The good side of the mining industry

The biggest crocodile in the world was captured alive in a creek in Agusan del Sur (another entry for the Philippines in the “Guinness Book of World Records”), but the biggest number of greedy crocodiles are still at the Batasan in Quezon City.

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With the drop in the exchange rate of the US dollar and the euro, governments, banks and rich people are buying gold like crazy, driving the price of the metal to almost $2,000 per ounce, the highest so far and still rising. That is why people are talking about mining, the Philippines being one of the world’s biggest producers of gold. Also, there is a citizens’ movement against mining, primarily in Palawan. Because of the mining disaster in Marinduque years ago, and also the very bad effects of logging on the environment, mining has acquired a bad reputation in the Philippines.

So to have a better picture of the controversy, we invited to the Kapihan sa Manila at the Diamond Hotel last Monday Philip Romualdez, president of the Chamber of Mines; Rogel A. Santos, exploration manager of MacroAsia Corp., a new mining company operating in Palawan; and Francisco Dakila, director of the Center for Monetary and Financial Policy of the Bangko Sentral ng Pilipinas (BSP) which is supposed to buy all the gold produced in the Philippines to form our gold reserves.

Romualdez gave a clear picture of mining in the Philippines, including the fact that gold, nickel and copper are to the Philippines as oil is to Saudi Arabia. The sad fact is that a lot of gold bought from small-scale miners is being smuggled out of the Philippines, he said.

The BSP buys all the gold available in the Philippines at current market prices, but many of the pick-and-shovel miners would rather sell their gold to foreign gold traders because the Bureau of Internal Revenue levies a 7 percent withholding tax on gold sold. Romualdez said that 42 percent of the value of all the minerals produced in the Philippines goes to the government in the form of taxes and other charges. That is the highest sharing ratio between miner and government anywhere in the world, he added.

And yet all the minerals in the country belong to the state, he said, the miners are only the contractors who dig the mineral from the ground, for which they get a little share of the proceeds, but the minerals are still owned by the government.

A lawyer suggested that the Philippines should nationalize the mining industry so that foreign mining companies do not take our minerals out of the country.

Romualdez replied that mining is practically already nationalized. Almost all our taipans (Lucio Tan, Henry Sy, George Ty, etc.) are into mining. Still, mining needs plenty of capital and has a long gestation period.

“You don’t get back your investment within a few years,” he said. “While you are prospecting, you are throwing away money. You start producing only after many years.  So the mining company must have a fat wallet. It is different from constructing shopping malls and condominium buildings.”

What about the destruction that mining does to the environment? The anti-mining propaganda shows photographs of many areas torn up and abandoned by the mining companies.

“It is easy to choose photographs like that,” Romualdez replied. “Mining is like the construction industry. In the early stages of construction you see the ground torn up. Very ugly. But once the houses and buildings are finished, the area is beautiful.

“Look at Fort Bonifacio now. Before it was just a sprawling golf course. Now it is a modern, beautiful city. It is the same with mining. In the early stages, you tear up the ground. But after the minerals have been mined, the ground is covered, trees are planted, homes, schools and chapels built.”

What about the charge that the communities where the mines were don’t benefit from the mining activities?

“False,” Romualdez said.  “Baguio became the vacation spot now because of the gold mining in Benguet. St. Louis University and other big schools, businesses, and even the Church grew big because of their income from the mining shares that they own. It is only now that tourism has overtaken mining in Baguio. But before it became the Summer Capital of the Philippines, mining was its primary income and engine of its economy.”

Romualdez cautioned journalists against confusing the big mining companies with small-scale miners. The big mining companies are socially responsible, he said. They have constructed schools, chapels and homes, provided jobs to the people in the communities, and planted trees on top of the areas they once mined. “We have planted more trees than even the government itself,” he said.

What about the pollution that miners leave in the creeks, rivers and seas?

Those are the small-scale miners, he replied. They dig up the ore, wash them in the waterways, and then add mercury to separate the gold dust. Mercury is very poisonous and long-lasting. It is ingested by the planktons eaten by fish and then it travels down the food chain until the fish is eaten by humans. The mercury accumulates in the body and poisons it.

In coastal town in Japan years ago, it was the source of the itay-itay disease that was first noticed on cats that were fed fish. The fish were loaded with mercury.

Mercury poisoning is very painful and the humans who were stricken were paralyzed, their limbs twisted. That may happen to the people living in and around the coast of Compostela Valley who eat fish caught in the seas, and the government should warn the people about it.

That is caused by mercury used by small-scale miners. The big mining companies don’t use mercury, Romualdez pointed out. They use cyanide which quickly loses its potency after it is exposed to the air.