Updated: Aug 28, 2020
By J.V. Jayme
The Philippines, an archipelago made up of more than 7,000 islands, is located on what geologists have come to call as the Pacific 'rim of fire’. As such, it is unsurprisingly well-endowed with a myriad of mineral resources. It is particularly rich in nonferrous metals and hard rock minerals such as silver, nickel, copper, zinc, and lead. Particular areas, especially in the southern island of Mindanao, are known for its extensive gold deposits.
By the late 1980s, external pressure coming from the World Bank and the Asian Development Bank called for a liberalization of the country’s mining laws. It classified the mining industry as an ‘underutilized’ tool for development, in no small part due to the certain statutes in Article XII of the Philippine Constitution of 1987 which effectively limits the extent of foreign ownership in mining projects. The particular provision stated that the stakes of foreign corporations should not exceed 40 percent of a project’s total investment in the project. (Rovillos, 2003)
This, along with the general push for neoliberal economic policies by the Ramos administration, eventually led to the passage of the Mining Act of 1995. (Rovillos, 2003) This particular piece of legislation became controversial because its critics deemed that it virtually legalized and encouraged want on environmental destruction. It contained provisions that serve as incentives for foreign mining corporations.
For instance, it gave mining companies a four-year income tax holiday. In addition to this, the law also offered tax and duty-free capital equipment imports while also exempting these companies from paying value-added taxes. At the same time, the law also offered companies income tax deductions if their operations were to start posting losses. Finally, the mining act also gave the freedom from expropriation as well as the opportunity to repatriate any profit made by the investment in full (Holden & Jacobson, 2007).
The mining act essentially gave way to the liberalization of the mining industry, fostering an export-oriented extractive scheme. For instance, during the period of 1997 to 2017, the Philippines was able to generate a total mineral production value of P1.69 trillion. However, the country also recorded a total of P1.59 trillion of mining exports from that same period. This means that no less than 93.4 percent of the total extracted mineral wealth was going directly to its foreign customers. (Yang-Ed, 2018)
Unsurprisingly, contrary to the purported claims of the foreign lending institutions, the mining industry did very little to serve as a development tool in the regions where these mines operate. The indigenous people have even been referred to as the upland poor - the country’s ‘poorest of the poor.’ (Antonio, 2012) For instance, the mineral-rich areas of Mindanao, including the four provinces of the Autonomous Region of Muslim Mindanao (ARMM) are among the poorest in the country. The same can also be said about the Ifugao province of the Cordillera Autonomous Region (CAR).
The same can also be said on a macro-economic level. Mining does very little in terms of helping the country develop. This is because a mere 6 percent of all minerals produced in the Philippines end up being used for domestic industries. Instead, mining production is driven primarily by the export market paving the way for environmental plunder. (Yang-Ed, 2018)
It is also worth noting that there have been numerous environmental disasters on account of large-scale mining. Yet, the national government has failed time and again to make these companies liable. For instance, the Philex mine spill disaster of 2012 was one of the worst incidents since the passage of the mining act. It resulted in a 20.69-million metric ton spill. In the end, said corporation paid a mere P1.034 billion as reparations. (Calleja, 2013) Despite the environmental damages the incident caused, the company got away with a slap on the wrist.
The Mining Act is but one of the controversial laws in the Philippines. Clearly, there is a need to reassess the framework for development, one that takes into account sustainability and the welfare of both the affected communities and the entire country.
Thank you for reading!
Antonio, E. (2012). Philippines experience, lessons and challenges in environmental mainstreaming. International Institute for Environment and Development, 84-168.
Calleja, N. (2013, February 15). Philex agrees to pay in full P1.034B fine for mine spill. Retrieved from https://business.inquirer.net/107843/philex-agrees-to-pay-in-full-p1-3-b-fine-for-mine-spill: https://business.inquirer.net/107843/philex-agrees-to-pay-in-full-p1-3-b-fine-for-mine-spill
Holden, W., & Jacobson, D. (2007). Ecclesial Opposition to Mining on Mindanao: Neoliberalism Encounters the Church of the Poor in the Land of Promise. Worldviews, 155-202.
Rovillos, R. S. (2003). Philippines: When the 'Isles of Gold' Turn to Isles of Dissent. In A. T. in M. Colchester, Extracting Promises: Indigenous Peoples , Extractive Industries, and the World Bank (pp. 200-237). Baguio: Tebtebba Foundation.
Yang-Ed, P. (2018, October 23). Mining in the Philippines: The steep price our people pay to line the pockets of a few. Retrieved from Bulatlat: https://www.bulatlat.com/2018/10/23/mining-in-the-philippines-the-steep-price-our-people-pay-to-line-the-pockets-of-a-few/