Philippines mining shutdown

The Philippines is the world's biggest supplier of nickel ore. President Rodrigo Duterte's
government has shut down over half of the country's mines. His environment minister said
that because of its unique ecosystem, the Philippines is simply unfit for mining.

The mining companies want the government to publish the environmental audit that has
brought the industry to a grinding halt. They say the closures are too drastic, that mining
policy isn't coherent and there could be knock-on effects elsewhere. But mining contributes
less than one percent to the economy.

While the Philippines says it can live without its mining industry, the rest of the world still
feels the impact. The crackdown has pushed up global prices for this key ingredient in
stainless steel.

Caroline Bain, the chief commodities economist with London-based Capital Economics gives
her take on the issue: "We think there are going to be appeals against their ruling - it might
be that the impact is less than it appears on paper, but as it stands now, they're cutting off
about 8 percent of global nickel supply with huge implications, given the Philippines supplies
around 97 percent of China's nickel. So, this is a major disruption for the nickel market."

"Around 70 percent of the world's nickel is used to make stainless steel," explains Bain. "So
that would be the primary impact on the stainless steel market. Nickel is also used in
aerospace and green batteries and chemicals, so there are considerable ramifications."

Also on this episode of Counting the Cost:

Fake Ads: We spend so much time on our phones these days and there's one group of
companies very eager to profit from that behaviour. Advertisers around the world are
coughing up more and more cash to capture our digital attention.

For example, US advertisers spent $17.6bn on digital ads in the last quarter alone, according
to the Internet Advertising Bureau. That figure is even bigger if you look at the global picture.
And it's likely to keep growing. Even the ad industry itself has become more digital
dependent. The way ads are bought and placed online is often done with automated
technology. But there's a problem in this brand new world. Digital advertising space is under
daily attack and advertisers often end up paying for "fake ads".

So, how can advertisers be handing over money to fraudsters? Fake ads happen like this:
The automated way advertisers buy ad space and the automated programs that digital
media companies use to sell ads can be fooled. And who is committing the fraud? It's other
computer programs. They pull ad revenue towards fake websites. Of course, advertisers
want humans to see their ads not computer programs, so-called bots which aim rack up
page impressions on fake sites.

The biggest digital ad fraud ever uncovered is known as the Methbot fraud. Hackers are
thought to have made as much as $5m a day by faking video views and exploiting the pay-
per-click system. And advertisers, understandably, don't want to hand over cash invested in
their brands to fraudsters. David Murphy, head of digital media solutions at the Irish Times,
discusses this trend.

Gambia's docile crocodiles: Gambia's tourism board is hoping to convince the new
government to fund an advertising campaign that would lure back tourists after the recent
political crisis. And the country's friendly reptiles form part of that plan. Reza Sayah reports
from Banjul.

Mexico's Green Gold: Mexico is the world's number one producer of avocados and the US
is its biggest market. But as the Trump administration threatens to change the NAFTA free
trade deal, Mexican producers are worried about their future. John Holman reports from
Uruapan.

New Gold Fever Has a Grip on the Philippines : Commodities: Dozens of foreign firms have set
up mining operations in the islands.

October 07, 1990|CRISTINA LEE | TIMES STAFF WRITER

The year was 1987. Daniel Montano recalls sitting pensively in a Manila coffee shop as Agustine
Jimenez, a 67-year-old former mine worker, told him a tale of a Philippine gold mine abandoned
long ago.

As Montano tells it, he studied a warped and faded photograph of a young Jimenez and five
other Filipino miners holding 12 gold bars in their hands. The bars were from a mine in the
Paracale district of the Philippines, an area Jimenez claimed was rich in gold deposits.
The mine, Jimenez told Montano, had been run by a prominent Filipino family until 1941, when
American engineers dynamited its entrance closed to keep its riches away from advancing
Japanese troops. At war's end, Jimenez bought claims to the abandoned mine.

Montano, gambling on an old man's memories and the glimmering gold sparkle he saw when he
later visited the mine's entrance, had gold fever. To finance renovation of the mine, the Orange
County investment banker put together a group of Filipino and American investors that includes
fast-food chain owner Carl N. Karcher.

