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Rapurapu Case Report PDF
Rapurapu Case Report PDF
Oxfam Australia This report was produced through the 2. Oxfam Australia’s approach to mining 4
132 Leicester Street skills, knowledge and hard work of many 2.1. The Mining Ombudsman project 5
Carlton 3053 dedicated people. We extend our thanks 2.2. A complaints mechanism
Victoria, Australia and respect to the many women and men for the mining industry 5
ABN 18 055 208 636 from communities who suffer the impacts
3. Rapu Rapu case study at a glance 7
Telephone: +61 3 9289 9444 of irresponsible mining activities in their
Website: www.oxfam.org.au/ mining daily lives. The first-hand case information 3.1. In brief 7
Email: mining.ombudsman@oxfam.org.au of many non-government organisations 3.2. Rapu Rapu mine ownership 8
and researchers has also been invaluable.
Authors: Shanta Martin and Kelly Newell 4. Case background 9
Editor: Lisa Vettori Oxfam Australia would like to thank 4.1. Lafayette and mining
Proof reader: Maureen Bathgate the women and men of Rapu Rapu, in the Philippines 9
Picture editor: Kate O’Rourke especially Mr Antonio Casitas and 4.2. About Rapu Rapu 10
Print coordinator: Kim Hayes Ms Amabel Gamboa, Ms Elena Lareza,
Design: Paoli Smith and all the staff at the Santa Florentina 4.3. ANZ and Rapu Rapu 11
Printer: Immij Pty Ltd Parish, the Centre for Environmental 4.4. The Mining Ombudsman
Concerns, Kalikasan and LRC-KSK. and Rapu Rapu 16
Contributors: Shen Narayanasamy,
5. Community grievances 17
Graham Dent, Marc Purcell, Oxfam Australia would like to thank our
Christina Hill and Alex Felipe Australian-based local groups, as well 5.1. Environmental issues 18
as our supporters and members of the 5.2. Social issues 23
Printed with vegetable-based inks public who have contributed funds to the
on Cyclus Matt, an unbleached 5.3. Little contribution to local,
ongoing work of the Mining Ombudsman
coated paper made from 100% regional or national development 32
project. Oxfam Australia groups that have
recycled post-consumer waste. contributed include Bayside, Bayswater, 6. Ineffective monitoring regime 39
Oxfam Australia is affiliated Berwick, Blackburn, Canterbury, Chadstone, 6.1. Lack of regulatory oversight 39
with the Australian Council for Dandenong, Dandenong Ranges, Diamond
6.2. Absence of means of monitoring
International Development (ACFID), Valley, Essendon, Fitzroy, Knox, Mornington, impact on marine life 40
by whose code of ethics we are Monash, Morwell, Musical Peaces, North
Adelaide/Prospect, Ocean Grove, Southern 6.3. Ineffective disaster
bound (for a copy of the code preparedness program 40
contact our national office); Fleurieu, South Australian Bookshop group,
Warrnambool, Wangaratta and Western 6.4. Failure to set aside funds
Oxfam International, by whose for rehabilitation 41
constitution and code of conduct Australian groups. The generous support
of such groups has enabled the Mining 7. What lies ahead 42
we are bound; People in Aid,
by whose code we are bound; and Ombudsman to help communities to raise 7.1. Current owners 42
the Refugee Council of Australia. their grievances with Australian mining
companies, and to defend their rights to 7.2. Further exploration 42
a sustainable livelihood and voice. 7.3. When the mine is gone 42
Oxfam Australia 1
1. Executive summary
Oxfam Australia 3
2. Oxfam Australia’s approach to mining
Oxfam Australia is an independent, between and within nations, resulting of economic growth and poverty reduction,
non-government aid and development in the exploitation and oppression of provided appropriate regulations and
organisation and the Australian member vulnerable peoples. Such injustice controls exist. However, without adherence
of the Oxfam International confederation. and suffering are neither natural nor to human rights standards, mining can
For more than 50 years, it has been a inevitable; they result from systems based cause the loss of land and livelihoods,
vehicle for Australians to help others to on injustice, inequality and discrimination degradation of land and waterways, and
build a fairer and more sustainable world and from the violation of human rights increased violence and conflict. The most
by fighting global poverty and injustice. by those with greater access to power. vulnerable or marginalised members of
The agency undertakes long-term communities — such as women, children
development projects, provides The agency is not opposed to mining but and Indigenous people — tend to be most
humanitarian responses during disaster believes it must be done in accordance excluded from the economic benefits of
and conflict, and advocates for policy with rights codified under the international mining, and to bear the brunt of its negative
and practice changes that promote human rights system, including the social and environmental impacts.
human rights and justice. right that Indigenous peoples and local
community members have to determine Oxfam Australia speaks in its own voice.
Oxfam Australia takes a rights-based their development and to give or withhold It does not assume a mandate to speak
approach to its work. This reflects the view free, prior and informed consent to mining on behalf of others, but aims to facilitate
that poverty and suffering are primarily activities. Oxfam Australia believes that local and Indigenous communities to
caused and perpetuated by injustice private sector investment can be a driver speak for themselves.
Oxfam Australia 5
Rapu Rapu case study
Oxfam Australia 7
3.2 Rapu Rapu mine ownership
Prior to administration, December 2007
60% 40%
Lafayette Mining Ltd
Philco Resources
74% 26%
60%
40% 40% 100%
Rapu Rapu Holdings Inc (RRHI) 60%
F&N Property Holdings is a Filipino corporation. With F&N holding majority ownership of RRHI, which holds majority ownership
of RRMI, the Philippines Department of Environment and Natural Resources considered RRMI a Filipino owned company.15
60% 40%
Malaysian Smelting Corp (MSC)
Philco Resources
30% 70%
60%
40% 40% 100%
Rapu Rapu Holdings Inc (RRHI) 60%
Laos
Thailand Manila
Vietnam
Cambodia
the Philippines
Kuala Lumpur
Malaysia
Indonesia
BATAN ISLAND
4.1.1 About Lafayette
Borad Morocborocan Viga
Tinopan
Lafayette Mining Ltd (“Lafayette”) was an RAPU RAPU Linao
Australian publicly-listed company until it
was suspended from official quotation on
PHILIPPINES Poblacion
Malobago
Binosawan
Pagcolbon
the Australian Stock Exchange on 25 August Rapu Rapu mine
2008.16 Lafayette was incorporated on
15 November 1996 and listed on the ALBAY GULF
Australian Stock Exchange on 29 August
1997.17 Initially, Lafayette acquired permits
and explored for gold in the Republic of
Gabon, West Africa.18 In response to Legazpi
Prieto Diaz
the then downturn in the price of gold,
Lafayette sought to diversify its activities, Bacon
and in November 1998, acquired its
interest in the Rapu Rapu copper- Sorsogon
gold-zinc-silver project located on the
island of Rapu Rapu, Philippines.19
Oxfam Australia 9
4.2. About Rapu Rapu per annum.32 Rapu Rapu was badly hit
by several typhoons in 2006 and 2007,
The residents are predominantly Roman
Catholic and the Church exercises a great
The Bicol Region is one of 17 regions including Typhoon Reming. The island deal of influence over attitudes towards
of the Philippines and is located along also sits on a major fault line, making it political and social issues.37
the south-eastern end of Luzon Island. prone to earthquakes.
Mining has previously occurred on Rapu
Bicol consists of six provinces, including
Fishing and farming are the primary Rapu. The Filipino owned Hixbar Mining
Albay, which is bordered to the south
sources of income for residents.33 The area Company previously conducted a relatively
by the province of Sorsogon.
produces rice, corn, abaca, fruit trees and small operation using open pit mining on
Rapu Rapu is an island municipality in the root crops, and the main agricultural crop of the island but closed operations in the
province of Albay about 350 kilometres the municipality is coconut.34 The municipal 1960s. Acidic run-off from the site is still
southeast of Manila. The municipality fishing grounds are rich with marine life and evident today (see discussion at Section
consists of three small islands — Rapu are shared by Rapu Rapu and neighbouring 5.1.2 regarding acid mine drainage).
Rapu, Batan and Guinanayan. The mainland fishing communities, such as
those in Prieto Diaz and Bacon in Sorsogon The Rapu Rapu mine established by
municipality is made up of 34 barangays
Province. The waters also lie in the migratory Lafayette is located to the east of the island.
(villages), with the barangay councils
route of the whale shark. Ecotourism based One of Lafayette’s former subsidiaries,
being the smallest local government unit
on whale shark watching is an emerging RRMI, holds a mining claim to 80% of
in the Philippines, each headed by a
industry in the area. Rapu Rapu island’s total land area.38
barangay captain. The seat of the Rapu
Rapu municipality is located in barangay Three barangays are deemed by the mine
There is an apparent lack of social
Poblacion on Rapu Rapu island. There are to be “direct impact areas”: Binosawan,
and economic services from both the
13 barangays on Rapu Rapu island, which Pagcolbon and Malobago. Another four
national and local governments in the
has an area of just 5,589 hectares and a barangays are said to be “indirect impact
municipality, including education, health,
population of 9,749 (as at the 2000 census). areas”: Poblacion, Santa Barbara, Linao
transportation and communication
infrastructures.35 Literacy is relatively and Tinopan.39
The Province of Albay is prone to natural
disasters. It lies on the Filipino typhoon belt high at 92.5% however most people
and is hit by an average of four typhoons have only completed primary school.36
Oxfam Australia 11
The Equator
Principles
Banks and other financial institutions • The borrower must prepare an Action Do the Equator Principles ensure
can play an important role in ensuring Plan to describe mitigation measures, respect for human rights?
that the projects that they finance are corrective actions and monitoring
environmentally and socially sound. measures necessary to manage the A recent study has revealed that the
The Equator Principles recognise the impacts and risks identified in the Equator Principles fail to address most
important social responsibility role that assessment. Borrowers must also fundamental human rights – including the
banks can play and provide a framework for have a Social and Environmental rights to life, property, food and health.
institutions engaged in project financing. Management System that addresses As such, banks may not be meeting their
the management of these impacts, obligations to respect human rights and
The Principles provide benchmarks for risks and corrective measures. could be increasing the hardships faced
assessing and managing environmental by some of the world’s poorest people.
and social risk, and apply to all new project • The borrower, government or third
financings over $10 million globally across party expert must ensure free, prior The report, The International Finance
all industry sectors. They also apply to all and informed consultation with Corporation’s Performance Standards
project financings covering an expansion affected communities. Consultation and the Equator Principles: Respecting
or upgrade of an existing facility where must be conducted in a structured Human Rights and Remedying Violations?
changes in scale or scope may create and culturally appropriate way. was prepared by the Center for
significant environmental and/or social International Environmental Law (CIEL)
• A grievance mechanism must be
impacts, or significantly change the nature and the Bank Information Center (BIC),
established and affected communities
or degree of an existing impact. with support from World Resources
informed of the process.
Institute, Oxfam Australia and Banktrack.
The Equator Principles state that institutions • An independent social or environmental It is available at www.oxfam.org.au/mining
that are signatories will only provide loans expert not directly associated with the
to projects that conform to all ten principles. borrower will review the assessment, Submitted to the United Nations Special
The following are requirements for projects action plan and consultation Representative on Business and Human
that carry potentially significant adverse process to assess compliance Rights, Professor John Ruggie, it finds that
social and environmental impacts: with the Equator Principles. the Equator Principles and the standards
used by the World Bank’s private sector
• A Social and Environmental Assessment • The borrower must agree to comply lending arm, the International Finance
must be carried out to address with relevant host country social and Corporation (IFC), fail to address most
impacts, mitigation and management environmental laws, regulations and critical human rights and address many
measures. The assessment will permits and agree to comply with others only partially or inadequately.
address compliance with relevant the action plan. They must agree to
host country laws and the applicable provide reports on their compliance. Oxfam Australia believes that Equator
social and environmental standards. • An independent environmental and/or Principle banks and the IFC must
social expert must be appointed to verify significantly amend the standards they
the borrower’s monitoring information. rely on to make sure that their lending
criteria are consistent with internationally
• Borrowers must also commit to report recognised human rights. In the meantime,
publicly on their implementation they need to go beyond those standards to
of the Equator Principles. implement better screening practices and
should ensure that their borrowers have
rights-compliant grievance mechanisms
for affected communities. Unless such
measures are implemented, banks who
sign up to the Equator Principles are at
continuing risk of financing projects that
fail to uphold human rights.
