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Mining, time to do it right

President Duterte issued Executive Order No. 130 on April 14 to lift the nine-year moratorium on new mining contracts. He opted not to wait for new legislation that was supposed to set the terms for taxes and royalties, among others, for the mining industry.

I reckon this to be a step in the right direction. The economy is in trouble, and in dire need of new investments.

In this line, and with the CREATE (Corporate Recovery and Tax Incentives for Enterprises) law setting the direction for investor incentives, I presume that mining and related activities, including mineral processing, may yet be included in the list of economic activities entitled to incentives in the future. I just hope that the requirements for new mining contracts will be stringent, but not restrictive.

New mining projects are now being evaluated, according to the Department of Environment and Natural Resources (DENR), which has been tasked to draft new mineral agreements that would “maximize government revenues and share from production, including the possibility of declaring these areas as mineral reservations to obtain appropriate royalties.” The government may also renegotiate active mining agreements.

Among the conditions mentioned by Environment Secretary Roy A. Cimatu was that only mineral reserves that would allow at least 10 years of commercial extraction for metallic minerals, and seven years for non-metallic, would be considered. In my opinion, the government should also ban the export of raw ore, and require local processing prior to sale of minerals abroad.

High electricity cost is said to discourage mineral processing, and perhaps incentives should be considered in this line. “Processing is the future of the industry … [but] one of the important considerations is creating an environment that will make it competitive,” Dante Bravo, president of the Philippine Nickel Industry Association and CEO of Ferronickel Holdings, Inc., was quoted as saying in a news report.

And as I have declared in previous columns, I am pro-environment, though I am not anti-mining. I cannot declare myself 100% anti-mining and yet continue to live on the products of the industry like cement, sand, iron and steel, glass, semiconductors, electronics, as well as coal, oil, and gas — all products of extraction, including mining. I support sustainable development and finding a balance between environmental and economic interests.

Mining, if the state permits it, should always be responsible, and should be less a business and more a livelihood. Key is balance, but with a leaning towards saving the environment and improving lives. In short, mining becomes just a consequence of the pursuit of economic and social upliftment. But, if the industry does more harm than good, then shut it down.

However, in determining who is responsible and who is not, there should be clarity in rules. Regulation should not be unilateral and arbitrary. And, more important, there should always be due process. In this regard, “standards” should not be parameters set only by the DENR and its leadership. Standards should have strong legal, moral, economic, social, environmental, and ethical bases, among others.

Since 2017, I have been pushing for IRMA or the Initiative for Responsible Mining Assurance. With the country again opening up to new mining investments, I believe that this should be considered. While it is private sector-led, IRMA is a multi-stakeholder, consultative initiative that advocates responsible mining worldwide. It favors a “multi-stakeholder and independently verifiable responsible mining assurance system that improves social and environmental performance.”

On its website, IRMA explains that it was founded in 2006 by a coalition of non-government organizations, businesses purchasing minerals and metals for resale in other products, affected communities, mining companies, and trade unions. Miners are part of the initiative, but with equal voice are the pro-environment groups.

This coalition developed “standards for environmental and social issues related to mining, including labor rights, human rights, indigenous peoples and cultural heritage, conflict response, pollution control and site closure.” The standards are practically universal, encompassing all facets of mining and its impact on society, and the initiative involves groups from all over the globe.

To date, IRMA offers third-party certification of industrial-scale mine sites for “all mined materials that is governed equitably by the private sector, local communities, civil society, and workers.” In a way, it goes a step above ISO certifications. And, with IRMA, “it is the mine site, not the company, that gets certified,” using a “step-by-step approach, not a pass/fail certification system,” using global “best practices” as standard.

Another effort that requires greater local support is EITI or the Extractive Industries Transparency Initiative. EITI is another global standard, but this time to promote the open and accountable management of natural resources. On its website, EITA claims to address the key governance issues of the oil, gas, and mining sectors.

“The EITI Standard covers themes or key issues from the extraction of the resource from the ground to how it affects the citizens of the country. This includes how licenses and contracts are allocated and registered, who are the beneficial owners of those operations, what are the fiscal and legal arrangements, how much is produced, how much is paid, where are those revenues allocated, and what is the contribution to the economy, including employment,” the EITI website notes.

By taking part in EITI, the private sector, particularly extractive industries like oil and gas as well as mineral mining, become more transparent in their dealing with government. At the same time, they can be held more accountable for their actions and what they pay — or not pay — to the government. At the same time, the government becomes more accountable as to how it spends what it earns from extractive industries like mineral mining.

The Philippines is very much involved in EITI now, but IRMA support appears limited. As I had noted way back in 2017, if local miners are certified by IRMA as compliant with the most recent and best global, multi-stakeholder standards, then what more will the government want? IRMA can be the end-all and be-all of mining standards. DENR, aside from ensuring that miners meet all local regulatory requirements, will monitor miners strictly for compliance, as well as ensure that miners’ IRMA certifications are updated.

Using IRMA standards and third-party certification can help minimize arbitrariness and the unilateral exercise of discretion in the DENR regulatory processes, and promote greater accountability on the part of regulators and the mining industry. It can also mitigate corruption in the regulation, audit, and monitoring processes, and can help ensure that only those fit to explore and operate mines are allowed to do so.

 

Marvin Tort is a former managing editor of BusinessWorld, and a former chairman of the Philippines Press Council

matort@yahoo.com

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