURES SA GOBYERNONG NAGPAPAHIRAP SA ATING MAMAMAYAN.

      THE CURRENT MINING INDUSTRY IN THE PHILIPPINES DOES NOT CONTRIBUTE TO THE REAL DEVELOPMENT OF OUR PEOPLE, OUR COUNTRY AND THE ECONOMY. DEVELOPMENT IT BRINGS ONLY TO THE MINING COMPANIES AT THE SACRIFICE OF OUR ENVIRONMENT AND PEOPLE. TO SAY OTHERWISE IS CONSCIOUS HYPOCRISY! LASTLY, I THANK THE WRITER ARNOLD PADILLA FOR HIS CONTRIBUTION IN TELLING THE TRUTH. I ENJOIN OTHERS TO DO THEIR OWN CONTRIBUTION.

  2. Since you started personal tirades against me, I am compelled to defend myself but won’t stoop as low as resorting to arguments ad hominem.
    My Classmates since elementary were sons and daughters of indigenous people who were employed by the mines. My neighbors were Igorots of several kinds– kankanaeys, ibalois, kalingas, bontoc, Ifugao. Most of them are now educated and succesful people, while some went back to their provinces and are now living in Poverty.

    Now, there are claimants who argue that the entire cordillera mountains are theirs since time immemorial. Hence, they claim the land back from the mining corporations. and since they claim ownership even of the underground, they can now freely enter the mine sites, study in company-provided schools and even build their houses inside the mines. Because they own every inch of it.

    No one would doubt their intentions until these claimants file their claims and demand compensation for being ousted from every mountain in the Cordilleras. So, once they are paid the compensation demanded (minimum of 1million pesos for each claimant), they go back to their endless claim just so to be compensated again. Extortion disguised under Abstract emotions of right to self determination? Btw, do not use that term again because it has a distinct meaning and it does not apply in your case.

    Finally, do you recall the miners who were trapped in a tunnel in Itogon? Those are small scale private miners who conduct their unregulated mining. And if you happen to visit the roads from Itogon to Samoyao, you will see that these small scale miners are doing the most damage to the environment you dearly love.

    By the way your comment goes, you are against corporate greed but not mining. Re-read your comments and you will realize just that.

    It helps to look at the industry by setting aside concepts that were fed to us by people who claim to care.

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