Oxfam Australia 13
• transparency regarding the process Specific suggestions for means by which By 18 December 2007, when Lafayette
of undertaking the audit of Lafayette’s such leadership could be demonstrated went into external administration,
compliance with the Equator Principles included: the Bank Group was owed approximately
including information as to the • creating a livelihoods fund directed at USD $268 million (AUD $311.6 million).63
identity of the independent technical assisting those in and around Rapu ANZ was Lafayette’s single largest creditor,
advisor undertaking the audit; Rapu island, particularly given that having provided financial support to
there had been almost no livelihood or Lafayette in three ways: as part of the
• a schedule of times when the
other benefits from the mine for local Bank Group ANZ was owed almost
independent technical advisor would
communities. As the Bank Group was AUD $115 million, as a creditor in its
be visiting Rapu Rapu island so as
considering accepting a large discount own right it claimed AUD $11,881,
to undertake the assessments;
on their recovery of debt, such a fund and as a shareholder ANZ Nominees
• publication of the independent technical claimed AUD $200,000.64
could have been financed by the banks
advisor’s assessment documentation
foregoing a small percentage of the On 22 April 2008, the Rapu Rapu mine was
and reports regarding the Rapu
amount of any moneys recovered; sold, with the transaction being “structured
Rapu mine, and specifically that a
proposed community action plan • ensuring that performance bonds as a sale by the banking group of the debt
to respond to community concerns be held in escrow; owing to it and the sale by the Company
and opposition be provided to [Lafayette] of its 74% stake in LPI for nominal
• ensuring that decommissioning
stakeholders including Sagip Isla value”.65 Ferrier Hodgson announced that
plans were in existence; and
Sagip Kapwa for comment and input; the proceedings from the sale would be used
• encouraging any new owners of to repay a portion of the amount owing to
• an undertaking that direct lines the mine to address the serious the Bank Group, with no surplus available
of communication between the environmental and social difficulties for unsecured creditors or shareholders.66
independent technical advisor surrounding the mine.
and concerned groups would be Despite multiple requests for specific
established and that the independent At the end of the telephone conference, documentation and information from both
technical advisor would openly the Director of Institutional and Corporate Lafayette and ANZ, including a further
and transparently meet with a Sustainability at ANZ proposed that the request to ANZ by letter from the Mining
broad array of the communities banks would consider the various means Ombudsman dated 8 May 2008, as at the
affected by the Rapu Rapu mine. by which they could make a responsible time of writing (October 2008), information
exit from the mine and would communicate had still not been provided. Neither ANZ
No written or substantive verbal response that in due time. Oxfam Australia’s nor the other Equator Principle banks have
was received to this letter and none of the Mining Ombudsman received no further provided any explanation of steps taken to
documentation requested was supplied. communication from ANZ prior to Lafayette ensure the banks made a responsible exit
Further, the Director of Institutional and entering external administration. from the Rapu Rapu mine. This is in stark
Corporate Sustainability at ANZ informed
contrast to public representations made by
the Mining Ombudsman that ANZ would Despite being aware of the social and ANZ that once social and environmental
not disclose the identity of the independent environmental problems at the Rapu Rapu issues are identified, the bank will “continue
technical advisor. The Mining Ombudsman mine from as early as November 2005, to monitor developments and keep in touch
expressed serious concerns with ANZ the Bank Group extended its support to with the client as well as any stakeholders
that the expert would be unable to assess Lafayette in 2007 by providing a line of who contact us with concerns about the
compliance with social requirements without credit of AUD $132.8 million, of which client and/or transaction”.67
consulting with local communities, including Lafayette used AUD $114.5 million by
those who had previously raised objections, 30 June 2007.61 This was in addition to a Oxfam Australia is aware of commitments
and that unless local community members secured bank loan of AUD $45.7 million, made by ANZ since 2006 to develop
knew who the independent technical advisor which Lafayette had utilised in 2006. The a policy on mining that will describe in
was and when he or she was present, they loans were secured with just AUD $28.6 detail how the bank makes decisions on
would be unable to meet with him or her. million of current assets (assets capable of transactions that have a potential impact
being converted into cash within one year) on the environment, or raise social policy or
On 27 November 2007, in a telephone
and AUD $95 million of non-current assets. ethical issues.68 Oxfam Australia’s Mining
conference with ANZ, ABN Amro and
Ombudsman has on several occasions
Standard Chartered (as the Equator On 7 February 2007, the Bank Group was offered to discuss the development of a
Principle members of the Bank Group), issued 91,164,190 options by Lafayette at mining policy with ANZ. To date, ANZ has
the Mining Ombudsman and several other AUD 10.6 cents per share,62 representing not acted on these offers to engage.
civil society organisations questioned the a total of approximately AUD $9.7 million.
adequacy of steps taken by Lafayette and This represented the single largest option
the banks to address the persistent social issue by Lafayette in its history and came at
and environmental concerns. In particular, a time when shares in Lafayette had been
Oxfam Australia’s Mining Ombudsman on a steep decline since 2005 and were
urged greater transparency, consistent trading at approximately 8 cents per share.
with the Equator Principles and the
OECD Guidelines. In addition, the Mining
Ombudsman raised the need for the
Equator Principle banks in the Bank Group
to demonstrate leadership and ensure A fisherman from the direct impact barangay, Binosawan,
positive outcomes for local communities. shares his concerns with the Mining Ombudsman.
Photo: Shanta Martin/OxfamAUS.
Rapu Rapu residents and their supporters In light of apparent widespread disdain
Fish-kills have voiced concerns about the mine since at the mine, many community members
2000, and since then a swell of community expressed their concern that Lafayette
organisations opposed to the mine has and its subsidiaries had sought to buy
continued to form. When the Centre for the support of barangay captains.75
Poor environmental standards led Environmental Concerns first approached The Mining Ombudsman was concerned
to cyanide-laden spillages resulting the Mining Ombudsman, it was already to learn from at least one barangay
in fish-kills and public fear. This working with more than 23 groups such as captain that he received money from the
produced community protests Sagip Isla Sagip Kapwa, Defend Patrimony! mine to monitor community opposition
and an official enquiry. Regulatory and Kalikasan-PNE. The local parishes and report to the mine about planned
constraints were imposed that led were also heavily involved. Together they activities. The Captain of Viga, Elmer
to the mine being less than fully organised protest actions in the community Echague admitted he received 3,000
functional from November 2005 to as well as in the broader region of Bicol and Philippines pesos (AUD $77) per month
February 2007. (See Appendix 1.) in Manila. Thousands of local people have from the mine for these activities,
Timeline of reported fish-kills: signed petitions demanding the closure of “especially if people are conducting
the Rapu Rapu mine.74 interviews”.76 When asked whether he
11 October 2005: believed RRMI/RRPI paid him to support
First cyanide-laden tailings spill When the Mining Ombudsman visited the mine, he stated, “Sure, that is their
causes dead fish and other seven of the barangays on Rapu Rapu thinking”. The Mining Ombudsman
marine organisms to wash up island, she asked community members heard similar reports about captains
on local shores. Cyanide levels about the benefits of the mine as well as receiving payments in Linao, Malobago
of local creeks are 633 times the problems. At almost every barangay, and Binosawan.
the DENR standard. the Mining Ombudsman was overwhelmed
by the number of people wishing to speak The one village visited by the Mining
31 October 2005: about their dissatisfaction at the mine and Ombudsman where opposition was not
Second cyanide-laden tailings the negative impacts they perceived it had freely expressed was Malobago, which
spill causes more dead fish on their livelihoods. People rarely identified is home to the majority of workers at the
and other marine organisms benefits and commonly expressed a desire to mine, including many who have migrated to
to wash up on local shores. see the mine closed. In general, community Rapu Rapu from other areas. While some
Cyanide levels of local creeks are members were concerned about the impact community members in Malobago did
356 times the DENR standard. of the mine on the environment as well as discuss with the Mining Ombudsman their
on people’s health, the effect of the mine’s concerns as well as the benefits of mining,
20–21 July 2006: environmental impacts on livelihoods, and others were very hesitant and appeared
During testing phase, DENR the increased militarisation on the island that fearful of talking openly. The Barangay
reports about nine kilograms of has occurred since the mine opened. Many Captain of Malobago, Reynold Asuncion,
sea shells, a moray eel, urchins community members also pointed to a lack of was very supportive of the mine and told
and squid found near Pagcolbon proper consultation and information about the the Mining Ombudsman that he had seen
(close to mine site). DENR finds possibility of negative outcomes prior no ill-effects from the project. 77
high acidity in Pagcolbon creek to the establishment of the mine.
(Internal MGB Memo, 14 December
2006). Lafayette denies a causal
link with the mine.
28 October 2007:
Dead fish are found near
Poblacion. Some reports of fish
also seen in barangays closer
to the mine. Lafayette denies
a causal link with the mine.
Oxfam Australia 17
5.1 Environmental issues 5.1.1. Cyanide-laden The President of the Philippines established
a Fact Finding Commission that found
spills and fish-kills
Dr Emelina Regis of the Institute for the company had been grossly negligent
Environmental Conservation and Research Since the commencement of the Rapu in failing to establish environmental
at the Ateneo de Naga University of the Rapu mine in 2005, the island has safeguards, which led to the toxic
Philippines, warned as early as 2001 that been plagued by a series of fish-kills, discharges in 2005.83 The Commission also
mining could not be conducted sustainably which local residents attribute to poor stated that the government department
and safely on the island of Rapu Rapu.78 environmental standards at the mine. responsible for regulatory compliance, the
According to Dr Regis, this was due to the DENR, had allowed Lafayette to violate the
island having a small land area with steep There is no dispute that within six months environmental protection requirements of its
slopes, erratic weather prone to typhoons of starting operations in 2005, two cyanide- Environmental Protection and Enhancement
and heavy rain, the potential for landslides, laden spills at the mine resulted in the Program. Despite the Commission’s
limited freshwater resources, and a great discharge of toxic slurry into the sea. The recommendation that RRMI/RRPI’s mining
propensity to develop acid-mine drainage mine waste (tailings) contained cyanide as permits be revoked and that a moratorium
due to the presence of iron sulphide rocks. much as 633 times the standard set by the on mining be declared on Rapu Rapu, the
DENR, which was high enough to cause the DENR response was to allow RRMI/RRPI
Many of the limitations observed in Dr Regis’ death of many kilograms of fish and other to temporarily recommence operations in
report have since resulted in damage being marine organisms.80 The DENR later found order to pass a series of environmental
sustained by the receiving environment, that “Lafayette had wrongfully started to compliance audits. The temporary lifting
including local waterways. Dr Regis operate fully even before its completion of of cease and desist orders was extended
anticipated that acidic run-off and heavy the required environmental infrastructure”.81 several times to enable Lafayette to meet
metal contamination from the mine site Lafayette’s subsidiaries operating the mine, the environmental criteria The mine was
could lead to the contamination of the RRMI/RRPI, did not deny that these spills not fully operational for most of 2006.
fisheries of Albay Gulf and have impacts were caused by the operations of the mine.82 (Appendix 3 provides a full account of
for not only those on Rapu Rapu island,
but those in and around the Albay Gulf.79
“In the 2005 fish-kills, Lafayette accepted it was them. Why would they
not accept this time? I think because the Environmental Compliance
Certificate said if it happens a third time the company must close.”
Rapu Rapu municipal councillor (name withheld upon request) – 14 December 2007
Oxfam Australia 19
Outcome of the spills:
the financial slide of Lafayette
The delay in production at the Rapu Rapu paid handsomely; the CEO and Executive In Oxfam Australia’s view, the opinion of
mine caused by the mine’s suspension Director of Lafayette, Mr David Baker, the directors of Lafayette more accurately
impacted on the company’s revenue flows received remuneration of AUD $892,225 reflected the cause of the collapse, being
and financial position. The directors of for financial year 2006/07, of which 30% the suspension of operations due to a
Lafayette were of the opinion that,“As a was “performance related”, and the failure of the mine operators to establish
consequence of events … including a Chief Financial Officer and Executive adequate environmental safeguards prior
twelve month suspension of operations Director, Mr Jeffrey Quartermaine, to commencing operations, and to ensure
imposed by the Philippines government received AUD $526,668 of which 20% local stakeholders were fully engaged and
plus serious structural damage to Project was ‘performance related’. It is unclear supportive of the mine.
infrastructure inflicted by Super-typhoon how performance was measured.
Reming, the Company’s financial position In April 2008, Philco Resources, owned by
deteriorated.” (McClusky, P and Sutton R, In July 2007, Lafayette unsuccessfully state-run Korea Resources Inc (KORES) and
Report by Administrators, 7 March 2008, 5). attempted to restructure and recapitalise LG International Corp, raised their stake in
to keep the company and the Rapu Rapu the Rapu Rapu project from 26% to 70%.
The company reported considerable losses project going. However, on 18 December The remaining 30% share was bought by
year on year; AUD $111 million in financial 2007, the Lafayette Board of Directors Malaysia Smelting Corporation (MSC). The
year 2005/06, a further AUD $94 million in agreed that the company could no longer three companies will hold the bank debts
2006/07 and even more over the following meet its debts, and resolved to voluntarily and inter-company loans as well as 100%
six months (Lafayette Mining Limited, appoint Ferrier Hodgson as external of Lafayette Philippines Inc. The buy-out
Annual Report 2007). In an increasingly administrators. and restructuring will allow the mine to
desperate effort to raise funds, the company continue, however the losses incurred by
issued more and more shares. With almost The Administrators reported that shareholders and creditors of Lafayette
1 billion shares issued, the value of the Lafayette failed because of: cannot be recouped.
shares on the market declined, closing • acts of God – namely
at 5.1 cents per share on 30 June 2007. two super typhoons;
In the 2007 financial year, total losses • inadequate equipment due to delays
amounted to AUD $234 million, with current in the delivery of vital machinery; Legend
liabilities exceeding current assets by • poor communication between Lafayette
AUD $28.5 million; the financial position senior and local management; and MTL&Mining
was looking dire. Despite accumulating
losses of over AUD $94 million in 2007 • lack of adequate working capital A Mining operations commence
alone, the executives of Lafayette were (McClusky, P and Sutton R, Report by B Tailings spills
Administrators, 7 March 2008, 10). C Cease and desist order
D Fact finding report released
E Temporary lifting order
F Typhoon Reming
G Final lifting order
H Voluntary administration
Adapted from share price graph compiled
Lafayette Mining Limited share value 07/2003 – 06/2008 by the Australian Securities Exchange.