The promise that Montano saw in the Paracale district--about 230 miles southeast of Manila--
has not escaped notice by other investors. Since the ouster of the late Philippine President
Ferdinand Marcos in 1986, the nation's gold mining industry has experienced a rebirth. Dozens
of foreign companies have set up mining operations in the country, which is believed to have
one of the world's richest gold deposits. The Philippines is second only to South Africa in the
concentration of gold deposits discovered per unit of land.

"There's no doubt that there has been an increase in interest for foreign mining companies
exploring in this country," said Frank Reid, president of WMC Philippines in Manila, an
Australian-owned gold mining concern. "One of the major attractions of the Philippines is that
its gold mining industry has never been exposed to modern exploration techniques until now."

The Philippines is one of eight Pacific Rim countries that sit atop the so-called Rim of Fire--a strip
that runs from Japan southward to New Zealand. The region is dotted by volcanoes and hot
springs where geologists say gold and other mineral deposits are concentrated.

The gold rush to the Philippines--and other Asian countries along the Rim of Fire--is being driven
by advances in mining technology and a devaluation of local currencies that has made mining
cheaper. Meanwhile, rising inflation, concerns about a global recession and turmoil in the
Middle East have prompted some investors to buy precious metals, particularly gold, as a hedge.

Gold prices flirted with the $400-per-ounce mark last week, up from about $375 on Aug. 1, the
day before the Iraqi invasion of Kuwait. "In light of what's happening in the Middle East,
speculators are driving up the prices," said Simeon Hernandez, a trade representative at the
Philippine consulate in Los Angeles.

Mining companies were also encouraged by the change in government in 1986. Under Marcos,
exploration permits often were parceled out to the late dictator's cronies or to mining
companies that agreed to pay off government officials, mining executives said.

The Philippine government--hungry for foreign investment and new jobs to boost a foundering
economy--has encouraged foreign gold mining companies by offering various financial
incentives.

But mining executives still complain about Philippine government red tape and regulations that
prohibit foreign firms from owning more than 40% of a mining company. That restriction limits
the profits a foreign investor can take out of the country and forces the investor to find a local
businessman with substantial capital, which is not easy.

Posing a different sort of problem are the leftist insurgents that roam parts of the country and
who sometimes demand payoffs from prospectors. And the area is swept by frequent typhoons,
as well as monsoons, which close the mines for five months a year.

Meanwhile, mining companies and the Philippine government also are dealing with the problem
of gold smugglers--an estimated 500,000 of them, according to official statistics. The
government blames smugglers, or so-called panners, for the loss of more than $1 billion in
revenue last year.

Mining companies are required by law to sell at market value all gold produced in the country to
the Philippine central bank. But smugglers sidestep the law by selling their nuggets on the black
market, avoiding government taxes in the process.

"The panners can't carry the gold around, so they sell it to people who want to risk transporting
the gold to foreign markets," said Henry Brimo, chairman of Philex Mining Corp., the second-
largest gold mining company in the Philippines.

Hoping to ease the smuggling problem, the government is expanding the number of gold-buying
stations in the nation's mining regions to persuade panners to sell their gold legitimately to the
government.

SOURCE LINK: http://articles.latimes.com/1990-10-07/business/fi-3222_1_gold-mining-

companies

Joint Venture Firm Buys Option for Rich Mine Claim : Precious metals: The company says
action on the Philippines land will raise its ore reserves to more than 10 million ounces of
gold.

ORANGE — Two Orange County companies announced Tuesday that their Philippine joint
venture firm, Precious Metals Mining and Development Corp., has purchased an option to
acquire mining claims in the Philippines.
The companies, VTN Corp. of Orange and Shelly Associates Inc. of Tustin, said Precious Metals is
in the process of reopening a pre-World War II mine in Camarines Norte, a province 130 miles
southeast of Manila, known as Gold River Claims.

The value of the option, which must be exercised within five months, was not disclosed.

