Mining share to GDP in past decade “very modest,” MGB stats reveal

This is a press statement from The Save Palawan Movement (SPM) from the Conference on Mining’s Impact on Philippine Economy and Ecology

The local mining sector has failed miserably to deliver its promise of economic progress and development in a national scale, as far as statistics by the Mines and Geosciences Bureau (MGB) are concerned.

Industry figures aggregated by MGB from 2000 to 2009 reveal that, on the average, the mining industry has merely accounted for no more than 0.91 percent of the Philippine gross domestic product (GDP). “Up to 2005, mining and quarrying accounted for less than one percent—from 0.6 percent to 0.9 percent—of Philippine GDP,” notes Margarita Gomez, an economist at Revenue Watch and coordinator of Bantay-Kita-Action for Economic Reforms, in her 2010 study entitled Transparency Issues in the Philippine Mining Industry: Towards Tax Justice. “From 2005 onwards, the mining industry’s contribution increased to one percent and above. To date, its greatest input to the country’s GDP has been 1.4 percent in 2007.”

In contrast, agriculture, fishery and forestry—industries that have all been recognized as key sectors in the Philippine economy despite being constantly under the threat of mining—accounted for 16.5% of the total GDP on the second quarter of 2009 alone.

The study—which cited figures from MGB’s Mining Industry Statistics released on February 2010, November 2010 and May 2011, respectively—also added that the mining industry’s contribution to total Philippine employment has, likewise, been described as “very modest.”

“In terms of employment, the mining sector has accounted for no more than 0.3 percent of the country’s total employment from 2000 to 2004, rising to 0.4 percent from 2005 to 2007, and 0.5 percent in 2008 and 2009,” the paper reveals. “On the average, the industry’s contribution to total employment during the decade was no more than 0.376 percent.”

Environment advocates and economists referred to a mining project in Mongolia to best illustrate this point.
“The Oyu Tolgoi (in Mongolia) is approximately a US $100 billion mine over 40 years. That is expected to be the third largest copper mine in the world. It has generated a total of 11,400 jobs during the construction phase, but only 3,500 jobs will be permanent eventually,” according to a coalition spearheaded by the Save Palawan Movement, the Catholic Educational Association of the Philippines, Ateneo de Davao University, and Alyansa Tigil Mina.

“Therefore, employment may only be intensive in the initial stage, but labor absorption is likely to decline over time because more labor-saving technologies are adopted in the industry. Agriculture, on the other hand, contributes nearly two-fifths or 40% of the jobs here in the Philippines.”

Gov’t gets nothing significant, even in taxes

From 2000 to 2009, the contribution of mining excise taxes—large-scale, small scale, non-metallic operations—to total BIR excise tax collections has only been about 0.7%, according to former Commission on Elections (Comelec) Chairman and Save Palawan Movement advocate, Atty. Christian Monsod.

“The development role of mining is always described as ‘potential’ because mining has never played a major role in our sustainable development, not even during the mining boom of the 70s and early 80s,” explains Monsod, an esteemed member of the Constitution Commission that drafted the 1987 Philippine Constitution. “What’s even more disappointing is that mining excise taxes relative to total BIR collections is consequently even smaller at 0.07%.”

The Department of Environment and Natural Resources (DENR), Monsod claims, has also revealed very disturbing inconsistencies in terms of the actual figures being reported by the mining sector. “The exports figure that mining companies have apparently gathered exceeded the reported production values of minerals (Php 277 billion from 2000 to 2009),” Monsod notes. “Aside from this, there has also been a discrepancy between potential excise taxes from mining and the actual collections that the sector has actually collected (Php 7.8 billion from 2000 to 2009.)

Mining and public costs

Since mining activities are usually located in rural and mountainous areas, it obviously has a huge impact on farmlands, rivers and shorelines, where the poorest of the poor namely, the farmers, indigenous peoples and municipal fishermen, usually reside.

“The fact is that mining cannot be conducted without affecting and disturbing the land, water, and air surrounding and connected to the site, as well as the various natural resources found in them,” Monsod notes. “Mining does not only result in the extraction of minerals, but often also necessitates the use, removal, or destruction of non-mineral resources, such as freshwater, timber, and wildlife. This may also result in health problems, displacement of people, social divisiveness, even the need to provide PNP and AFP protection.

Then, there are the disasters that happen from the denudation of forests—from the dislodging of the rocks that anchor the trees, from siltation and erosion, as well as the accidents from mining structures. All these translate into public costs.

Responsible mining: a product of fiction

This glaring truth complements the recommendations aired by the Ateneo School of Government, led by Antonio La Viña, on its recent study regarding the future of mining in the Philippines.

The policy brief, an independent report based on objective and peer-reviewed documents, recommends that the government impose a blanket moratorium on mining that includes suspension of processing of submitted mining applications, and not only for cleansing of dormant or defective applications. “Based on our researches and analyses, supported by experts and stakeholders consulted in this study, the country is not yet capable of accurately measuring the real benefits and costs of mining,” the study reveals.

The moratorium, on the other hand, was also endorsed by the participants in the recently concluded nationwide conference on mining and the ecology, which staged regional forums in Davao, Iloilo, and Manila.

This simply highlights the fact that there is no such thing as responsible mining; the mere fact that mining operations are taking place in the Philippines—the seat of the world’s richest biodiversity that possesses an intricate web of ecological systems—is in itself very irresponsible.