$.23
A
$.14
B
$.12
C
D E $.09
F
G
$.06
$.04
$.02
H
$.01
JUL JAN JUL JAN JUL JAN JUL JAN JUL JAN JUN
2003 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008
Oxfam Australia 21
5.1.2. Effect on water During the Fact Finding Commission 5.1.3. Landslides
investigation in 2006, testing of local
Mining can be both a major consumer rivers found excessively high acidity. According to a Lafayette announcement to
and polluter of water. In the Philippines, The Mining Ombudsman’s visual the Australian Securities Exchange (ASX),
some mining concessions overlap with inspection of the mine and surrounding the Rapu Rapu project was exposed to
watershed areas where demand for water areas also confirmed the presence of three typhoons in the last quarter of 2006,
exceeds the available supply — mining in extreme yellow colouring typical of which resulted in 900 millimetres of rain
these areas therefore competes with the AMD-affected rivers (refer to photograph falling in the project area. 100 Typhoon
needs of other users, including farmers on the inside back cover of this report). Reming hit hardest in November 2006.
and local households.88 Many community When the Mining Ombudsman toured Landslides occurred, killing 11 people,
members in Rapu Rapu expressed their the mine site in March 2007, the area of near the village of Malobago on Rapu Rapu
concern to the Mining Ombudsman that impermeable encapsulation of potential island — an area identified by the company
the mine had contaminated local water acid-forming materials exhibited the as a “directly affected” community. Many
sources and had lessened the availability characteristic bright yellow stains of community members expressed to the
of clean drinking water. AMD. Mine management stated that Mining Ombudsman that they believed
they conduct regular biological and these fatal landslides as well as an increase
One of the greatest challenges to the chemical testing of water in surrounding in landslides elsewhere since the mine
mining industry is the effects of a process barangays, however the results of these commenced operations were largely a
known as acid-mine drainage (AMD),89 tests have not been made available. result of slope instability caused by blasting
in which rock containing sulphur is exposed activity at the mine.101 Some community
by the mining process to air and water, In addition to the effects of AMD, the
members also believed that tree felling
causing run-off water to become highly Mining Ombudsman heard complaints
around the mine site was adding to the
acidic. As the acidic water contacts rock, regarding water and other environmental
problem. 102 The company denies any
it can leach out toxic metals and other issues. Research conducted by the Ibon
causal link between the mining operations
contaminates, resulting in more sulphuric Foundation found that farmers have noticed
on Rapu Rapu island and the landslides.103
acid and triggering a continual cycle of a marked decrease in water supply since
drainage of contaminated acidic water Lafayette started mining and processing.98 A group of scientists were asked by CEC
that can last for centuries.90 The highly Community members in surrounding to review the Permanent Lifting Order
acidic and contaminated water can have barangays of Pagcolbon and Binosawan issued by the DENR. They reported:
profound impacts on surrounding water reiterated these observations to the Mining “It is a generally accepted fact that ground
bodies (including groundwater) and the Ombudsman. They believe that the water disturbances such as those caused by
flora, fauna and people dependent on them. has been diverted to the mining operation. earthquakes, blasting and precipitation
While a number of different methods exist However, mine management disputed these lowers the threshold for slope failure.
for trying to prevent and limit AMD, there is claims, stating that in the case of Binosawan The high frequency of landslides …
currently no definitive solution for stopping the village “is too far from our area here to suggests that the area is marginally
this process once started.91 be affected”99 despite it being classified by stable … any additional disturbances
the mine as a direct impact barangay. could trigger failures or further bring
Rapu Rapu is well-known to be prone to the system closer to instability”.104
AMD, originally observed as a result of the The village of Pagcolbon was originally
operations of a smaller mining operation that located where the open pit now stands. At present, no monitoring equipment
has since closed.92 In these circumstances, Seven families accepted a relocation is in place to measure the effect of
it was foreseeable that a large-scale mine offer including a house and land lot blasting activities. Moreover, the Mining
with an open pit and significant waste rock from the company.95 Mr Manuel Belardo, Ombudsman found that local communities
production might exacerbate AMD and former Barangay Captain of Pagcolbon, were unaware of the blasting schedule
have a considerable environmental impact. explained to the Mining Ombudsman of the mine. Greater communication
Mine management explained to the Mining that the land they used to occupy was with surrounding communities about
Ombudsman in early 2007 that the mine fertile and good for production, “but here, these activities would be warranted.
was collecting potential acid-producing because of the effect of the mining, the
materials in a separate part of the tailings plants are affected, the environment and
storage facility and using impermeable water are affected.”96 Whereas previously
encapsulation as well as limestone treatment his family grew mango, citrus and jackfruit,
to limit AMD. Contrary to earlier reports that now they only have enough land to grow
RRMI/RRPI would revert the mined area to banana. Mr Belardo says that water quantity
agricultural use after abandonment of mining and quality has dropped since the mine
activities,93 mine management told the Mining began and he is concerned that the mine
Ombudsman RRMI/RRPI intended to flood spillages have contaminated the drinking
the open pit for mine closure as a means of water. According to Mr Belardo, “They
stopping rock being exposed to oxygen and promise and promise to put [in a] water
preventing the AMD process. Several studies supply but they don’t do it.” When asked
have raised significant doubts about the about the supply of clean drinking water
effectiveness of the mechanisms employed to local barangays, mine site management
and proposed by the mine to address AMD.94 claimed that fresh water was in plentiful
supply and that the company intended
to build a bigger catchment area.97
At the time of writing, these proposed
works had not proceeded.
Oxfam Australia 23
24 Mining Ombudsman case report: Rapu Rapu polymetallic mine
Left: Fisherfolk in Sorsogon experienced a
significant downturn in fish sales following
reports of fish-kills in and around Rapu Rapu.
Photo: Shanta Martin/OxfamAUS.
Right: Food aid is delivered to the Rapu Rapu
Municipal Council in December 2007.
Due to decreased access to fresh fish,
some residents of Rapu Rapu say they
now depend on humanitarian aid for food.
Photo: Shanta Martin/OxfamAUS.
“We did not ask for compensation The company had no fair and accessible Subsequent fish-kills and
because… we don’t know the process system for receiving and responding to consumer fear further affect
for how to ask for compensation.” community grievances, meaning local community livelihoods
Jesus Alamir, Barangay Councillor, community members were generally
Poblacion117 reluctant to approach the mine. Instead, When subsequent fish-kills were reported
the mine expected local fisherfolk with in June 2006 during the testing phase of
Mine management told the Mining very few resources to provide evidence to new environmental measures for the mine,
Ombudsman in March 2007 that they had show cause for compensation, failing to consumer fear resurfaced. Similarly, when
recently received complaints of lost income recognise what a high burden this process fish-kills were reported in October 2007,
by local residents. Management dismissed would place on impoverished families. many fisherfolk reported an inability to
these claims on the basis that “it is too late; earn a sustainable living from fishing.
we have no way of confirming the cause If communities had been able to access
is really our incident… If they can show a trustworthy rights-compliant grievance According to the Rapu Rapu Municipal
evidence of fish-kills and animals, then mechanism, a fair compensatory process Social Welfare Development Officer,
maybe we can do something, but it is our might have been possible. (Refer to Section Ms Shirley Osman, many fisherfolk have
word against theirs”.118 When questioned 2.2 above for the principles needed to stopped fishing since the fish-kills in 2005,
about the process used by the company underpin effective grievance mechanisms). 2006 and 2007 because it is hard to sell their
to determine the impact of the fish-kills, catch and because “they are afraid of being
mine management stated that they sought While villagers on Rapu Rapu island poisoned”.121 The Agricultural Technologist
and obtained a “certification” from one received no compensation for the 2005 and Municipal Fisheries Coordinator of
barangay captain in which he stated that spills, local governments provided Rapu Rapu, Mr Jack Malovega, informed
there was no need to pay compensation. assistance to villagers in the surrounding the Mining Ombudsman that the last
bay area, some 12 kilometres from Rapu fish-kill in October 2007 caused the most
The company’s efforts to determine the Rapu. Residents of Bacon told the Mining impact on livelihoods because “almost all
short, medium and longer-term impacts Ombudsman that a sack of rice was given residents no longer want to eat fish”.122
of the cyanide-laden spills and provide to full-time fisherfolk and half a sack to part- To date, however, fisherfolk and their families
compensation were clearly inadequate. time fisherfolk.119 However, some fisherfolk remain uncompensated and unassisted
An initial assessment would have missed out on this assistance and fish by the operators of the Rapu Rapu mine.
intuitively included immediate loss of retailers received no compensation at all.120
income and lower availability of food
sources, as well as the delayed impacts
of consumer fear on the local economy.
“We cannot assume responsibility unless we have proven we are the direct cause.
We have accepted responsibility for the [2005] cyanide laden spills but not for the
effect on fisherfolk… It is their word against ours.”
Ms Carmelita Pacis, Environmental Management and Pollution Control Officer
Oxfam Australia 25
“Right now we have so much poverty. Before we were poor but we had fishing.
Before I bought milk for my children, but now I only can give them rice-water.
My child got sick because I can’t afford the milk… A couple of days ago my
husband wanted to go fishing but I didn’t have food for him for breakfast,
so how could he go? I am tortured because before my budget for breakfast was
PHP40, now it is PHP20… Now I have to divide the rice between the children.”
Longer-term issues Mrs Arlene Bordarais, Rapu Rapu resident and mother of 12 children.136
“I am already 41 and have been fishing
for 20 years. Before when I would go to
sea I would always have a catch but since
the mine, sometimes there is no catch.”
Perfecto Banaynal, local fisherman123
Some fisherfolk reported they had sold locals told how they and their children
“We have to go on what BFAR and the their fishing equipment to raise money.131 suffer from respiratory illness during the
DENR tell us but I believe that 90% As a result, they would not be in a position summer, which they attributed to dust
[of the decrease in fish] is from Lafayette, to return to traditional income-earning coming from the open pit and tailings
because even the old folks have never activities without assistance. dam at the mine.138 However, Rapu Rapu
seen anything like it before.” mine management denied that Binosawan
Municipal councillor, “Now we can’t eat fish. There is a or other villages were close enough to
name withheld on request124 lot of poverty. We can’t afford rice. be affected by dust from the mine.
Sometimes we can eat root crops or
Many community members associate the the relief goods from the government.” There are also concerns about
operation of the mine with dwindling fish Beata Ebuenga, local resident, toxic heavy metals from the mine
catches. Villagers in Viga, for example, tell a fisher woman and mother of four, contaminating water, air and food
common tale. Despite not being recognised Poblacion, Rapu Rapu.132 sources. However, neither the health
by the mine as an impacted area, local authorities nor the mine operators
fishermen and their wives informed the have established a toxicological
Mining Ombudsman that before Lafayette
5.2.2. Effects on health assessment program, so the impact
began mining, they could catch 10 to 15 on health is difficult to determine.
Rapu Rapu fisherfolk whose incomes
kilograms per day, but since the mine their
have been impacted by the spills The Fact Finding Commission investigation
daily catch is about one kilogram.125
noted their health has been affected. into the 2005 spills referred to testing by
Mining Ombudsman interviews found the Many told the Mining Ombudsman the Department of Health for toxic heavy
majority of communities in and around they were eating only once per day133 metals such as cadmium, lead, arsenic and
Rapu Rapu island fell into two categories: and forgoing foods such as fresh fish. mercury in the blood and urine of a sample
those who believe smaller fish catches are of individuals from coastal areas of Rapu
Villagers in Linao reported that before
due to the mine and those who believe the Rapu and Sorsogon. While the study found
Lafayette commenced operations people
mine has aggravated already declining fish that some children had toxic heavy metals
earned approximately PHP 500 (AUD $13)
numbers.126 Over-fishing and illegal fishing in their blood and urine, the studies were
per day, however now even PHP 50
activities have damaged the reef areas not able to conclusively link the findings to
(AUD $1.30) is difficult to obtain.134
around Rapu Rapu and are likely to have contamination of water, air or food sources
Javee Ann Garcia, a local fisherman’s
contributed to a decline in fish numbers.127 in the area.139
wife, told the Mining Ombudsman that
Whether the mine contributed to declining she used to feed her daughter branded In its commentary on the 2005 spillages,
fish numbers is difficult to determine. milk but now feeds her rice-water.135 the DENR noted that skin diseases were
However, what is apparent is that dwindling As the principal carers in most families, reported from people within a 20-kilometre
fish stocks have caused fisherfolk to women in particular reported hardship. radius who had come into contact with
experience significant financial strain, which the water.140 However, it concluded that
Many community members are also
has been exacerbated by low saleability of there was no basis for linking the mine
concerned about the mine operation’s
fish due to consumer fear of contamination. with skin diseases of residents in the
possible effects on their health.
host communities. The DENR stated that
Many report they have to travel large The approach to dust management by
dermatologists from the University of the
distances to make substantial catches RRMI/RRPI was at odds with recognised
Philippines concluded that the skin diseases
and incur increased fuel costs and work best practice in the Australian mining
were more likely due to fungal and bacterial
longer hours.128 The price of fish has industry. As “dust generated from the
infections than exposure to heavy metals.
therefore risen. Simultaneously, they are surface of tailings storage facilities
now competing with imported fish.129 may be a public health risk and cause The Charge Nurse at Rapu Rapu District
Struggling with lost income, many fisherfolk environmental impacts from airborne Hospital, Mrs Gamboa, informed the
are attempting to grow their own root crops particulates and contaminates,”137 Mining Ombudsman that within three days
for consumption, further exacerbating the it is common practice in the Australian of the October 2007 fish-kill, the hospital
reduced incomes that farmers receive.130 mining industry for dust control measures treated three cases of food poisoning
to be implemented. According to within 24 hours. All cases reported that
The Mining Ombudsman heard reports residents in one of the barangays closest they had eaten shell fish.141 When asked
that some men have had to leave their to the mine, Binosawan, dust from the whether this was a common occurrence,
families to look for work in Manila and mine site poses a significant health risk. Mrs Gamboa emphasised that it was not.
nearby cities. Women have also found it
necessary to find other work, which can Kagawad Jimmy Roxas, a councillor of
take them away from child-rearing duties, Binosawan, explained, “The dust comes
while older children are recalled from from the mine when they dump their
school to help with household duties waste … when the wind blows the dust Janny Valicio-Belbin shows some of the shellfish her children
and to look after younger children. comes towards the community all over collected and cooked while she and her husband were out of
the house. Mrs Valicio-Belbin claims her children became sick
the barangay”. At a meeting convened after eating shellfish shortly after the October 2007 fish-kills
by a local group opposed to the mine, and were rushed to hospital for treatment. Photo: Alex Felipe.