Precious Metals has mining concessions for 250 acres in the town of Paracale, with 350,000 troy
ounces of gold in proven reserves worth about $133 million based on current market rates of
$380 an ounce. The company claims that the options will raise its concessions to a total of 3,097
acres in the same district and raise its ore reserves to more than 10 million ounces of gold worth
some $4 billion in the current market rate.

"Our geologists say we have between 10 million and 15 million ounces of gold in the veins of our
claims," said Daniel Montano, chairman of VTN, an engineering and development concern, and
Shelly, an electronic components and systems manufacturer.

"Basically, we have what appears to be one of the largest gold finds in Asia."

Precious Metals is 40% owned by Gold Properties Restoration Co. of Orange and a group of
Filipino and U.S. investors. Among the major shareholders of Gold Properties are Shelly
Associates (38%), Carl N. Karcher Trust of Anaheim (14.2%) and Montano Securities Corp.
(16.1%), in which Montano is a major shareholder.

Precious Metals has purchased the properties from local Filipino owners, who hold 45-year
concessions on the properties. So far, the venture has invested $2.3 million in the last 3 1/2
years in the development of the Philippine mines.

Montano said Gold Properties hopes to raise $5 million to finance the gold mine development
through a public offering later this year. Toluca Pacific Securities Corp. in Burbank will
underwrite 1 million shares at $5 a share.

In addition, Precious Metals hopes to borrow between $5 million and $6 million from
international lending institutions to develop the mine and build a mill to process the ore into
bullion. The firm is discussing loans with the World Bank in Washington, Asian Development
Bank in Manila and Overseas Private Investment Corp., a U.S. development agency in
Washington, company officials said.

Initial estimates of the cost to produce an ounce of gold from the mine are $190, Montano said.
He said low labor costs in the Philippines and the high content of gold in the ore body makes this
possible.

Montano said the Paracale district concession is just one of several the company is planning to
invest in. "We have other companies looking into other gold mining concessions in other parts
of the Philippines," he said.
Although there are concerns that insurgency problems in the Philippines may make the
investment risky, Montano said this problem is not prevalent in that particular area in the
country.

"It's not one of the most prosperous areas in the Philippines, but they have no insurgency
problems," said Ray Gorre, the spokesman with the Philippine Consulate General in Los Angeles.

He said, however, that the area is often struck by typhoons, which could make mining activities
difficult.

Many foreign companies continue to do business profitably in the Philippines, said Brian Jenkins,
managing director of Kroll Associates, a consulting firm in Los Angeles. "Companies can do
business profitably so long as they take appropriate security measures," he said.

The Philippines is the largest gold producer in Asia.

SOURCE LINK: http://articles.latimes.com/1990-10-03/business/fi-1728_1_precious-metals

MANILA, Philippines (UPDATED) – The mining industry in the Philippines is controversial again
after Environment Secretary Gina Lopez ordered the closure of about 23 mining operations and
cancellation of a total of 75 mineral production sharing agreements (MPSAs) in watersheds
earlier this year. (READ: DENR announces closure of 23 mining operations)

Below is a list of key things to know about the mining industry in the Philippines:
1.The Philippines is the fifth most mineral-rich country in the world for gold, nickel, copper, and
chromite. It is home to the largest copper-gold deposit in the world. The Mines and Geosciences
Bureau has estimated that the country has an estimated $840 billion worth of untapped mineral
wealth, as of 2012.

2. All the regions (except NCR and ARMM) in the country allow mining operations. ARMM
ceased issuing permits due to the on-going peace process between the Moro Islamic Liberation
Front and the national government.

3. About 30 million hectares of land areas in the Philippines is deemed as possible areas for
metallic minerals. About 9 million hectares of land areas is identified as having high mineral
potential, according to MGB.

4. The Philippines metal deposit is estimated at 21.5 billion metric tons and non- metallic
minerals are at 19.3 billion metric tons, as of 2012.

