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Will Filipino Mining Realise Its Potential?

 4 min read / 

After a tenure that lasted only ten months, Filipino lawmakers rejected the appointment of Regina Lopez as secretary of the Department of Environment and Natural Resources (DENR) on 03 May 2017. The Philippine Stock Exchange (PSE) promptly posted its highest close since September 2016, buoyed by mining and oil stocks that surged after Lopez’s ousting.

Too Radical

The Commission on Appointments cited Lopez’s lack of technical qualifications and knowledge of mining and the uncertain legal basis of her recent rulings against mining companies as reasons for the dismissal. A staunch advocate of environmental protection, Lopez’s brief but tumultuous reign saw the closure of 22 of the country’s 44 mines, in addition to the cancellation of 75 mines yet to be developed.

A week before her dismissal, Lopez banned prospective open-pit mining applications with a total worth of $8bn. The ban garnered controversy due to its selective nature. It blocked gold, copper, silver and complex ore projects, while allowing coal, nickel and large-scale quarries, which Lopez’s family plans to operate in Batangas.

Sensing the end was near, when issuing the ban, the ad interim secretary stated:

“Politics is unpredictable. I want to put in place these policies while I am still here.”

Going Downhill

Cracks in Lopez’s crusade against mining companies began to show when Greenstone Resources opted to suspend its gold project in Surigao del Norte. Despite passing stringent audit requirements imposed by the Mines and Geosciences Bureau (MGB), Greenstone halted the project due to uncertainty over regulations and governmental mining policy.

Persistent uncertainty over the future of mining has fueled a growing backlash against the secretary and her most recent directive – that sought to bar companies from exporting unless they established a trust of 2 million pesos per hectare of mined land – was overturned.

A profanity-laced tirade against a young reporter who questioned the directive did no favours for the secretary’s waning support amongst the public and her government colleagues.

One of her biggest advocates, President Duterte, who fought twice to have her reinstated as secretary, has been uncharacteristically quiet and has not issued a statement since the dismissal. Duterte’s silence on the matter may signify his fading will to battle against the country’s miners. Perhaps he sees the economic benefits of reversing the crackdown on an industry that has untapped reserves that experts say a number in the hundreds of billions.

Reversing Legislation

Following Lopez’s dismissal, the Philippine Chamber of Mines said it would seek to immediately nullify measures imposed by the secretary, arguing that many of her decisions carried no legal grounds, which of course was part of the reason for her dismissal.

Lopez will certainly be remembered by the mining industry’s compliance officials, but their attention is quickly shifting towards the question of who will be the DENR’s next secretary. A few days before the resumption of Lopez’s confirmation hearing, associates of President Duterte, clearly confident she would not remain, threw a name into the ring to replace her.

A press statement endorsed Mark Kristopher Tolentino, a young private litigation lawyer and professor at De La Salle University for the position, who is widely known for his tolerant approach to the industry. An advocate of responsible mining, Tolentino underlines the need for a middle ground to exist between the utilisation of mineral resources for economic growth as well as the necessity of environmental protection.

Looking Ahead: An End to Uncertainty?

Tolentino’s relationship with mining companies will undoubtedly fare better than Lopez’s, especially since his particular perspective focuses on the economic realities (and benefits) of mining. However, when looking at these realities, it is hard to ignore the unequal distribution of profits – not just to local communities – but the entire economy: the industry contributing only 0.7% to the country’s GDP between 2000 and 2015.

The Philippine Stock Exchange (PSE) enjoyed a boost from the news of Lopez’s ousting with nickel prices falling by 3%, potentially enticing China to look at increasing its imports from the resource-rich archipelago – a former world-leading nickel producer. Nevertheless, grave uncertainty remains over the future of the industry.

Opportunities remain for Filipino mining. However, both the industry and government must demonstrate its feasibility as an industry that can play both a sustainable and fair role in the economy.

This requires transparent legislation to be passed that seeks to reverse its elitist and arguably gamed nature – an objective of Duterte prior his nomination – and one he would do best to reorientate himself towards if mining is to be welcomed back into the Philippines.

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