Oxfam Australia 29
5.2.4. Free, prior and
Politically motivated killings in the Philippines informed consent
The Philippine Mining Act requires
The United Nations Special Rapporteur on extrajudicial killings companies to obtain an Environmental
reported on his 2007 visit to the Philippines that “over the past Compliance Certificate (ECC) as part of the
six years, there have been many extrajudicial executions of regulatory process. In order to be granted
leftist activists in the Philippines. These killings have eliminated an ECC by the Environmental Management
civil society leaders, including human rights defenders, trade Bureau, a company must first conduct an
unionists and land reform advocates, intimidated a vast number Environmental Impact Assessment (EIA)
of civil society actors, and narrowed the country’s political and submit a statement that documents
discourse. Depending on who is counting and how, the total the “environmental impacts of a project
number of such executions ranges from 100 to over 800”.160 including the discussions on direct and
indirect consequences upon human
Human Rights Watch released a report in June 2007 welfare and ecological and environmental
investigating extrajudicial killing in the Philippines.161 The report integrity”.162 The company must submit
documents the involvement of the armed forces in the killings proof of social acceptability through the
of individuals because of their political activism including ECC approval process. This includes
anti-mining activities. It claims activists are being gunned down endorsement from the local barangay
or “disappeared” with their murders going unprosecuted. councils and the Sangguniang Bayan
(Municipal Council).163 Ascertaining “social
acceptability” is defined as a process that
ensures that the valid and relevant concerns
of stakeholders, including affected
communities, are fully considered and/or
resolved in the decision-making process
for granting or denying the issuance of the
ECC.164 The DENR and the company are
required by law to hold a public hearing
to ensure that public concerns are fully
integrated into the EIA.165
The Mining Ombudsman and her party Some local activists claim that death
were stopped twice along the road. Prior threats have been received by groups The Equator Principles also state that
to arriving in Malobago, armed uniformed organising anti-mining rallies.157 projects with significant adverse impacts
private security guards physically barred on affected communities must ensure
the party’s passage and demanded that the The concerns of local activists are free, prior and informed consultation
group sign documentation held by the mine. heightened by news of Bicol residents and facilitate communities’ informed
The security personnel obstructed the party who have apparently been the victim of participation.166 The Principles further
until they received permission from mine summary executions. On 31 July 2006, state that consultation with communities
management to allow the party to continue. 21-year-old student Rei Mon Guran, must be conducted in a structured and
from Aquinas University of Legazpi, culturally appropriate manner.
Curtailment of freedom of movement was reportedly gunned down by two
has added to community mistrust of assailants on a motorbike as he boarded Beyond these standards, obtaining free,
the mine. Mr Antonio Casitas, leader of a bus.158 Mr Guran was a leader of prior and informed consent is also good
a local activist group, Sagip Isla Sagip a leftist organisation, the League of business practice, and helps in securing a
Kapwa, says the mere presence of Filipino Students, and had participated “social licence” to operate. Both a regulatory
military makes villagers afraid.154 in rallies against Lafayette in June and licence to operate from the host government
July 2006. On 12 December 2006, as well as an ongoing social licence to
A fear of militarisation is all the more Attorney Gil Gujol was shot dead operate from affected communities is
profound in the Philippines, which has in Sorsogon along with his driver. needed for project viability; a mining project
experienced a large number of Gujol was the lawyer of Sorsogon- attempting to operate without one or the
extrajudicial killings of leftist activists, based complainants who filed a class other is inherently unsustainable from
as documented in a report of the suit against Lafayette demanding both a business and a social perspective.
United Nations Special Rapporteur compensation for the damage allegedly Oxfam Australia has produced a guidance
on extrajudicial, summary or arbitrary brought about by the mine spills. 159 note entitled Free, prior and informed
executions.155 Mr Casitas is concerned There is no evidence linking the incidents consent: the role of mining companies,
that Sagip Isla has been branded with Lafayette or their operation. available at www.oxfam.org.au/mining.
“leftist” and members may be “marked
for summary killings” (a form of
extrajudicial punishment where a
person is killed without trial).156
Oxfam Australia 31
“The extent and nature of economic growth is central to development and to
the lives of poor people. Put simply, countries that have reduced poverty have
invariably had to grow to do so. Properly managed, growth in the market
economy creates jobs, increases incomes, and generates tax revenues
that effective states can invest in infrastructure, schools, and hospitals.”
Oxfam International, From Poverty to Power174
However, a road existed prior to the the Rapu Rapu mine website states creating social development programs —
construction of the mine and was regularly that a significant portion of its SDMP a participatory approach is essential to the
used by villagers, who say that the old expenditure has been allocated to training, projects’ effectiveness and sustainability.
road “was better because it used to be which includes “vocational/technical skills A company representative informed
more direct”.185 The old road ran through training” for local residents to gain skills for the Mining Ombudsman that programs
land that has been taken over by the employment within the project.187 It should were developed in consultation with
mine and has therefore been rerouted. be noted that due to the application of the communities directly and indirectly
The portion of the road that has been generous tax concessions, RRMI/RRPI is affected by the mine,189 yet he was unable
improved by the mine is a large section able to deduct 50% of the costs of these to elaborate on how this occurred. In each
that runs from near the mine’s port to the training programs from taxes that would of the seven barangays visited by the
mine to allow heavy vehicles to transport otherwise be paid to the government.188 Mining Ombudsman, almost all community
machinery and goods. This portion of the members complained that they were
road is at times described by company Ensuring that local residents are able to not involved in developing the programs
management as a “private road”, but the gain skills for employment in the mine and that few if any were beneficial. Most
Mines and Geosciences Bureau says that is a laudable objective; however, such stated that where programs did exist, they
a public thoroughfare cannot become a training should be funded by the 0.1% of were only available to barangay officials
private road.186 Villagers have no option costs required by the law to be allotted to and other individuals who showed strong
but to use this road in order to travel “manpower training”. Funding should not be support for the mine.
between barangays, however, it has been at the expense of development programs
constructed without a pedestrian walkway which are intended by law to form part of During the Mining Ombudsman’s December
so that villagers must step off the road if the SDMP. Similarly, relocation packages 2007 visit, she inspected some of the
they hear oncoming mining trucks, making for people whose land has been occupied SDMP projects and found serious flaws. For
it more dangerous to use. Armed private by the mine should not be considered as example, the Mining Ombudsman met with
security personnel and military also now part of the SDMP, but rather as part of the villagers, the Barangay Captain, Barangay
monitor and restrict access to the road. required process for acquisition of land. Councillors and the former Captain of
Binosawan, which is one of the three direct
Other program expenditure reported under In relation to those programs that genuinely impact barangays that should receive 85%
SDMP may also be a misrepresentation. form part of the SDMP, the Mining of the SDMP. Random interviews with local
According to the Mining Act 1995 and Ombudsman is very concerned about their residents of Binosawan invariably resulted
the Mines and Geosciences Bureau, sustainability and broader beneficial nature. in statements to the effect that the local
expenditure on labour development As is recognised in Filipino regulations people receive no benefits from the mine
programs should be separate and in giving rise to the SDMP— which require and that many of the projects promised by
addition to SDMP funding. However, participation by local communities in the company were never carried out.
Oxfam Australia 33
When the Mining Ombudsman asked about In contrast to these views, the Mining Mr Dubuenga took the Mining Ombudsman
some of the projects the company had Ombudsman heard very positive reports through the village to inspect the projects.
identified as being undertaken in Binosawan, when interviewing the former captain of It was revealed that many projects that
such as the goat-rearing project and water Binosawan, Mr Efren Dubuenga, who were supposed to be completed had yet to
tanks, a community member stated, “It’s all stated, “The company helps us whatever be actioned, and others which had been
promises… they also promised a breakwater help we need.”193 He claimed the company carried out years before were no longer
but [it is] still just a promise. It’s useless. had spent PHP 5 million (AUD $128,000) effective. The Mining Ombudsman
We have heard promises since exploration. on development programs in Binosawan learned during this inspection that:
They promise a concrete road but still in 2007, and referred to eight projects: a • the water project had not been
nothing.”191 Such sentiments were heard in water system; a chapel; a livelihood program completed as the company had
most barangays the Mining Ombudsman piggery project; repair of three school not paid the contractors;
visited and were echoed in discussions rooms; contribution to a 120-metre council-
with municipal and provincial government built concrete reinforcement of a local • the chapel was built in 2004–2005
officials. The Rapu Rapu Municipal Social riverbank; a day-care centre; four janitors without consulting the local priests,
Welfare Development Officer confirmed being paid to keep the barangay clean; who now refuse to use it;
that the Municipal Council had received no and provision of scholarships to 15 children. • the piggery project had failed because
assistance from the company despite a dire While Mr Dubuenga denied being paid by the company had stopped providing
need for food, shelter and education on the RRMI/RRPI, he explained that he receives loans when the mine was not fully
island.192 Staff at the starkly under-resourced payments for an environmental monitoring operational, and people could not afford
municipal hospital also stated the hospital process and handles the money for to feed the piglets or repay the loans.
received no assistance from the mine. salaries for janitors and other projects. The village had not been provided with
the promised goat-rearing project;
• the company had replaced roofing
irons on a dilapidated school
building that was further damaged
during the typhoon, while metres
away the Department of Education
was constructing new buildings;
• the company had not fulfilled its
commitment to repair the riverbank
reinforcement built four years prior,
and which had been destroyed
in the 2006 Typhoon Reming;
• there was no building for the day-care
centre; instead a barangay hall was
being used. One day-care teacher was
receiving a salary from the company;
• the community was engaged in
a village-wide voluntary effort to
clean up all refuse, making the
need to pay janitors dubious;
• scholarships provided to students
were to allow them to attend the free
local high school, and amounted to
an allowance for lodging of PHP 250
(AUD $6.40) per week and weekly
transport on a motor boat; and
• an electricity generator was installed
in 2004 when electricity was already
available to Binosawan from a
hydroelectricity project. When initially
installed, the generator only supplied
select individuals, but was made
available to the rest of the community
after the hydroelectric generator was
damaged in the 2006 typhoon.
Mr Dubuenga explained that once
the mine closed, people would
be required to pay for electricity
again. Thus, the benefit of the
generator is only temporary.
Oxfam Australia 35
5.3.2. Poor employment
prospects for local community “They said there would be jobs, but most people from here don’t
have knowledge of the machines and can only get a few jobs.”
In general, large-scale mining is a low level
Mr Antonio Casitas, Rapu Rapu elder and leader of Sagip Kapwa.197
employer beyond the construction phase.
Increasing mechanisation of processes has
reduced job prospects even further for local
communities. Many jobs within a mining
operation require specialised skills and Many people in and around Rapu Rapu, Both domestic and foreign corporations
experience. Mining projects can, however, including the Governor of Albay, believe operating in the Philippines are usually
stimulate the creation of additional jobs that the benefits provided by the number subjected to a variety of taxes, including:209
through service and ancillary industries. of jobs “are too paltry”200 to make up
• income tax at a rate of 35%;
for the negative impact that the mine
One of the many complaints heard by has had socially, environmentally and • capital gains tax at a rate of 35%; and
the Mining Ombudsman was that the fiscally. Many local community members • profit remittance tax at a rate of 15%.
mine had brought few jobs to local emphasised that most employees living
community members. It was said in and around the mine are not originally However, under a tax regime established
that local community members were from Rapu Rapu, but from other regions.201 by the Philippines National Government,
generally unable to obtain staff positions. In Malobago, the Barangay Captain, some company operations can receive
Reynold Asuncion, estimated that the local significant tax breaks, resulting in
There are approximately 9,749 people corporations contributing very little to
population had almost doubled since the
living on Rapu Rapu island (as at the national, provincial or local revenue.
commencement of the mine.202 Many other
2000 census). During a visit by the Mining
community members complained that locals
Ombudsman to the mine site in March 2007, The Philippine Economic Zone Authority
are rarely employed as skilled labourers.203
mine management gave a presentation (PEZA) is a government investment
in which figures were provided for the When asked whether local community promotion agency that establishes
employment of locals. According to these members were offered the opportunity to special economic zones, or “Ecozones”,
figures, as of August 2006, the total labour obtain skills, the Mining Ombudsman was to attract foreign investment. The Special
force was 888, with 285 people employed told by Mr Asuncion that only a few single Economic Zone Act210 states that except
by the mine while 603 were employed males were being trained. He explained for real property taxes on land owned by
through the Australian company, Leighton that most people could not afford to go for developers, no taxes, local or national, are
Contractors. Of the 285 staff, the company training as the trainees only received an payable by PEZA-certified companies.211
reported that 93 men and four women were allowance, which was not enough to feed Such companies therefore do not pay
employed from the directly impacted a family.204 As a result, local community national internal revenue taxes, local
barangays surrounding the mine. A further members tended to receive short-term government fees, licenses or taxes, gross
30 men and four women reportedly came contracts and menial jobs,205 for example, receipts tax, value added tax, or excise
from other barangays within Rapu Rapu. to erect fences and undertake other minor taxes.212 PEZA-certified businesses pay only
The remaining 154 staff (54%) were construction work.206 Many explained that 5% of gross income. Three per cent of the
employed from other Philippine regions their capacity to obtain even contractor gross income is distributed to the National
or internationally.198 Rates of pay ranged positions was hampered by the practice of government, while 2% must be paid by
from approximately PHP 270 (AUD $6.90) the mine and its contractor to hire people the company to the treasurer’s office of
per day for manual labourers to PHP 400 from other areas, particularly Visayas.207 the municipality or city where the business
(AUD $10.20) per day for skilled workers. is located. As an additional incentive,
A request by the Mining Ombudsman businesses are able to deduct 50% of
for the company to provide a breakdown 5.3.3. Generous tax concessions the value of labour training expenses and
of the types of jobs in which locals were and non-payment of taxes management training programs from the
able to gain employment was not fulfilled. 5% final tax due.213 The Section Chief of the
Government collection of taxes from Tax Exemption and Incentives Division of
The proportion of local staff at the mining companies’ revenues can be the Philippines Bureau of Internal Revenue
mine appeared to improve slightly after used to contribute to economic growth (BIR), Ms Tess Idio, explained to the Mining
2006, while contractor rates dropped and poverty reduction. However, the failure Ombudsman that these tax exemptions
markedly. The drop in contractor to collect taxes which may otherwise apply for the first four years, with a further
positions was no doubt in part due to be used for social development is a extension being possible on application.214
a reduction in construction needs as significant problem. So too is the failure
well as the non-payment of Leighton of governments to use such taxes for On 1 May 2004, the Philippines
Contractors, which precipitated the development initiatives that have a lasting Presidential Office signed a PEZA
external administration of Lafayette. and sustainable benefit for communities. certification designating certain areas
According to 2008 figures released on Rapu Rapu island as the “Rapu Rapu
by RRMI/RRPI, the labour force in 2008 Due to generous tax concessions, many Ecozone”.215 PEZA granted to the Rapu
was 742. There were 413 employees prominent leaders in the Philippines, as well Rapu mine a “pioneer status”, effectively
of both companies, of which 241 were as local communities, are angered that the a longer tax holiday, in relation to its zinc
from Rapu Rapu, while 89 contractors Rapu Rapu mine contributes very little to production as there are no other zinc
out of 328 were local.199 national, provincial or local revenue. producing operations in the Philippines.