5. According to MGB, there are 236,000 workers in the mining industry in 2016.

6. The mining industry’s contribution to the country’s GDP is at 0.6% in 2016.

7. The contribution of minerals and mineral products to the country’s total exports is at 4% and
0.3% for non-metallic mineral manufacturers in 2016.

8. The mining industry's gross production value declined in the last 2 years. From P208.2 billion
($4.2 billion) in 2014 to only P100.6 billion ($2 billion) in 2016, according to MGB.

9. The Mining Act of 1995 allows for foreign ownership of mining assets and exploration
permits. The Supreme Court upheld the constitutionality of the foreign investors' participation
in mining activities in 2004.

10. Mining tax is low at 2% for metallic and non-metallic minerals. During the Aquino
administration, a mining reform bill was drafted to increase revenues of the government. In the
bill, companies will either pay 10% tax on gross revenues or 45% to 55% tax on adjusted mining
revenues plus a percentage of windfall profit, whichever is higher.

11. As of September 2016, there are about 40 metallic mines and 62 non-metallic mines
operating in the country.

12. There are a total of 1,473 mining applications under process in the country as of 2016,
according to the MGB.

13. As of August 2016, mining companies have already committed P13.1 billion for the
development of their host and neighboring communities under their Social Development and
Management Programs, the MGB reported.

14. Meanwhile, mining companies have allotted a total of about P19.1 billion for the
implementation of approved projects and programs under their Environmental Protection and
Enhancement Programs.
15. From 2011 to 2013, the mining sector committed to reforest about 34,000 hectares, under
the National Greening Program. By December 2015, more than 47,000 hectares have been
reforested.

Source: Mines and Geosciences Bureau’s Mining Facts and Figures and Mines and Geosciences
Bureau’s Mining Industry statistics

SOURCE LINK: https://www.rappler.com/business/special-report/whymining/whymining-latest-

stories/11983-fast-facts-mining-philippines

Mining industry in the Philippines

THE Philippines is the fifth most mineral-rich country in the world for gold, nickel, copper, and
chromite. It is home to the largest copper-gold deposit in the world. The Mines and Geosciences
Bureau (MGB) has estimated that the country has an estimated $840 billion worth of untapped
mineral wealth, as of 2012.
About 30 million hectares of land areas in the Philippines is deemed as possible areas for
metallic minerals. According to the Mines and Geosciences Bureau (MGB), about nine million
hectares of land areas is identified as having high mineral potential. The Philippines metal
deposit is estimated at 21.5 billion metric tons and non-metallic minerals are at 19.3 billion
metric tons, as of 2012.

How mining in the Philippines started?

When the Philippines inhabited by pre-colonial settlers 67,000 years ago, the traditional place
and lode mining were part of the activities of the natives. This was the time of Negrito tribes.
These groups traded with what is now China, India, Japan, Thailand, Vietnam and Indonesia.
Raw gold was a commodity that was sold or bartered to these trading partners.

The Spanish colonizers were not able to turn mining into an industry due to the fierce resistance
they encountered from the Ygorotes of the Gran Cordillera Central. In 1837, a Royal Decree was
issued creating the Inspeccion General de Manila with the stated purpose of administering to all
the mining activities in the colony. In 1864, the Lepanto Mine was opened and marked the first
full scale mining operation that produced gold and copper.

The Philippine Mining Bureau was set up in 1900 to process and administer claims and all
related transactions pertaining to mining. The Benguet Mine was opened in 1907. It was the first
modern gold mine in the Philippines. Seventeen other mining companies followed suit in Baguio
and Benguet. Commercial mining was born in the Philippines.

The boom years of the Philippine mining industry was the pre-war period. The principal product
was gold. There were forty gold mines in operation producing about 40 metric tons per annum
before the outbreak of World War II. Year 1936 saw the passing of Commonwealth Act 137 or
country’s third mining law. Gold had taken the third spot in the top commodities exported by
the Philippines after sugar and coconut products.

