LYCEUM-NORTHWESTERN UNIVERSITY

Tapuac District, Dagupan City

INSTITUTE OF GRADUATE AND PROFESSIONAL STUDIES

SPECIAL TOPICS IN THE PHILIPPINE STUDIES

Summer 2017

TOPIC: MINING INDUSTRY IN THE PHILIPPINES

DATE REPORTED: APRIL 30, 2017
DISCUSSANT: ARIES C. BULLO
PROFESSOR: DR. RODRIGO P. DE VERA, JR.
DISCUSSION: HISTORY AND ECONOMIC GAINS AND LOSES OF MINING
INDUSTRY IN THE PILIPPINES

I. History

• Mining in the Philippines started in the pre-colonial period.

• In a number of regions in the archipelago, indigenous communities mined for
gold, copper and many other minerals.
• Natives from all over the Philippines used gold, pearls, agate, and so on, for body
ornaments. Gold was also bartered, through the Arab world, with merchants all
over Asia and Europe in the pre-Islamic and Islamic periods. It is noted that many
merchants from Luzon (Northern Philippines), Brunei and Jolo traveled
continually all throughout Mindanao in search of slaves and gold.
• The first commercial mine in the Philippines was in Benguet, in Central Luzon,
established by the Benguet Mining Corporation. The Spanish colonisers took
advantage of whatever mineral resources they could get. In fact, gold was the
main reason why Spain colonized the Philippines, mainly for their so-called Royal
Service. They even made a law, called Inspeccion de Minas, to inspect the
existence of minerals in the archipelago.
• It was the Americans, however, who made strategic steps to exploit the minerals
of the Philippines. They did a geological survey, which validated the Philippines
as a mineral-rich country, and issued Act 468, a law that basically gave the
government the right to reserve mineral lands for its own purposes. They claimed
a number of areas as "reserved areas" for future mining, hence the
commercialization of the Benguet gold mining.
• In the year 1914 in the south, Surigao and other parts of the Caraga region were
declared as an "iron reserved" area for future mining. By then, the mining
industry in the Philippines was on its way to boom and the Commonwealth US
government took more hold of it, forming a Mining Bureau to regulate all
 potential operations in the future.
• Up till 1921, there was no large scale mining but many were making a living from
small-scale gold mining. Between 1933 and 1941, gold was the dominant and
most important mineral in the mining industry.
• Under the tyranny of the Japanese, Filipinos in many regions of the country were
coerced into mining for metals to be used for war weapons in Japanese
imperialism. This paved the way for further commercialization, exploitation and
degeneration of the Philippines. Large-scale copper mining reached its peak in the
1960s and 1970s.
• By the late 80s, world demand for copper decreased in favor of gold. However, a
number of gold mining companies closed down in that period because of law
violations and so gold mining went into decline.
• With the help of the World Trade Organization, the International Monetary
Fund and the World Bank, the neo-colonized Philippines was again coerced to
adjust its economic policies to adhere to neo-liberal policies.
• By 1994, pro-development politicians, such as Gloria Macapagal Arroyo,
lobbied for a Mining Bill which would later become the Republic Act 7942 or the
Philippine Mining Act of 1995. This law basically gives power over land,
resources and life to corporations; many areas became mining hot spots.
• By 1996, the Philippine mining industry got back on track, allowing offshore
companies to operate fully in the 'reserved areas' - a disaster for a number of
places in the Philippines.
• In March 1996, the Marcopper tunnel in Marinduque collapsed. In rough
estimation, 1.6 million cubic meters of mine tailings flowed from the mine pit to
the Makulapnit and Boac river, trapping 4,400 people in 20 villages.
• The government declared the Boac river officially dead. The disaster caused
massive siltation in downstream communities and coastal areas.
Among the tragedies that happened in 1998 is the Malangas Coal Corporation
case in Zamboanga Del Sur, Mindanao, where an explosion occurred in the mine
site, killing almost a hundred workers and injuring 35 people.
• In 2004, another disaster took place in Surigao Del Norte, Mindanao. This time it
was caused by one of the largest and longest-standing mining corporations in the
Philippines, the Manila Mining Corporation (MMC). Three disastrous incidents
occurred, where approximately five million cubic meters of waste materials
containing high levels of mercury were released, damaging local people's
agricultural lands and temporarily poisoning the adjacent Placer Bay.
• Today, 20 large-scale mining operations, 10 medium-scale and more than 2,000
non-metallic small-scale mining operations exist in the Philippines. Yet, hundreds
of mining applications are pending to prey on what's left of the country's
resources.
II. REASONS FOR MINING
- Gold, diamonds and ores such as uranium supply national governments with trading
goods, and provide jobs for millions of miners.
- Mining is essential to modern society.
- The computer you are using to read this contains about 37 materials that came from
mining.
- The electricity to power it may come from coal, oil, or gas brought from underground.