Oxfam Australia 37
told the Mining Ombudsman, “Honestly we
cannot monitor all because there are over “They violate provisions of the ECC [Environmental Compliance Certificate]
one thousand PEZA entities across the and they were the ones given the tax holiday; that is the harsh reality.
Philippines”, and the BIR has insufficient Why were they given a tax holiday when it was their fault? ... We were
resources.227 When the President of RRMI, expecting millions … at least for when they were producing from February
Mr Alfredo Non, was asked about the DENR to June 2007, but it appears they have been given a special privilege.”
report’s reference to incorrect excise tax
computation, Mr Non merely asserted that Ms Imelda Araojo, Assistant Treasurer, Rapu Rapu Municipal Council
the DENR report was incorrect, saying that
the basis of the computation was the market
value, not the transfer price to RRPI.228 He
also confirmed that the Bureau of Internal
Revenue had not issued an assessment. RRMI/RRPI therefore sought to provide stated that RRPI had paid approximately
the PHP 5 million as an “interest free loan” PHP 36 million (AUD $923,000) in excise
It appears RRMI/RRPI sought various means
under the same conditions, even though taxes between 2005 and March 2008,234
to avoid the payment of taxes. The Assistant
the PHP 5 million would have to be repaid however no information has been
Treasurer at the Rapu Rapu Municipal Office,
to the company. obtained regarding payments by RRMI.
Ms Imelda Araojo, stated that PHP 3.2 million
Such lack of transparency in the payment
(AUD $82,000) was collected for the period The amount of taxes actually paid by of taxes to government authorities is
January to September 2005.231 However, Lafayette and RRMI/RRPI is difficult to a significant obstacle to development
due to the mine’s cyanide spillages and clearly ascertain. The Mining Ombudsman and has been recognised as such at
suspension, the municipal government had requested from both Lafayette and RRMI/ the international level (see boxed text,
received no income from the mine between RRPI details of contributions of taxes, “Why is revenue transparency needed?”).
October 2005 and December 2007. revenues and royalties to local, municipal
Ms Araojo explained her belief that the and National Government authorities in At a meeting with the Mining Ombudsman
National Government had granted the November 2007.232 The companies have in 2007, the DENR stated it now recognises
company an additional tax holiday for not responded. While the Rapu Rapu that PEZA certification of the mine was a
three years, exempting the company from Municipal Accountant, Mr Arden Eclao, mistake.235 The DENR further asserted that
the payment of the 2% usually paid to was willing to assist, he was unable to they are now asking PEZA to ensure that
the municipal government. A municipal obtain clear financial data.233 Meanwhile, mining operations are not given Ecozone
councillor showed the Mining Ombudsman the National Bureau of Internal Revenue status, although downstream operations
documentation in which the company offered claimed it was prevented from disclosing such as refining may still be eligible.236
to provide the municipal council a PHP 5 the amounts paid due to s270 of the In its report on the Rapu Rapu mine, the
million (AUD $128,000) grant as part of the National Internal Revenue Code, which DENR conceded that removing PEZA
SDMP and in lieu of payment of taxes.229 states that such information is confidential. tax incentives would be beneficial to the
The Provincial Prosecutor assessed the The Mining Ombudsman later obtained a communities and local governments.237
arrangement as being contrary to law.230 written statement from the DENR which
Despite the great wealth capable of being generated by mining, oil and gas extraction, the exploitation of these resources
in developing countries has commonly failed to generate benefits for the poor, with massive profits failing to go to poverty
alleviation initiatives. In many countries, money from oil, gas and mining is associated with poverty, conflict and corruption.
Commonly referred to as the “resource curse”, this is often driven by a lack of transparency and accountability around the payments
that companies make to governments, and the revenues that governments receive from those companies. Revenue transparency
is a vital first step towards alleviating the crushing poverty of ordinary citizens in many resource-rich developing countries.
The Publish What You Pay (PWYP) campaign, of which Oxfam is a founding member, aims to help citizens of resource-rich
developing countries hold their governments to account for the management of revenues from the oil, gas and mining industries.
The PWYP coalition of more than 300 non-government organisations worldwide calls for the mandatory disclosure of the payments
made by oil, gas and mining companies to all governments for the extraction of natural resources. There is also a need for
governments to “publish what you earn”. If companies disclose what they pay in revenues, and governments disclose their receipt of
such revenues, then members of civil society will be able to have the basic tools needed to hold their governments to account and to
insist that the wealth generated be spent on socially beneficial programs. For more information go to www.publishwhatyoupay.org
The Extractive Industries Transparency Initiative (EITI) is a voluntary initiative, supported by a coalition of companies,
governments, investors and civil society organisations. It aims to strengthen governance by improving transparency and
accountability in the extractives sector. The EITI sets a global standard for companies to publish what they pay and for
governments to disclose what they receive. For more information go to www.eitransparency.org
Oxfam Australia 39
6.2. Absence of means 6.3. Ineffective disaster • organized [sic] Quick Reaction Teams;
• cascaded emergency procedures
of monitoring impact on preparedness program to the local communities”.
marine life The effect of the spillages on 11 October When the Mining Ombudsman enquired
2005 on local fish was first brought to the about emergency preparedness
The cyanide-laden spills have clearly had attention of mine staff when local people
an impact on fish, with significant flow-on procedures with mine site management,
noted the fish-kills. When the second spill the Environmental Management and
effects for local communities dependent on occurred on 31 October 2005, it was
fisheries. Community members have also Pollution Control Officer for the mine,
local barangay officials who notified the Ms Carmelita Pacis, explained the mine
claimed that the mine is having a sustained company of the appearance of dead fish.247
impact on local fisheries. Yet despite these has a “Quick Response Team” comprising:
Communication by RRMI/RRPI to local
circumstances, no measures have been communities about the spillages was not • environment personnel to assess
taken by either government entities or RRMI/ proactive, meaning that local populations the environmental impact;
RRPI to conduct regular monitoring of marine were unknowingly potentially exposed to • media and special operations
life. The Mining Ombudsman interviewed contaminants and contaminated fish for personnel to explain to the media
the President of RRMI, Mr Alfredo Non, longer periods than necessary. and the public what happened;
and asked whether the company should
undertake regular testing of marine life to Following the 2005 spills, the DENR • safety personnel; and
measure what impact, if any, the mine stated that it required the company • legal personnel who
might have on fish. Mr Non’s response was, to “institute an emergency warning oversee any liabilities.250
“Why should we?”.246 In an interview with the and alert system for the local population”
Mining Ombudsman, Mr Leo Jasareno of the in case of accidents or spillages asa When asked at what point the team
Mining Tenements Management Division of precondition to continuation.248 engages with local communities to
the Mines and Geosciences Bureau, DENR, minimise impacts, Ms Pacis explained
noted that the Bureau of Fisheries and The DENR reported that the project that the safety personnel would work
Aquatic Resources (BFAR) had discussed management had complied with this with local communities. She stated
the need for regular ocean floor sampling as condition and had:249 that the company had instituted an
well as creating mollusc stations to ensure • “developed and manualized [sic] the emergency warning and alert system
regular testing. One obstacle the Bureau Emergency Notification Procedure; for the local population and that two
faces, however, is resources. To date, no drills had been coordinated with the
• established direct communication
such testing regime has been established. direct impact barangays of Pagcolbon,
links with the local population;
“The Mining Act of 1995 and its implementing rules and regulations have provided
such environmental and social safeguards [for] hold[ing] mining companies
responsible even in the most challenging cases like what Rapu-Rapu faces now.”
Jose L Atienza Jr, Environment Secretary253
Oxfam Australia 41
7. What lies ahead
8.1. For the current 8.2. For Philippines • If the free, prior and informed consent
of affected communities is gained
mine owners regulatory authorities and the independent assessment
results in the recommendation
• Do not resume operations at the • Support a thorough independent multi-
that mining can recommence:
mine until community consent stakeholder assessment of the suitability
to continue is obtained. of Rapu Rapu island for – require the monitoring of impacts
mining activities. of mining on local marine life
• Ensure ongoing rehabilitation of
with the participation of local
the mine site and treatment of AMD • Require permission to recommence
communities, ensuring availability
during cessation of operations. operations at the Rapu Rapu mine to
of training for local communities to
be dependent on a positive finding
• Publicly disclose all past and present maximise their active participation;
from the independent enquiry that the
payments of royalties, taxes, fees and
island is suitable for mining and on – prior to commencement of
other forms of revenue paid to local,
the mine operators obtaining the free, operations, ensure payment of
provincial and national government’s,
prior and informed consent of affected funds into an escrow account or
and sign on to the Extractive
communities prior to recommencement. impose a performance bond on
Industries Transparency Initiative.
the company, guaranteed by a
• Provide a specified period within which
• If free, prior and informed consent of party of sound financial standing,
the mine operators must obtain
affected communities is gained and which requires unconditional
community consent to continue
the mine recommences operations: payment of an agreed sum to
operations and otherwise require the
– prior to commencement of the relevant government authority
closure and rehabilitation of the mine.
operations, ensure payment into if the company fails to meet
• Remove the special tax exemption environmental commitments.
an escrow account or provision
status granted to the mine by the The required sum should be
of a performance bond that
Philippine Economic Zone Authority sufficient to cover the costs of
ensures sufficient funds are
(PEZA), undertake an assessment mine closure and rehabilitation,
available and guaranteed by a
of taxes paid to date and require and for addressing the ongoing
party of sound financial standing
the full payment of taxes due. impacts of AMD ;
to cover the costs of mine
closure and rehabilitation, and for • Publicly disclose all revenues – require mining operators to
addressing the ongoing impacts received from the Rapu Rapu have site-level rights-compliant
of acid mine drainage (AMD); mine, and sign on to the Extractive grievance mechanisms for
Industries Transparency Initiative. affected communities;
– institute means for monitoring
impacts of mining on local marine • Establish an independent rights- – institute a system voluntarily
life with the participation of local compliant grievance mechanism accessible to community
communities, ensuring availability for affected communities which members for regular monitoring
of training for local communities to can escalate grievances not able of toxicological indicators
maximise their active participation; to be resolved at the site level, to determine health impacts
and which would cooperate with any free of charge;
– fully engage with local communities
mechanism created within Australia.
to ensure broad acceptance – require the mine operators to
of the mine and its operations • Provide livelihoods assistance to establish a comprehensive disaster
on an ongoing basis; ensure fisherfolk whose capacity to pursue preparedness system that fully
the development of a disaster fishing as a livelihood has been engages local communities; and
preparedness system of which substantially affected, particularly
– ensure mine operators offer
local communities are familiar; those who have been forced
employment opportunities first
by low sales to dispose of
– commit to the Voluntary Principles to local community members,
their fishing equipment.
on Security and Human Rights; with training provided and
– ensure monitoring equipment is provision of a living wage both
in place to measure the effects during and after training.
of blasting on slope stability
and transparently provide timely
information to local residents
regarding blasting schedules; and
– ensure a rights-compliant
grievance mechanism for affected
communities is in place.
Oxfam Australia 45
Appendix 1: full chronology of events
Lafayette acquires its interest in the Rapu Mining (ore extraction) operations start. 274
March and prayer rally is held in Legazpi.
Rapu copper-gold-zinc-silver project. At least 6,000 people participate in the event
July 2005 concerned at the National Government’s
1999 lack of response to the Rapu Rapu Fact
Milling (processing) operations start.275 Finding Commission recommendations.
Lafayette carries out an extensive drilling
program on Rapu Rapu island as well as 11 October 2005 10 July 2006
commissioning an independent preliminary
feasibility study of the project.270 First tailings spill: between midnight The DENR issues a Temporary Lifting Order
and 2am, the main pumping unit of (TLO) to Lafayette to allow it to operate
2000 the Rapu Rapu mine malfunctions and and to “sample” and “test” environmental
tailings materials flow into the plant’s management systems to demonstrate
Lafayette commissions a definitive storm water drainage which flows into “best practice”.282 Stage 1 commissioning
feasibility study and completes an the sea.276 Dead fish are reported in and of the TLO by Lafayette commences.
Environmental Impact Study as around the shorelines of Rapu Rapu. The test run involves the circulation of
well as extensive independent pilot water into the system to test for leaks.283
plant test work at Rapu Rapu.271 30 October 2005
11 July 2006
January 2001 Second tailings spill: following heavy rainfall,
the lower tailings storage facility overflows March and prayer rally in Legazpi. At least
The definitive feasibility study is completed and on the morning of 1 November, fish 8,000 people participate to show their
and concludes that development of the are found dead in nearby creeks, in and concern at the National Government ’s
Rapu Rapu project is both technically around the shorelines of Rapu Rapu.277 lack of response to the Rapu Rapu Fact
and economically feasible. According to Finding Commission recommendations.