“The government’s limitations in accounting for verifiable economic benefits versus environmental, social, cultural and economic costs are so serious that we are effectively gambling away our future. We are mindful of possible adverse economic displacement in imposing a moratorium today, which is at worst temporary,” the study adds.

The Save Palawan Movement (SPM) is a non-profit, multi-sectoral volunteer organization that stands for the protection of our greatest resource—which is biodiversity. Armed with the support of more than 5.6 Filipinos and 849 organizations, SPM has been continuously fighting for the preservation of our island ecosystems, as well as poverty alleviation through community-based sustainable ecotourism and agriculture.

GINA LOPEZ, convenor of the Save Palawan Movement

• BIODIVERSITY: The Philippines is number one in terms of endemicity and is also one of the 17 megadiversity countries worldwide. Reforestation cannot bring back biodiversity; planting trees does not replicate an ecosystem.

• ISLAND ECOSYSTEMS: This is an interweave of biological systems, which includes steep mountains, forests, coral reefs, mangroves, and farm lands, contrary to DENR’s definition of island ecosystems limiting the area to 50 hectares Given that the Philippines is the number one typhoon-hit country in the planet, mining within an island ecosystem, whether large-scale or small-scale, is irresponsible.

• THE RIGHT CHOICE TO MAKE: Areas of biodiversity are also rich in mineral resources, but we need to make the right choice between extracting these minerals and preserving biodiversity. We made a commitment to the international community that we will protect the environment at all cost.

• POVERTY: The poorest areas in the country are mining areas. The greatest incidence of poverty is in the mining sector.

• ALTERNATIVES: Community-based sustainable ecotourism can remove poverty in a short span of time, with very little costs.

CLIVE WICKS, consultant, Working Group in Mining in the Philippines

• MINING AND FOOD SECURITY: Mining operations are not being planned together with the Department of Agriculture—who is responsible for ensuring food security—and other departments tasked to ensure clean water for their municipalities.

• RESPONSIBLE MINING: Our team has not identified any responsible mines in the Philippines, so far.

• ENVIRONMENTAL IMPACT AREAS: Mining companies have a huge impact on the environment and other fragile biological systems. By requiring exemptions from the laws, it shows that mining companies don’t respect the laws protecting water catchments and tropical forests. They impact on irrigation and freshwater systems and pollute our shallow aquifers, which cannot be cleaned up and pose huge risks to the lives of our fellow Filipinos when disasters strike. This was proven by the devastation of Typhoon Sendong—floods and toxic wastes—in Cagayan de Oro last year.

• TAMPAKAN: One of the most dangerous proposed mines in the world is in the Philippines. It has the potential to cause induced seismic activity and cause major problems to six rivers Mindanao. These could cause disaster to people living in nearby communities, who already have to put up with all the current seismic activities.

• CUMULATIVE RISKS: The cumulative risks of mining in the Philippine context are very high. Whether large-scale or small- scale, and because of the cumulative risks, we believe that there is really no such thing as responsible mining in fragile island ecosystems. The confluence of various risks that exist in the Philippines makes mining—a site-specific industry—in the country an extremely hazardous, destructive and irresponsible undertaking.
CHRISTIAN MONSOD, member of the 1986 Constitutional Committee

• POVERTY: Mining has the highest poverty incidence (48.7%) among all the sectors in the country (agriculture, manufacturing, even the unemployed). It is the only sector where poverty incidence increased between 1988-2009. Thus, mining cannot be discussed except in the context of our country’s dismal performance in addressing mass poverty and the gross inequalities of income, wealth and political power that persist more than 25 years after the glowing promise of EDSA of a just society.

• SOCIAL JUSTICE: Mining is often cited as an example of what Paul Krugman calls activities that “privatize benefits and socialize costs.”

• COSTS AND BENEFITS: Mining companies are allowed to recover and repatriate all pre-operating and development costs up to 4-5 years after start of operations. Thus, we can assume that these inflows and outflows even out during that period. Mining operations usually front load production during the first five years, arguably to exploit market opportunities, but this also happens to coincide with their tax holidays.

• TAXES: From 2000 to 2009, the contribution of mining excise taxes—large-scale, small scale, non-metallic operations—to total BIR excise tax collections has only been about 0.7%.

?- MINING AS A DRIVER OF DEVELOPMENT: : The development role of mining is always described as “potential” because mining has never played a major role in our sustainable development, not even during the mining boom of the seventies and early eighties. Truth is, mining is not considered enough of a value-adding activity.
Mining or Food? by Clive Wicks
A preliminary dam break analysis was used to help assess the likely consequences of a dam failure to downstream communities, infrastructure and the environment. This further aids in classifying the failure consequence for the dams, and hence helps selection of the appropriate design criteria.

Based on Table 5.1., the TSF has been given an ‘Extreme” consequence classification, during operation and closure, due to the high potential for loss of life and high environmental damage if failure occurs. This classification also applies to waste rock co-disposed with tailings in the TSF. The selection of ‘Extreme” classification means that the structure is designed to the highest level of protection consistent with international dam engineering practice.

The FWD has been assigned a ‘Very High” failure classification during operation, except where a failure mode could impact the TSF, in that case the TSF criteria takes precedence. In essence the combined TSF/FWD system is designed to the highest criteria.