III. ADVANTAGES OF MINING IN THE PHILIPPINES

-The advantage is that it supplies raw materials (metals, coal) that are needed to build and
maintain modern industries and economies.
- It would create more jobs· You can get a lot of limestone at once.· Limestone is a
valuable natural resource, used to make things.
- It creates jobs, helps the economy of the area.
- Mining of ores will enable people to get useful elements with significant profit.
- Mining will give unemployed.
- Short term employment
- Increased exports
- Potential tax revenue
- Benefits mining companies / investors
Not only have the oil, gas and mining industries not helped the poorest people in
developing countries, they have often made them worse off. Scores of recent academic
studies and many of the bank's own studies confirmed our findings that countries which
rely primarily on extractive industries tend to have higher levels of poverty, child
morbidity and mortality, civil war, corruption and totalitarianism than those with more
diversified economies. Does this mean extractive industries can never play a positive role
in a nation's
economy? No, it simply means that the only evidence of such a positive role we could
find took place after a country's democratic governance had developed to such a degree
that the poorest could see some of the benefits.

IV. DISADVANTAGES OF MINING IN THE PHILIPPINES

-The depletion of resources rather than the reuse of existing materials, or use of materials
readily available on the surface (e.g. hydropower, solar power instead of coal and
uranium)
- The damage to both underground and surface environments (e.g. produced water, coal
slag, strip mining)
- The danger posed to men engaged in mining (cave-ins, explosions, gas, black-lung
disease, asbestosis, silicosis, and radiation sickness).
- It can damage the environment both on and below the surface.
- It can imperil water resources by contamination with heavy metals.
- Extinction of animal species Pollution Poisoning the water with fuels etc. from mining
equipment Advantages are: Scientific.
- Displacement of long term employment in agriculture and fisheries
- Reductions in long term sustainable
- Agriculture and Tourism Industries
- Destabilization of indigenous communities
- Conflicts, health risks, damage to livelihoods
- Displacement of small scale miners
- Militarization and human rights abuses
- Increased Corruption
- Irreparable environmental damage to biodiversity and endemism
- Accidents, tailing dam failures, floods, damaging land & marine resources
- High legacy costs
- Risk of increased/induced seismic activity
- Unproven macro-economic benefits export led, repatriation of profits, low taxes
- Damaged livelihoods and caused health impacts and high incentives
- Potential distortion of exchange rates

V. ECONOMIC GAINS

Based on the study of Patrick Caolie (2015), mining is the most logical economic
driver for the Philippines because agricultural production is down and rice even cost three
times more compared to imports from Vietnam and Thailand. But the Aquino
government instead relied on the remittances of migrant workers and the business process
outsourcing (Inquirer, 2015).