Lafayette, this conclusion is subsequently 7 November 2005
confirmed by independent technical 13 July 2006
auditors appointed by the project financiers. The Department of Environment and Natural
Resources (the DENR) suspends milling.278 Lafayette reports that a leak, which the
Early 2001 DENR later dismissed as a minor incident,
9 November 2005 occurred during operations at the mine.284
A report by Regis et al272 advises that
mining should not be conducted on The DENR suspends Lafayette’s 18 July 2006
Rapu Rapu by any individual or mining wastewater discharge permit.279
company due to the likely environmental The DENR issues an order confirming that
and social effects of mining on the island. 9 January 2006 Rapu Rapu Processing, Inc. (RRPI) has
fully complied with all of the requirements
July 2001 Pollution Adjudication Board (PAB) of Stage 1 of testing and grants permission
issues a Cease and Desist Order for RRPI to proceed with Stage 2. This
The Government of the Philippines against Rapu Rapu Processing Inc. involves the processing of non-ore-bearing
grants an Environmental Compliance materials.285 A public rally is held at the
Certificate (ECC) to the project and, 10 March 2006 Rapu Rapu Municipal Hall, Poblacion,
shortly afterwards, an Environmental protesting the DENR’s response to the
Protection and Enhancement The President appoints the Rapu Stage 1 testing. At least 1,500 people
Program (EPEP) approval. Rapu Fact Finding Commission to are reported to have participated.
investigate the social and environmental
December 2002 impacts of the Rapu Rapu project. 20 July 2006
The Philippine Mines and Geosciences April 2006 A petition against the resumed operations of
Bureau sanctions the project with the the Rapu Rapu mine is gathered with more
issuance of a Declaration of Mining Declaration by the Philippines Bureau than 800 signatories from residents and
Feasibility which is the final regulatory of Fisheries and Aquatic Resources environmental groups. A class action is filed
approval required to commence (BFAR) that fish caught from the Rapu on 20 July at the Makati Regional Trial Court
project construction and operation. Rapu area are now safe to eat.280 asking for a temporary restraining order on
Lafayette’s 30-day test run on Rapu Rapu.
LG International (LGI) and KORES The Makati Regional Trial Court rules that
purchase 26% of Lafayette’s wholly 19 May 2006
it is not the venue for the suit. Petitioners
owned subsidiary, Lafayette The Presidential Fact Finding were advised to take their case to the
Philippines Inc (LPI).273 Commission delivers its report finding Pollution Adjudication Board. That course
that Lafayette had engaged in grossly of action was not taken by the petitioners
negligent activity.281 Lafayette questions because the PAB is under the DENR which
the credibility of the report. had approved the conduct of test runs.
Greenpeace contacts Oxfam Australia’s Operations at the site withstand a direct Earth Day rally is held in Legazpi. At
Mining Ombudsman requesting hit by Typhoon Milenyo. Lafayette states least 500 people are reported to have
an investigation into environmental that all critical operational areas are participated protesting environmental
concerns on Rapu Rapu island. undamaged. Power supply to the process issues and human rights violations.
water pumps is restored with processing
21 July 2006 activities resuming on 6 October 2006.290 6 June 2007
Residents report a fish-kill at Mirikpitik creek 9 October 2006 The Mining Ombudsman contacts
on Rapu Rapu island. Lafayette denies that Mr Gavin Murray, Director of Institutional
there was a toxic spill which led to a fish Lafayette announces a USD $10–$15 and Corporate Sustainability, ANZ,
kill and claims the fish-kill was a result of million convertible note issue to raise to raise concerns expressed by villagers
acts of sabotage. A report by the Mines funds for a targeted exploration program about the Rapu Rapu mine and to
and Geosciences Bureau of the DENR on Rapu Rapu island and to provide enquire into the position of the bank.
later obtained by the Mining Ombudsman a working capital safety net.291
confirms that approximately nine kilograms 8 June 2007
of dead marine organisms were collected 9 November 2006
along the shoreline on 20 July and 21 July Community members and local leader
2006.286 Acidic water was measured by A further 30-day extension of Sagip Isla Sagip Kapwa, Antonio
the DENR at one of the mine’s outflow to the TLO is announced.292 Casitas, and Frances Quimpo of Centre
creeks, Pagcolbon Creek, with elevated for Environmental Concerns-Philippines
levels of copper, lead, zinc, cadmium and End November 2006 (CEC) attend a Lafayette General
iron. Tests for cyanide by the Bureau of Meeting in Melbourne to present a
Agriculture and Fisheries are negative. Supertyphoon Reming hits the petition with 3,000 signatures of locals
island causing damage to various opposing the Rapu Rapu mine.
25 July 2006 structures including the wharf facility,
camp accommodation and office 12 June 2007
Police and unidentified security personnel facilities, but Lafayette states there
detain and question Greenpeace is no damage to the environmental The Mining Ombudsman hosts a meeting
employee, David Andrade, after he management systems.293 between Gavin Murray of ANZ, Antonio
was apprehended while obtaining Casitas of Sagip Isla Sagip Kapwa, Frances
water samples from Mirikpitik creek. December 2006 Quimpo of CEC, and Techa Beaumont
of Mineral Policy Institute, to provide
24 August 2006 ANZ formally adopts the Equator Mr Casitas an opportunity to express
Principles, a benchmark for the community concerns to ANZ regarding the
RRPI receives permission to commence financial industry to manage Rapu Rapu mine and ANZ’s involvement.
Stage 3 commissioning from the DENR, social and environmental issues Mr Murray is provided a copy of a 3,000
which is the final regulatory approval in project financing. signature petition calling for the closure of
required to ramp up production from the the mine. A number of follow-up actions are
plant, pending a successful application agreed by Mr Murray, including providing
for a Permanent Lifting Order (PLO).287 14 December 2006 information on how ANZ is urging Lafayette
The DENR delivers an evaluation / to comply with the Equator Principles.
12 September 2006 report on the Rapu Rapu Polymetallic
Project under the test-run conditions. 22 June 2007
Local Rapu Rapu community-based
organisation, Sagip Isla Sagip Kapwa, The Mining Ombudsman follows up with
and national NGO the Center for 8 February 2007 Mr Murray and learns that none of the
Environmental Concerns (CEC) ask The PAB issues a Final Lifting Order (FLO) agreed actions have been carried out. The
Oxfam Australia’s Mining Ombudsman formally terminating all proceedings Mining Ombudsman urges Mr Murray to
to take up the Rapu Rapu case.288 in connection with the tailing spills ensure ANZ demonstrates its commitment
of late 2005. The FLO authorises the to fulfilling the Equator Principles.
13 September 2006 immediate resumption of production of
concentrates from the base metals plant. 11 July 2007
A 60-day extension of the TLO
(backdated to 9 September 2006) LPI launches a libel suit in the Philippines
is granted, enabling Lafayette/RRPI 12–20 March 2007 against Frances Quimpo and Antonio
to continue commissioning its The Mining Ombudsman conducts a Casitas regarding statements made at the
base metals plant and testing its preliminary field investigation on Rapu Rapu Lafayette General Meeting in Melbourne.
environmental management systems island and surrounding areas, including
at commercial levels of production.289 meeting with mine staff and undertaking
a visual inspection of the mine site.
Oxfam Australia 47
Appendix 1: full chronology of events (continued)
Follow-up letter sent to Mr Murray and The Mining Ombudsman writes to Lafayette First creditors’ meeting confirms
Mr Gerard Brown, Group General Manager, copied to ANZ requesting detailed appointment of Ferrier Hodgson
Corporate Affairs and Investor Relations, information and documentation relating to as administrators of Lafayette.
ANZ, and other members of the banking the Rapu Rapu mine. No written response
syndicate regarding the appointment of an was received and no information provided. 22 January 2008
independent technical advisor and the lack
of compliance with the Equator Principles. 27 November 2007 Ferrier Hodgson writes to the Mining
Ombudsman stating that it is concerned
23 August 2007 The Mining Ombudsman, Mineral Policy about the preservation of human
Institute, and Rapu Rapu civil society group rights associated with the project.
The Mining Ombudsman writes to ANZ representatives hold a teleconference with
Director of Institutional and Corporate Mr David Baker, Managing Director of 18 March 2008
Sustainability requesting a response to Lafayette and representatives from ANZ,
previous letters and requests for information. ABN AMRO and Standard Chartered (the Second meeting of Lafayette creditors is
three Equator Principle members of the held. Administrators propose the execution
28 October 2007 Rapu Rapu project’s banking syndicate). of a Deed of Company Arrangement.
Oxfam Australia questions the adequacy
Antonio Casitas and Municipal Councillor of steps taken by Lafayette and the banks 8 May 2008
Wilson Guianan report sighting of dead to address community concerns, and
fish along the shoreline of Barangay urges greater transparency by the banks, Correspondence sent to Mr Gavin Murray,
Poblacion, Rapu Rapu. The company consistent with the Equator Principles. ANZ, following the release of ANZ’s Forest
claims the fish-kill is a result of high Policy in which they state their commitment
sedimentation caused by heavy rain, 30 November 2007 to the Equator Principles. Oxfam Australia
and also claims the fish-kill is a hoax.294 questions the capacity of the bank to
Lafayette requests a second demonstrate its commitment and again
30 October 2007 temporary halt in the trading of requests information relating to steps
the company’s shares on the ASX. taken by the bank to ensure a responsible
Albay Governor Jose Sarte Salceda calls withdrawal from the Rapu Rapu mine.
for a thorough investigation of the fish- 5–12 December 2007
kills by the Environmental Management 14 May 2008
Bureau (EMB) and the BFAR.295 The People’s Camp moved from the
front of the Rapu Rapu Municipal Hall Ferrier Hodgson announces the
31 October 2007 to the provincial capital, Legazpi. On sale of Lafayette’s stake in LPI
12 December the protesters stormed the and RRPI to Philco Resources.
Public rally is held in front of Rapu morning session of the Provincial Board
Rapu Municipal Hall. Over 1,000 people after it failed to act on the complaints 4 June 2008
are reported to have participated and about the recent fish-kill. The board
demanded closure of the mine. later held discussions with community The Filipino management team running the
representatives. The committee promised Rapu Rapu mine resigns after negotiations
14 November 2007 to investigate not just the fish-kill but all with Philco Resources fall through.297
matters relevant to mining on Rapu Rapu.
Rally at the “People’s Camp” in front 12 September 2008
of the Rapu Rapu Municipal Hall. 12-18 December 2007
Mr Antonio Casitas and Mr Stephen The Mining Ombudsman forwards a
Prestado of Ateneo De Naga University The Mining Ombudsman conducts draft copy of this report to ANZ Bank,
are arrested and temporarily detained a comprehensive field visit on Rapu Ferrier Hodgson and on 15 September
by local police during the rally. Rapu island and surrounding areas. 2008 to Rapu Rapu Processing Inc
for information and comment.
21 November 2007 18 December 2007
24 September 2008
Lafayette requests a temporary halt Lafayette goes into voluntary administration.
in the trading of Lafayette’s shares The Mining Ombudsman writes to ANZ
on the Australian Stock Exchange. 24 December 2007 highlighting that ANZ has not been
forthcoming in responding to community
23 November 2007 The Mining Ombudsman writes to concerns about the Rapu Rapu mine
administrators, Ferrier Hodgson, copied to despite representations made on
Lafayette announces that a cornerstone ANZ, urging the parties to be mindful of the ANZ’s website that once social and
investor is evaluating its option to purchase human rights of local community members environmental issues are identified the
the company’s debt from the Bank Group. and pointing to regulatory requirements bank will keep in touch with stakeholders.
Suspension of trading is lifted.296 relating to environmental bonds yet to be
paid by Lafayette. A copy of the letter
from 26 November is also provided.
The Mining Ombudsman met with Internal Revenue, the Governor and shop owners, the wives of fishermen and
senior management of Lafayette Vice Governor of Albay province, local other women in villages. Wherever possible,
and its subsidiaries, including the and municipal councillors, as well as she met with individuals known to support
Chief Executive Officer of Lafayette, independent lawyers and scientists. the mine and also conducted random
the President of RRMI, and Senior selection interviews in public places, calling
Vice President Legal of RRMI. She The Mining Ombudsman travelled to and unplanned community meetings, visiting
accepted an invitation to tour the mine met with local community members in fishing areas and requesting spot interviews.
site and interviewed operational mine seven barangays on Rapu Rapu island The Mining Ombudsman also interviewed
staff including senior geotechnical as well as several affected barangays in local and international community
engineers, safety officers, community Sorsogon province. Aware that the most organisations and non-government
relations, human resources and outspoken community members were often organisations, bishops and priests.
administrative officers, and environmental members of community groups that protest
pollution control management. against the mine, the Mining Ombudsman The following is a schedule of interviews
specifically sought the views of other and meetings with government officials,
She met with representatives of the community members. With the assistance company representatives and community
Department of Environment and Natural of an independent translator, the Mining groups. Meetings with individual community
Resources, the head of the Mines and Ombudsman took to the streets to speak with members have not been listed.