The outbreak of World War II on December 7, 1941 with the Japanese attack on Pearl Harbor
had destructive effects on the mining industry. Aside from gold, the Japanese utilized prison
labor explore and mine for iron, copper, chromite and manganese. The same were shipped back
to Japan to serve as raw materials for the war effort. Yamashita’s last stand in the hinterlands of
Northern Luzon forced the Americans to bomb the area extensively resulting in extensive
damage to the mines.

The end of the war in 1945 signaled the start of the reconstruction and rehabilitation of the
mines damaged during the war.

The gold mines were rehabilitated and the exploration for copper began in earnest in the 1950s.
New technologies such as open pit mining for large tonnage, low grade copper deposits were
introduced. Gold and copper became the pillars of large scale mining with the establishment of
three major mines; Atlas in Cebu in 1955, Sipalay in Negros Occidental in 1957 and Philex in
Baguio in 1958.

From 1960 to 1980 the mining industry was at its peak. The expiration of parity rights in the
Laurel-Langley Agreement in 1974 paved the way for Marcos and his cronies to take over
existing mines and use existing claims to build new ones. Marcos’ Presidential Decree No. 463
issued in 1974 gave them blanket authority to impose their will on the industry.

In the early 80s, the mining industry was hit by a market crash of unprecedented proportions.
Prices of gold and copper tumbled down. This triggered a domino effect which saw 14 large and
medium-sized mines shut down their operations due to heavy losses. It was during this period
that small-scale mining made a dramatic comeback. A small army of men, women and children
descended upon and engaged in gold panning in Mt. Agtuganon/Diwata more popularly known
as Mt. Diwalwal. Marcos immediately enacted Presidential Decree 1899 or the Small-Scale
Mining Law to regulate these miners. In effect, the law served to ensure that the gold would still
be sold to the State. However, it spawned a whole new industry of gold smuggling and had the
adverse effect of environmental degradation.

The year 1986 in time of Marcos gave the mining industry a glimmer of hope. However the
political situation from 1986-1992 had local and foreign investors watching on the sidelines for a
clear mining policy initiative from the government which never came. They were not prepared
to take on a huge risk in time of crisis of early 90s.

During this time, the Bureau of Mines and Geo-Sciences had been conducting major studies on
the Philippines’ mineral potentials funded by foreign grants. After the victory of Fidel Ramos in
the 1992 elections, a policy roadmap was formulated which led to the enactment of the
Philippine Mining Act of 1995, the country’s fifth mining law. The Philippine mining industry had
gone full circle with the impending resurrection of large scale mining by local and trans-national
companies.

On June 19, 1995, the La Bugal-B’laan Tribal Association filed a petition before the Supreme
Court questioning the constitutionality of the Philippine Mining Act of 1995 with particular
reference to its implementing rules and regulations and the provision which allows foreigners to
operate mining companies in the Philippines.

In January 2004 the Supreme Court ruled on the petition and nullified the provision of the
Philippine Mining Act which allowed foreign mining firms to operate in the country. In
December 2004 the Supreme Court reversed itself and once again allowed foreign mining
companies to operate in the Philippines.

The contribution of mining industry in economic growth

In 2016, there are 236,000 workers in the mining industry. The mining industry’s contribution to
the country’s GDP is at 0.6 percent in the same year. The contribution of minerals and mineral
products to the country’s total exports is at 4 percent and 0.3 percent for non-metallic mineral
manufacturers.

According to MGB, the mining industry’s gross production value declined in the last two years.
From P208.2 billion ($4.2 billion) in 2014 to only P100.6 billion ($2 billion) in 2016.

The Mining Act of 1995 allows for foreign ownership of mining assets and exploration permits.
The Supreme Court upheld the constitutionality of the foreign investors’ participation in mining
activities in 2004.
Mining tax is low at 2 percent for metallic and non-metallic minerals. During the Aquino
administration, a mining reform bill was drafted to increase revenues of the government. In the
bill, companies will either pay 10 percent tax on gross revenues or 45 percent to 55 percent tax
on adjusted mining revenues plus a percentage of windfall profit, whichever is higher.

As of August 2016, mining companies have already committed P13.1 billion for the development
of their host and neighboring communities under their Social Development and Management
Programs.

