Economy, Environmental plunder

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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