Geosciences Bureau, the Bureau of local residents including fisherfolk, farmers,
13 March 2007 Sorsogon City, Sorsogon Bishop Arturo Bastes, former head of the Fact Finding Commission
13 March 2007 Sorsogon City, Sorsogon Community organisations: representatives of SALMON, IRDF, Bacon Resource
Management Multipurpose Cooperative, Alyansa Kau Pavasiva Sa Sorsogon,
Small Farmers Association for Sorsogon, BIGKIS, Gupat Association of
Practitioners and Advocates for Sustainable Agriculture
13 March 2007 Barangay Bato, Bacon, Approximately 30 community members (wives of fisherfolk)
Sorsogon and members of Samahan ng Mangingis da sa Bato
15 March 2007 Barangay Poblacion, Community organisation: representatives of Sagip Isla Sagip Kapwa
Rapu Rapu, Albay
15 March 2007 Barangay Poblacion, Rapu Rapu Municipal Council Officers: Arden Eclao (Municipal Accountant),
Rapu Rapu, Albay Shirley Osman, (Social Welfare Officer)
Oxfam Australia 49
Appendix 2: schedule of interviews (continued)
16 March 2007 Rapu Rapu Mine Site, Attendance at Rapu Rapu mine site: Joey Cubias (Manager,
Rapu Rapu, Albay Community Relations, Human Resources and Administration),
Carmelita Pacis (Environmental Management and Pollution Control Officer),
Alex Limosnero (Manager, Mine Operations), Roy Cervantes (Community
Relations Officer), Marco Montes (Senior Goetechnical Engineer), Abdon
Paras (Metallurgical Department), Reynold Asuncion (Malobago Barangay
Captain), Teodimer Bendal (Tinopan Barangay Treasurer), Manuel Belardo
(Pagcolbon Barangay Captain), Nono Bueno (Linao Barangay Captain),
Elmer Echague (Viga Barangay Captain), Amabel Gamboa (Sagip Isla Sagip
Kapwa), Jon Demelletes (LRC)
17 March 2007 Barangay Poblacion, Community organisation: approximately 40 members of Sagip Isla Sagip Kapwa
Rapu Rapu, Albay
18 March 2007 Naga City, Dr Emelina Regis (Director for the Institute for Environmental Conservation
Camarines Sur and Research (INECAR) of the Ateneo de Naga University)
19 March 2007 Quezon City Bureau of Internal Revenue: Cynthia Santos (Chief of Statistics Division),
Tess Idio (Section Chief, Tax Exemption and Incentives Division),
Maria Singayan (Supervisor, Large Taxpayers Audit and Investigation Division)
20 March 2007 Quezon City Rapu Rapu Minerals Inc: Mr Alfredo Non (President), Bayani Agabin (Senior
Vice President, Legal)
12 June 2007 Melbourne Gavin Murray (Director of Institutional and Corporate Sustainability, ANZ
Bank), Antonio Casitas (Sagip Isla Sagip Kapwa), Frances Quimpo (Centre
of Environmental Concerns-Philippines), (by telephone, Techa Beaumont,
Mineral Policy Institute)
2 November 2007 Telephone David Baker (Managing Director and Chief Executive Officer, Lafayette)
Gavin Murray (Director of Institutional and Corporate Sustainability, ANZ Bank)
27 November 2007 Melbourne Attendance at Lafayette Annual General Meeting. Discussion with
David Baker (Managing Director and Chief Executive Officer, Lafayette),
Peter Geddes (Non-Executive Director, Lafayette)
27 November 2007 Teleconference David Baker (Managing Director and Chief Executive Officer, Lafayette),
representatives from ANZ, ABN AMRO and Standard Chartered
12 December 2007 Legazpi, Albay Priests of the Redemptorists Church, local chapters of Kalikasan and CEC
12 December 2007 Legazpi, Albay Protestors outside the Albay Provincial Government Building
13 December 2007 Legazpi, Albay Community organisations: Coastal Core and SAC
13 December 2007 Barangay Poblacion, Rapu Rapu Municipal Council officers – Mrs Arrajo (Municipal Tax Office),
Rapu Rapu, Albay Mr Jack Malovega (Municipal Fisheries Inspector),
Shirley Osman (Municipal Social Welfare Officer)
14 December 2007 Barangay Poblacion, Rapu Rapu District Hospital: Mrs Gamboa (Charge Nurse),
Rapu Rapu, Albay Dr Abilos (Attending Physician)
14 December 2007 Barangay Poblacion, Municipal Council Office: Imelda Araojo (Assistant Treasurer)
Rapu Rapu, Albay
14 December 2007 Barangay Viga, Mr Elmer Echague (Barangay Captain) (NB: follow up interview 15 Dec 2007)
Rapu Rapu, Albay Kagawad Elias Guinan (Barangay Councillor)
Meeting with 25+ local community members
15 December 2007 Barangay Tinopan, Barangay Captain and councillors: Ms Heidi Springael (Captain),
Rapu Rapu, Albay Kagawad Jesus Dondonilla, Kagawad Venus Apon,
Teodimar Bendal (Treasurer), Estrellia Labrador (Secretary)
Community members, day care worker, elders, shop owner
15 December 2007 Barangay Linao, Meeting with 30+ local community members
Rapu Rapu, Albay
16 December 2007 Barangay Binosawan, Barangay Captain and councillors: Enida Bendal (Captain),
Rapu Rapu, Albay Kagawad Roland Balinsayo
Interview with local community members (6+)
Interview with former barangay captain, Efren Ebuenga
16 December 2007 Barangay Pagcolbon, Local residents, including former barangay captain, Mr Manuel Belardo
Rapu Rapu, Albay
17 December 2007 Barangay Poblacion, Community organisation: Sagip Isla Sagip Kapwa
Rapu Rapu, Albay
17 December 2007 Legazpi, Albay Nong Rangasa, former member of the Fact Finding Commission
Mac Pavia, Engineer, Province of Albay,
Provincial Planning & Development Office
18 December 2007 Quezon City Mines and Geosciences Bureau, DENR: Horacio Ramos (Director),
Leo Jasareno (Regional Director and Chief Mining Tenements
Management Division, MGB)
Oxfam Australia 51
Appendix 3: tailings spills and fish-kills
Mining operations commenced on Six days after the first tailings incident, In the DENR-approved designs, the tailings
Rapu Rapu island in July 2005. Four the DENR approved Lafayette’s resumption from the Carbon in Leach (CIL) process,
months later, two tailings spills occurred of operations. 308 The DENR admits they used for processing gold, should have
at the site. The first incident occurred “focused solely on the immediate cause been pumped toward the upper tailing
between midnight and 2am on 11 October of the first spill, but did not conduct a storage pond rather then the lower one that
2005 when the main pumping unit more comprehensive assessment of was designed for emergency purposes.
malfunctioned.298 For more than three- the company’s entire environmental Also the freeboard capacity of the dam
and-a-half hours, a combination of slurry infrastructures, and their deficiencies was less than approved in the plans.
materials and process water overflowed (the causes of the second spill)”.309 These deviations were said to have
from the event pond. The event pond contributed to the disaster caused by
is essentially a sump where occasional Just three weeks later, on 31 October 2005, the two spills in 2005.315 According to the
processing spillages might collect in an a second spill occurred when heavy rainfall Fact Finding Commission, the second
emergency;299 it should have been kept resulted in an overflow from the lower tailings incident was foreseeable as the
empty but instead was already 40% full and tailings storage facility. This led to further level of rainfall was common and warning
subsequently overflowed.300 Tailings then fish-kills in Ungay and Hollowstone creeks. had been given by the Institute for
flowed to the plant’s storm water drainage, Samples from the surrounding creeks Environmental Conservation and Research
and to nearby waterways, through the Alma conducted on 4 and 5 November 2005 that such heavy rainfall could occur.316
and Pagcolbon creeks to the open sea. showed higher than acceptable cyanide The Fact Finding Commission called for
levels, which was confirmed as the cause the cancellation of RRMI/RRPI’s ECC.
According to the company and a DENR of death of approximately 15 kilograms of
report, approximately 20 cubic metres of marine organisms.310 Despite accepting that their acts had caused
slurry materials flowed out.301 However, the spills, Lafayette and its subsidiaries
the Fact Finding Commission compared Following the first two fish-kill incidents rejected the Fact Finding Commission’s
the duration of the overflow up to the in 2005, President Gloria Macapagal conclusions and called the report
time the slurry materials reached Alma Arroyo established the Rapu Rapu Fact “unscientific” and “biased”.317 The National
and Pagcolbon creeks and the distance Finding Commission to “get the facts and Government also questioned some facets
between the events pond and these circumstance surrounding the alleged of the report. Director of the Bureau of
creeks, and reported that the volume health and environmental hazards brought Mines and Geosciences, Mr Horacio Ramos,
was likely to have been far greater.302 about by the operations of Lafayette said, “not all the findings were based on
Philippines Inc and to make appropriate facts — we therefore adopted the facts
In the afternoon of the same day, more than recommendations”.311 The two-month and disregarded the fiction”.318 Of the
two kilograms of dead fish and crustaceans independent fact finding mission involved nine-member commission, one member
were observed floating at the mouths of the numerous scientists and non-government submitted a dissenting opinion stating
two creeks.303 Lafayette and its subsidiaries organisations and was headed by Catholic that the report fell short of the standard
claimed the spill was contained by filters Bishop Arturo Bastes. The commission for determining facts.319 There were also
and that only process water flowed into the released its report in May 2006. It accused questions raised by the dissenting member
creeks.304 However, according to the Fact the company of gross negligence for failing that the commission went beyond its
Finding Commission and the DENR the to establish environmental safeguards.312 mandate when it discussed PEZA, tax and
slurry was not only higher than the DENR Further to company negligence, the the process of the issuance of the ECC.320
standards for cyanide305 but also contained commission stated that the responsible
other toxic heavy metals and chemicals that government department, the DENR, Bishop Bastes, charged with leading the
should have been analysed for proper and had been noticeably consistent in investigation, said that the government
adequate remedial measures.306 allowing Lafayette to violate the agreed response was not surprising given the
environmental protection requirements. degree to which the National Government
A number of recommendations were wishes to pursue mining in the Philippines,
made by the DENR as to steps required According to the Fact Finding Commission, but noted the report could not be ignored
for Lafayette to comply with sound Lafayette had violated 10 of the 29 because of all the scientists and non-
environmental standards. These included conditionalities and sub-conditionalities government organisations which supported
immediate measures to contain the of its Environmental Compliance it.321 Another member of the commission
spill, informing affected barangays and Certificate (ECC).313 Serious violations questioned whether the government
suspending grinding and milling operations. of the ECC included a reduction of the established the commission without the
The DENR also imposed conditions dosage of chemical reagent used to intention of following its recommendations,
to address the causes and prevent a reduce cyanide levels to below industry but rather to pacify critics.322
recurrence; this included repair of the standards.314 The commission found
pumps, improvement in the mill’s storm that some environmental protection
drainage and regular draining requirements approved by the DENR
of the events pond.307 were not implemented by the company.
Oxfam Australia 53
Glossary Endnotes
AFP Armed Forces of the Philippines 1 Aside from two fish-kills resulting from 16 Australian Securities Exchange,
spillages on 11 and 31 October 2005, Annual Listing Fees, Suspension from
AMD acid mine drainage at least two other fish-kills have been Official Quotation, Market Release,
reported. These latter fish-kills have never http://www.asx.com.au/asxpdf/20080825/
ASX Australian Securities Exchange been accepted by the mine operators pdf/31bwf7w2sl8wcm.pdf,
BFAR Bureau of Fisheries and as being connected with the mine. [at 25 August 2008].
Aquatic Resources 2 Mayuga, Jonathan L., “Activists Picket 17 Lafayette Mining Ltd, above n 3.
Embassy To Protest Mine Investor”,
BIR Bureau of Internal Revenue 18 Ibid.
Business World, 2008.
CAO Compliance Adviser/Ombudsman http://www.businessmirror.com.ph/ 19 Ibid.
06122008/companies05.html,
CDO Cease and Desist Order [at 12 June 2008]. 20 Ibid.
Oxfam Australia 55
72 Letters from Oxfam Australia Mining 85 Interview with Jack Malovega, 94 In its assessment of the project following
Ombudsman to Ferrier Hodgson, Agricultural Technologist and the 2005 spills, the DENR commented
24 December 2007 and 2 January 2008. Municipal Fisheries Coordinator that experts think that contact of the
(Poblacion, 13 December 2007). acidic rock with rainwater may result in
73 Interview with Mr Antonio Casitas, the formation of AMD and subsequently
Rapu Rapu elder and leader 86 For example, interview with community will cause permeability problems at the
of Sagip Isla Sagip Kapwa elders (Tinopan, 15 December 2007). dam. For this and other reasons, the
(Poblacion, 15 March 2007) methods used at the mine “have not
87 Interview with Governor Joey
74 Sagip Isla Sagip Kapwa Signature Salceda, Governor of Albay been fully accepted by some experts
Campaign, “Petition to ABN AMRO, (Legazpi, 12 December 2007). and the public as safe”: Department of
Standard Chartered, ANZ and all Environment and Natural Resources,
financiers of Lafayette Inc. seeking 88 Doyle, C., Wicks, C. and Nally, F., Mining above n 7, p 10. The Center for
termination of financial assistance in the Philippines Concerns and Conflicts: Environmental Concerns and Defend
to Lafayette Philippines Inc. and its Report of a Fact Finding Mission to the Patrimony Alliance requested scientists
sister companies in the Rapu-Rapu Philippines July-August 2006, 2007, p 11 to review the DENR’s basis for lifting the
Polymetallic Project in Albay, Philippines”, Cease and Desist Order (CDO) placed on
89 Acid drainage from both closed
copy on file with Oxfam Australia. the company after the 2005 tailings spills.
and operating mines is the largest
These scientists found that AMD was not
75 Interview with Enida Bandal, environmental liability facing the
specifically mentioned in the objectives of
Barangay Captain Binosawan mining industry worldwide. The liability
the Permanent Lifting Order and that the
(Binosawan, 16 December 2007). of acid drainage in Canada, for example,
AMD problem was not taken as seriously
is estimated at between $2 billion and
as it should have been; ‘The report failed
76 Interviews with Elmer Echague, $5 billion: Natural Resources Canada,
to consider how the AMD in the open
Barangay Captain Viga (Viga, Use of Inhibitors to Prevent Acid Mine
pit would be managed and contained
14 and 15 December 2007). Drainage, at http://www.nrcan.gc.ca/
during and after the mining operations,
mms/canmet-mtb/mmsl-lmsm/enviro/
77 Interview with Reynold Asuncion, considering its size and potential for
effluents/effspecserv-e.htm#Inhibitors
Barangay Captain Malobago (Rapu contaminating groundwater’; Barril, C,
[at 27 Aug 2008].
Rapu Mine Site, 16 March 2007). Regis, E, Saturay, R, An Initial Probe of
90 For example, a mine site in the Iberian the DENR’s Basis for the Permanent
78 Regis, E., Medrano, I., Azurin-Conde, Pyrite Belt in Spain has been generating Lifting Order (PLO) of the Cease and
A. and Regis, M., above n 54. AMD for more than 2000 years: Australian Desist Order (CDO) of the Rapu Rapu
79 Ibid. p 62. Government Department of Industry Polymetallic Project, March 2007.
Tourism and Resources, Leading Practice
80 Department of Environment and 95 The only other option offered
Sustainable Development Program for
Natural Resources, above n 7, by the company was to receive
the Mining Industry: Managing Acidic
Executive Summary. The company P200,000 (AUD$5,143) without land
and Metalliferous Drainage, (Australian
and many in the community disagree or housing; Interview with Manuel
Government publication), 2007, p 2.
on the quantity of dead fish and Belardo, former Barangay Captain
the number of affected waterways. 91 The website homepage of the (Pagcolbon, 16 December 2007).