The Economy of the Philippines is the 39th largest in the world, according to 2014
International Monetary Fund statistics, and is also one of the emerging markets. The
Philippines is considered as a newly industrialized country, which has been transitioning
from one based on agriculture to one based more on services and manufacturing. In 2014,
the GDP by Purchasing power parity was estimated to be at $692.223 billion. [World
Economic Outlook]. According to Index Mundi (2014), agriculture contributed 11.2
percent, industry 31.6 percent and services 57.2 percent. The labor force of 41.33 million
(2013 est.) is distributed – by occupation in agriculture (32%), industry (15%) and
services (53%).
In 2015, there are about 12 million Filipinos around the world and they contribute US$40
billion to the Philippine economy it is about 13 percent of the national GDP (Wooton,
2015). But in 2014, the mining industry employed only 235,000 workers; its gross value
of P84.2 billion contributed to merely .7 percent of GDP, a significant drop from P299.5
billion or 3.3 percent of GDP in 2013 (Mining Industry Statistics, Mines and Geoscience
Bureau, 2015).
About 60% of total mining production is accounted for by non-metallic minerals,
which contributed substantially to the industry’s steady output growth between 1993 and
1998, with the value of production growing 58%. In 1999, however, mineral production
declined 16% to $793 million. Mineral exports have generally slowed since 1996. Led by
copper cathodes, Philippine mineral exports amounted to $650 million in 2000, barely up
from 1999 levels. Low metal prices, high production costs, lack of investment in
infrastructure, and a challenge to the new mining law have contributed to the mining
industry’s overall decline.

The industry rebounded starting in late 2004 when the Supreme Court upheld the
constitutionality of an important law permitting foreign ownership of Philippines mining
companies. However, the DENR has yet to approve the revised Department
Administrative Order (DAO) that will provide the Implementing Rules and Regulations
of the Financial and Technical Assistance Agreement (FTAA), the specific part of the
1994 Mining Act that allows 100% foreign ownership of Philippines mines.
The Philippines boasts some of the world’s vastest precious metals reserves, valued at
around $840bn at 2010 prices.
In 2013 the Philippines was tied with Indonesia as the largest nickel producer in the
world, producing some 440,000 tonnes each. The country’s vast and largely untapped
mining potential will continue to draw strong interest from foreign and domestic actors
despite decreasing investment in the short term. Although overall output and revenue are
being sustained by existing operations, new investment continues to lag, as mining
companies wait out the finalization of new mining regulations. The question is when will
the regulatory framework catch up with the demand. (Oxford Business Group, 2015).

VI. SUSPENSION OF PERMITS OF 75 MINING CONTRACTS

When Philippine Environment Sec. Gina Lopez decided to suspend permits of 75

mining contracts, the national debate on the importance of the mining and quarrying
(MAQ) sector in the economy was already raging. On the one hand, you have former
Economic Planning Chief and UP School of Economics Professor Emeritus Solita
“Winnie” Monsod already exposing some facts:

Is Gina Lopez dealing a mortal blow to the economy in protecting the environment?
Is she being irresponsible? Look at the data: Mining industry statistics (as of Dec. 15,
2016) show that the gross value added in mining averaged about 0.65 percent of GDP for
2012–2016, and that includes nonmetallic mining. That is less than 1 percent of total
GDP. Even if the entire mining industry goes under, GDP will decrease by less than 1
percent. What about exports? The same data indicate that the mining industry, both
metallic and nonmetallic, accounts for about 5 percent of total exports. Employment? The
industry accounts for about 0.6 percent of total employment.

On the other, here is Prof. Carlos Arcilla of UP National Institute of Geological

Sciences responding four days later:
This is to answer Mareng Winnie Monsod and other people suggesting mining be stopped
because it only contributes <1 % to the GDP. First only a SMALL part of the Philippines
have mining activities — the graph shows that in CARAGA and MIMAROPA,
contributions from mining exceeds 20%!! Now, when you AVERAGE mining
contributions to include those places that have no mining, no WONDER why the national
GDP contribution is <1 %. If we stop mining, we stop 25% of income in CARAGA and
MIMAROPA. This is why taking averages is sometimes tyrannical. Maybe Mareng
Winnie should take a break from Forbes Park and go to visit CARAGA and MIMAROPA
to find out.
Prof. Arcilla then uploaded the following chart, probably from Philippine Statistics
Authority’s (PSA) latest figures on the Gross Regional Domestic Production (GRDP):

REFERENCES:
http://bit.ly/2nBQPtP
http://www.philstar.com/headlines/2017/02/15/1672432/denr-chief-cancels-75-
mining-contracts

http://newsinfo.inquirer.net/135251/philippine-mining-laws-policies-not-clear-and-
strong-enough-says-expert

http://opinion.inquirer.net/25621/points-for-mining-industry-to-
consider#ixzz4fca0v4kO
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