As of September 2016, there are about 40 metallic mines and 62 non-metallic mines operating
in the country.There are a total of 1,473 mining applications under process in the country as of
2016.

SOURCE LINK: http://www.manilatimes.net/mining-industry-philippines/348610/

CHAMBER OF MINES IN THE PHILIPPINES

COMP stands by responsible miners, challenges impartiality of audit

The Chamber of Mines of the Philippines decried the announcement made by the DENR
Secretary that she wants to close 21 mines and suspend an additional 5 operations.

“Mining companies were invited by government to invest in the Philippines and signed contracts
with them as partners in mineral resource development. By entering into these contracts,
government is bound to observe due process. Sec. Lopez cannot just shut down mines without
due process,” Artemio Disini, chairman of the Chamber of Mines, said.

The Chamber stands by its members in the face of the pronouncement of DENR Secretary Gina
Lopez suspending the operations of 5 mines and the closure of 21 mining projects. The Chamber
also questioned the way by which the DENR mine audit was conducted, highlighting the
inclusion of anti-mining activists that tainted the process.

“We are not against a strict implementation of the law. In fact, we have often called for stricter
monitoring of all mining operations in the country. What we question is the bias and partiality of
the audit from the very start with Secretary Lopez’s early statements that she does not like
mining and would like to see mines closed,” Nelia Halcon, COMP executive vice president, said.

“With the inclusion of anti-mining groups in the audit teams, you can see that the audit was
compromised. The participation of these anti-mining activists immediately raises the question of
whether or not the results are impartial,” she added.

The Chamber also laments how the audit review findings were first made known through a press
conference.

“If the audit found violations, the law provides for a procedure. She should have filed the
appropriate cases or invoked the arbitration clause of the mining agreements. Our members
have not received any formal decision but have already been subjected to trial by publicity.

“Unfortunately, it seems that her decision to close these mines was based merely on a quick fly-
by over Surigao del Sur last week in a chopper during the height of the rainy season. It may not
have been based on the review conducted by the Mines and Geo-sciences Bureau. Reports
reaching us even said MGB personnel were even banned from her press conference,” Halcon
said.

Former MGB director Leo Jasareno, earlier dismissed by the Office of the President, was present
in the Office of the DENR secretary during the press conference. Further, it has been reported
that the review results will not be released by Sec. Lopez saying it was “too complicated.”

Halcon added that despite the snag hit by the minerals sector following the nationwide audit
conducted by the DENR last year, mining firms remain committed to delivering on their
obligations and are even working beyond the requirement of the laws particularly in the
development of human capital and the enhancement of the economic base of provinces hosting
mining projects.

“We assure government, stakeholders and the public that our member companies have been
working very hard to comply with environmental laws relevant to our industry. Our social
development management programs are still in place and so with our environmental
enhancement and protection programs,” Halcon said.

According to the COMP exec, member-companies, majority of them now ISO 14001 certified,
with several undergoing the accreditation process, have not been remiss on their duties.

“Even as we faced challenges in 2016, we paid our taxes faithfully, contributed to the
betterment of our host communities, and did our part in caring for the environment,” Halcon
said.

“But the DENR Secretary does not seem to see the mining industry as government’s partner in
growing the economy. She sees miners as villains, even when mining companies have always
been a consistent partner of their host communities,” she added.

COMP cites the proliferation of illegal mining operations which bring suffering.

“They do not pay taxes; they do not help in the development of the communities; and are
destructive to the environment. It is these illegal operations that must be stopped. Yet it seems
Secretary Lopez has turned a blind eye on these,” Halcon ended.

COMP is calling on the Mining Industry Coordinating Council (MICC), co-chaired by the
Department of Finance, to convene and review the policies and arbitrary actions of Secretary
Lopez. Her drastic action of publicly announcing the closure and suspension 28 mining
operations without due process will have detrimental and far-reaching impacts on the economy,
the mining industry, and the country.

SOURCE LINK: http://www.chamberofmines.com.ph/020217pr.html