The company claims that one to two International Network for Acid
96 Interview with Manuel
kilograms (kg) of thumb-sized fish Prevention (www.inap.com.au), an
Belardo, above n 95.
and marine creatures were found industry association whose members
after the first spill and 15-17 kg after include some of the world’s largest 97 Interview with Joey Cubias, above n 82.
the second, whereas many in the mining companies, notes that
“Effectively dealing with acid drainage 98 Ibon Foundation, above n 35, p 13.
community claim that the numbers
of dead fish were much higher: is a formidable challenge for which 99 Interview with Marco Montes, above n 82.
Avila, Charles R, above n 8, p. 30. no global solutions currently exist.”
100 Lafayette Mining Ltd, Rapu Rapu
81 Department of Environment 92 In 2001, the Regis Report showed the Project Supertyphoon Reming:
and Natural Resources, above existence of AMD in a former mining Update, ASX Announcement,
n 7, Executive Summary. area on Rapu Rapu Island: Regis, E., http://www.asx.com.au/asx/
Medrano, I., Azurin-Conde, A. & Regis, statistics/showAnnouncementPDF.
82 Lafayette accepted responsibility M., above n 54, p 60. Although Hixbar do?idsID=00676536,
for the 2005 fish-kills; Interview with Mining company abandoned the area [at 8 December 2006].
Joey Cubias (Manager, Community in 1976, sulphuric acid continues to be
Relations, Human Resources and released. In a follow up report conducted 101 Interview with community members
Administration), Carmelita Pacis by INECAR in 2006, AMD is now found (Viga, 14 December 2007).
(Environmental Management and in other creeks and is believed to be
Pollution Control Officer), Alex Limosnero caused by the current mining activity. 102 Interview with community members
(Manager, Mine Operations), The report further states that these (Tinopan, 15 December 2007).
Roy Cervantes (Community Relations bodies of water will not be able to 103 Lafayette Mining Ltd, above n 100.
Officer), Marco Montes (Senior revert back to their original unpolluted
Goetechnical Engineer), Abdon Paras state: Regis, E, Alto, B, Assessment of 104 Barril, C, Regis, E, Saturay, R, An
(Metallurgical Department), (Rapu the BioPysico-Chemical Conditions of Initial Probe of the DENR’s Basis
Rapu Mine Site, 16 March 2007) the Surroundings of the Mining Site in for the Permanent Lifting Order
the Eastern Part of the Island of Rapu (PLO) of the Cease and Desist
83 Avila, Charles R, above n 8. Order (CDO) of the Rapu Rapu
Rapu, Albay, Institute for Environmental
84 Rapu Rapu Processing Inc, above n 14. Conservation and Research, 2006. Polymetallic Project, March 2007.
93 Regis, E., Medrano, I., Azurin-Conde, 105 Interview with Mrs Vilma Tapaganao,
A. & Regis, M., above n 54, p 62. local resident (Viga, 14 December 2007).
106 Department of Environment
and Natural Resources, above
n 7, Executive Summary.
Oxfam Australia 57
171 Department of Environment and Natural 183 Letter from Oxfam Australia 200 Interview with Governor
Resources, above n 7, Executive Mining Ombudsman to Mr David Joey Salceda, above n 87.
Summary; ANZ, above n 68. Baker, Chief Executive Officer,
Lafayette, 26 November 2007. 201 Interview with Elias Guianan,
172 Ibon Foundation, above n 35, p 10. Barangay Councillor Viga
184 Rapu Rapu Processing Inc, (Viga, 14 December 2007)
173 Interview with Edwin Boticario, http://www.rapu-rapumining.com/
former Barangay Councilor social-responsibility.html 202 Interview with Kagawad Reynold
(Binosawan, 16 March 2007). [at 27 August 2008]. Asuncion and community members
(Malobago, 16 March 2007).
174 Green, D, Poverty to Power, How Active 185 Interview with community members
Citizens and Effective States can Change (Binosawan, 16 December 2007). 203 Ibid.
the World, Oxfam International 2008.
186 Interview with Rapu Rapu Minerals 204 Ibid.
175 Department of Environment Inc staff, above n 82 and interview
and Natural Resources, above 205 Interview with Kagawad Roland Balinsayo
with Horacio Ramos, Director of the (Binosawan, 16 December 2007).
n 7, Executive Summary. Mines and Geoscience Bureau, and
176 Chapter X of Republic Act No. 7942 Leo Jasareno, Regional Officer, Chief, 206 Interview with Kagawad Jimmy Roxas
(Philippine Mining Act of 1995). Mining Tenements Management Division and Bartolome Ecleo, above n 148,
(Quezon City, 18 December 2007). and interview with community members
177 Primer for the Social Development (Linao, 15 December 2007).
and Management Program, 187 Rapu Rapu Processing Inc,
Mines and Geosciences Bureau http://www.rapu-rapumining.com/ 207 Interview with Reynold Asuncion, above
http://www.mgb.gov.ph/sdmp_frame.htm social-responsibility.html n 77; interview with community members
[at 2 June 2008]. [at 27 Aug 2008]. (Malobago, 16 December 2007).
178 Department of Environment and Natural 188 See discussion regarding 208 Interview with Governor
Resources, Mines and Geosciences non-payment of taxes at 5.3.3. Joey Salceda, above n 87.
Bureau, Approved Social Development 189 Interview with Rapu Rapu 209 Austrade Country Profile,
and Management Programs (SDMP) Minerals Inc staff, above n 82. http://www.austrade.gov.au/
as of March 2006, available at Philippines-profile/default.aspx
http://www.mgb.gov.ph/ 190 Name withheld upon request,
sdmp_frame.htm#primer interview with community member 210 The Special Economic Zone Act
(at 27 August 2008). (Binosawan, 16 December 2007). of 1995, Republic Act No. 7916,
http://www.peza.gov.ph/about_peza.htm
179 Community Relations Department, 191 Ibid.
Rapu-Rapu Polymetallic Project, 211 The Special Economic Zone Act
A Brief Presentation on Social 192 Interview with Shirley of 1995, Republic Act No. 7916, s24,
Development Management Program, Osman, above n 121. http://www.peza.gov.ph/about_peza.htm;
presented on 16 March 2007 193 Interview with Efren Dubuenga Meeting with Ms Tess Idio, Tax Exemption
and Rapu Rapu Processing Inc (Binosawan, 16 December 2007). and Incentives Division – Section
http://www.rapu-rapumining.com/ Chief (Philippines Government),
Social%20Responsibility.html 194 Visual observation and interview Manila, 19 March 2007.
[at 2 June 2008]. with Alfredo Dondonilla (Tinopan,
15. December 2007). 212 Rules and Regulations to Implement
180 Interview with Jesus Alamir, above n 117. Republic Act No. 7916, otherwise
195 Interview with Efren Known as “The Special Economic
181 Interview with Kagawad Jimmy Roxas Dubuenga, above n 193. Zone Act of 1995”, Rule XIV.
and Bartolome Ecleo, above n 148.
196 Interview with Governor 213 Ibid.
182 In 2007, Lafayette’s subsidiaries Joey Salceda, above n 87.
represented that PHP12.4 million 214 Interview with Tess Idio, Tax Exemption
(AUD$318,000) had been spent on 197 Interview with Mr Antonio and Incentives Division – Section
SDMP prior to the 2007-08 financial year Casitas, above n 73. Chief (Philippines Government)
with almost PHP9 million (AUD$230,000) (Quezon City, 19 March 2007).
198 Community Relations Department,
spent between the years 2000-05.
Rapu-Rapu Polymetallic Project, A Brief 215 Centre for Environmental Concerns
Mine management stated that the
Presentation on Social Development (CEC), Rapu-Rapu: A struggle
allocated SDMP budget for 2007-08 was
Management Program, presented on against Mining Liberalization and
significantly increased to PHP18 million
16 March 2007. Prior to the suspension Plunder in the Philippines, 2007.
(AUD$416,000). However, in 2008, the
of the mine as a result of the 2005
company readjusted this assessment and 216 Interview with Governor
spillages, the majority of Lafayette’s
is now applying the PHP18million to the Joey Salceda, above n 87.
subsidiaries’ management team were
2008-09 year. The company also recently
Australian. Following the spills, the 217 Letter to President Macapagal-Arroyo
stated that “more than PHP23.5 million
management team was replaced with from R.D. Watt, Country Manager,
had already been spent on SDMP”, which
a mostly Filipino team, resulting in Lafayette, 26 February 2004, copy
would suggest that PHP11.1 million was
less than six expatriates. Mr Carlos on file with Oxfam Australia.
spent between earlier statements made in
Dominguez was appointed chairman
March 2007 and representations made in 218 Rules and Regulations to
and president of Lafayette Philippines
August 2008: Rapu Rapu Processing Inc, Implement Republic Act No 7916,
Inc. In April 2008, Dominguez and his
http://www.rapu-rapumining.com/ otherwise known as The Special
entire team announced their resignation.
Social%20Responsibility.html, Economic Zone Act of 1995,
[at 13 June 2008]; Community Relations 199 Rapu Rapu Mining Inc, The Companies, http://www.peza.gov.ph/about_irr.htm
Department, Rapu-Rapu Polymetallic http://www.rapu-rapumining.com/
Project, A Brief Presentation on Social the-companies.html 219 Centre for Environmental Concerns
Development Management Program, [at 12 September 2008]. (CEC), above n 215.
presented on 16 March 2007.
Oxfam Australia 59
279 Lafayette Mining Ltd, above n 3. 302 Avila, Charles R, above n 8, p. 5. 324 Department of Environment and
Natural Resources, above n 7, p 19.
280 Interview with SAMAMOMU – 303 The company claimed that 2 kilos of
Organisation of small fisherfolks in dead fish were collected after the first 325 Lafayette Mining Inc, above n 3.
Muntupar and community members spill. As some Rapu-Rapu residents
(Sorsogon, 13 March 2007). gave testimonies to the Fact Finding 326 Ibid.
Commission that they were able to 327 Mineral Policy Institute, above n 284.
281 Avila, Charles R, above n 8. recover more dead fishes immediately
282 Lafayette Mining Ltd, above n 3. after the tailings incidents it is probable 328 Mines and Geosciences Bureau,
the amount of dead fish was higher than Department of Environment and
283 Ibid. 2kg collected by DENR investigators; Natural Resources, Evaluation report
Avila, Charles R, above n 8, p 7. on the Rapu Rapu Polymetallic
284 Mineral Policy Institute, Project under test run conditions,
http://www.mpi.org.au/campaigns/ 304 Lafayette Mining Ltd, above n 301. 14 December 2006, p 15.
waste/rapurapu_watching
[at 12 November 2007]. 305 Department of Environment 329 Memorandum to the Secretary
and Natural Resources, above of the DENR from Horacio
285 Lafayette Mining Ltd, above n 3. n 7, Executive Summary. Ramos, above n 286, p 16.
286 Memorandum to the Secretary of 306 Avila, Charles R, above n 8. 330 Email to Oxfam Australia Mining
the DENR from Horacio Ramos, Ombudsman from Frances Q
Director of the Mines and 307 Department of Environment and
Natural Resources, above n n 7, p 19. Quimpo, Centre for Environmental
Gesosciences Bureau, DENR, Concerns, 16 August 2006.
on the Evaluation Report on the 308 Avila, Charles R, above n 8. p. 5.
Rapu Rapu Polymetallic Project 331 Interview with Jack Malovega,
Under the Test Run Conditions, 309 Department of Environment Agricultural Technologist and
19 Dec 2006 (copy on file). and Natural Resources, above Municipal Fisheries Coordinator
n 7, Executive Summary. . (Poblacion, 13 December 2007);
287 Lafayette Mining Ltd, above n 3. Interview with Mr Antonio Casitas,
310 Avila, Charles R, above n 8, p. 5. Rapu Rapu elder and leader of
288 Letter from Frances Quimpo, above n 13.
311 Avila, Charles R, above n 8. Sagip Isla Sagip Kapwa (Poblacion,
289 Lafayette Mining Ltd, above n 3. 15 March 2007); Memorandum from
312 Ibid. Mines and Geosciences Bureau
290 Ibid.
and Environmental Management
313 Ibid, p. 9.
291 Ibid. Bureau to DENR, Investigation of
314 Department of Environment Alleged Fishkill in Rapu Rapu, Albay,
292 Ibid. and Natural Resources, above 30 October 2007; and Executive
293 Ibid. n 7, Executive Summary. Summary Report to Governor
Joey Sarte Salceda, The Rapu Rapu
294 Rapu Rapu Processing Inc, above n 14. 315 Avila, Charles R, above n 8, p. 6. Fishkill on October 28 2007 and
316 Ibid. Days Thereafter, 1 November 2007.
295 Ugalde, Manny T. and Barcia, Rhaydz B.,
“Albay Governor orders investigation of 317 Lafayette Mining Ltd, Lafayette 332 Memorandum from Mines and
fish kill”, Manila Times, 31 October 2007, Rapu Rapu Update, 19 May 2006. Geosciences Bureau and
http://www.manilatimes.net/national/2007/ Environmental Management
oct/31/yehey/prov/20071031pro1.html 318 Interview with Jeremias Bureau to the DENR, above n 331.
Dolino, above n 235.
296 Lafayette Mining Ltd, ASX Market 333 Regis, E, Institute for Environmental
Release, Reinstatement to Official 319 Department of Environment and Conservation and Research,
Quotation, 23 November 2007, Natural Resources, above n 7, p 10. Ateneo de Naga University,
http://www.asx.com.au/asxpdf/ Report on the initial investigation
20071123/pdf/3160jh5p6dr8z0.pdf 320 Ibid. conducted in the Island of
321 Interview with Bishop Arturo Bastes, Rapu-Rapu on the recent fishkill,
297 “Lafayette management team quits,” 7 November 2007. See also,
Philippine Daily Inquirer, 4 June 2008, former head of Fact Finding Mission,
(Sorsogon, 13 March 2007) Executive Summary Report
http://business.inquirer.net/money/ to Governor Joey Sarte
topstories/view/20080604-140594/ 322 Interview with former member of Salceda, above n 331.
Lafayette-management-team-quits Fact Finding Mission, name withheld
298 Avila, Charles R, above n 8, p. 4. (Quezon City, 7 March 2007).
www.oxfam.org.au/campaigns/mining
mining.ombudsman@oxfam.org.au