On top of situation

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In your editorial, dated Sept. 19, you described as “disappointing” the response of Philex Mining Corporation (“PMC”) to the recent discharge of sediment from the Tailings Pond No. 3 (“TP3”) at its Padcal Mine, in Benguet. While Philex Mining commends your keen interest in such an important issue, it is also compelled to clarify certain points to set the record straight.

The following are the inaccuracies in your editorial:

1. “The first news of the leakage did not come from the company but from the text message sent by a concerned resident in Benguet.”

This is simply not true. From the following chronology of relevant events, you can see that PMC has always been on top of the situation and has provided timely notice to the regulators, the Philippine Stock Exchange (“PSE”) and all its stakeholders and the investing public as soon as it was able to conduct an inspection of TP3 and determine the condition of TP3. Both its top ranking officers, the Chairman, Manuel V. Pangilinan, and the President, Mr. Eulalio B. Austin, were also on top of the situation.

The following is the accurate chronology of the relevant events:

August 1, 2012:

At around 11 p.m. of August 1, 2012, one of PMC’s personnel guarding and monitoring TP3 that first reported hearing unusual sounds were heard at the dam. PMC, as of its monitoring procedures, has personnel guarding and monitoring TP3 on a 24/7 basis. Immediately, President Austin, travelled from Manila to Padcal to take charge and by 12:00 midnight of August 1, Chairman Pangilinan instructed President Austin to stop the operations of the mine and conduct a full inspection of TP3 to determine the condition of TP3.

August 2, 2012:

PMC’s personnel without wasting any time proceeded to conduct an inspection of TP3 and by 12:15 p.m. PMC informed the MGB CAR and EMB CAR of the incident through text message, and by 2:00 p.m., official communication about the incident was faxed by PMC to MGB CAR and EMB CAR informing these offices of the voluntary suspension of PMC’s mining and milling operations.

At 3:00 p.m. official communication about the incident was faxed by PMC to San Roque Power Corporation as a precautionary measure.

By 5 p.m., a command conference was held at PMC head office attended by Chairman Pangilinan and the Management of PMC, and participated in by President Austin and the Padcal officers through video link. In that conference President Austin briefed the Chairman and PMC Management of the situation and instructions to implement measures to protect the main dam and to hire local and foreign consultants to address the incident were issued by Chairman Pangilinan for immediate implementation.

August 3

PMC issued a disclosure of the incident to the PSE and conducted a press conference.

On the same day, the barangay captains of the host communities and Benguet Governor Nestor Fongwan were also informed of the incident as a precautionary measure.

Since then, PMC has hired no less than four foreign consultants to assist in plugging the leak and in the remediation of the dam. PMC has also hired three consultants to assist in the rehabilitation of the affected environment.

2. “Philex’s response… has been rather disappointing.”

You can see from the foregoing that the company’s response to the incident has been swift and decisive, contrary to what you have claimed. Please refer to the chronology of events above.

3. Your suggestion that the company “might not have been entirely on top of the situation—negligent, in a word…” is simply not correct.

It is a fact that the accidental discharge occurred following historically unprecedented heavy rains brought about by two major typhoons (i.e., Gener and Ferdie), after more than two weeks of continuous heavy rainfall. In fact, prior to the August flooding in Manila, the rainfall on the day of the incident was the highest since 2011 for Padcal. Clearly, Chairman Pangilinan’s statement that the incident was caused by force majeure is supported by the facts.

PMC conducts monitoring of TP3 on a daily basis. It has engineers who do daily rounds of inspection of embankments, and indicators like seepage, erosion, or occurrence of sinkholes on the embankment, if any. This is the reason why the company was able to detect the incident immediately, and conduct its inspection and issue its report to the MGB in less than a day.

Notwithstanding that the incident was caused by force majeure, PMC remains committed to the remediation and rehabilitation of the affected areas. What PMC has deplored is the trial by publicity that it has been subjected to when its regulator announces in two press conferences that PMC is liable to pay substantial fines, when no notice of such penalties has been sent to PMC prior to such media pronouncements by the regulator. To date, PMC has not received any notice of the alleged substantial penalties alluded to in the last press conference by the regulator. We see no reason why an assertion of the fundamental right to due process by PMC is now being cynically called “knee-jerk resort to legalism”—especially where Philex has already committed itself to addressing the effects of the spill despite it having been caused by force majeure.

4. Your suggestion that the spill caused the contamination of fishes in Agno River and San Roque Dam….”

Metallurgists at PMC, as well as external experts and government agencies have attested that the accidental discharge at Padcal does not pose any danger to people and the environment, as it is non-toxic because the chemical compounds used in milling operations were biodegradable. Also, the amounts of reagents (substances that examine or produce other substances during a chemical reaction) are extremely small or negligible. PMC has fully cooperated with the government in its investigation of the accident, and anybody asking for the results should contact the DENR.

The recent lifting by the Bureau of Fisheries and Aquatic Resources of the temporary ban on fishing at areas near San Roque Dam, in Pangasinan, has been supported by a test conducted by an independent science and laboratory company, SentroTek, or the Sentro sa Pagsusuri, Pagsasanay at Pangangasiwang Pang-Agham at Teknolohiya Corp. SentroTek said in its analysis done early this month that harmful chemicals have not been detected in tilapia fish samples taken from the waters near Padcal mines.

PMC has provided, through its Environment and Community Relations personnel, immediate assistance to the families living near Padcal Mine whose livelihood has been affected by the accident. The company will continue to help them, and it has vowed to bring families back to no less than their previous status before the accidental discharge of non-toxic sediment at Padcal Mine. PMC has also established good relationship with these families, and even engaged them to help its employee-volunteers, who are mostly miners, in the cleanup and rehabilitation drive on Balog Creek and the area where it converges with Agno River.

The company trusts that it has clarified pertinent points and looks forward to maintaining a healthy relationship with the media in the treatment of this issue.

—ATTY. MICHAEL T. TOLEDO,

senior vice president,

Corporate Affairs,

Philex Mining Corp.

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