story from minesite , page-5

Some more interesting info. It's a few weeks old, but I'm not sure whether it has been posted before.

Miners shun mineral wealth of the Philippines
By Donald Greenlees
MANILA: When the Australian miner Rusina started to extract nickel from its mining concession on the island of Luzon in March, the first major problem it faced was what to do about a highly organized illegal mining operation.

The illegal miners working on Rusina's property did not feel the need to conceal their activity. Dozens of trucks, bearing the logo of a local contractor, lined up at the mine site to cart the stolen nickel ore away.

"The brazenness is incredible," Rusina Mining's managing director, Robert Gregory, said.

By mid-April, more nickel ore had been removed from the property by the illegal miners than Rusina's own operations. Gregory estimates that 50,000 tons of ore, valued at about $4.5 million, had been taken by his unlawful competition.

Three other miners, with concessions adjacent to Rusina's in Zambales Province, 250 kilometers, or 150 miles, north of Manila, had experienced the same fate. Nine container ships had already sailed from the nearby port of Santa Cruz with an estimated 450,000 tons of ore. Another 200,000 tons was waiting on the dock.

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The experience of Rusina and its neighbors is one of the many reasons the Philippines has struggled to attract investment from global mining giants even as the industry is booming amid record commodity prices.

A 2005 decision by the Philippine Supreme Court to uphold the constitutional validity of a law allowing 100 percent foreign ownership of mines should have opened the floodgates of investment.

Following the Supreme Court decision, the administration of the President Gloria Macapagal Arroyo identified mining as one of the key drivers of future economic growth. It estimates that as much as $9 billion in new investment could flow into the industry by 2011.

But miners and mining analysts say the money is still only trickling in to exploration and the opening of new mines. Excessive and slow regulatory procedures, laws that give local governments significant power over the exploitation of mineral resources, the invasion of mining concessions by illegal miners or small-scale mining operators, and security problems surrounding many mines in remote regions are all blamed for discouraging investment.

The Fraser Institute, one of the leading international mining research groups, ranks the Philippines as one of the five most mineral-rich countries in the world, but, in an annual survey, places it near the bottom of the 65 mining regions and countries as an investment destination, only slightly better than Zimbabwe.

The Philippines government estimates mineral wealth of $1 trillion. It is estimated to have the second-largest gold deposits after South Africa, and one of the largest copper deposits in the world. It is also rich in nickel, chromite and zinc.

"Philippine resources are among the best in the world, so miners have to take an interest," said Peter Wallace, a Manila-based business consultant, who has written extensively on the country's mining industry.

"But there are other places for miners to put their money, so they don't have to come here," he said. "What we are seeing is small miners come in, take the exploration risk and then try to sell on to the majors. But we have not had a lot of investment from the majors yet."

Some major companies, like BHP Billiton and Anglo-American, have carried out exploration, but have been wary about committing to new projects.

The president of the Chamber of Mines of the Philippines, Benjamin Philip Romualdez, said that the legal impediments to foreign investment had been resolved, and that all that remained was for "companies to work through the process under the mining law to push their investments through to commercial operation."

Mining in the Philippines also suffers a significant domestic image problem. Mining in the past has caused serious environmental damage, antagonizing local communities and powerful interest groups, like the Catholic Church, to which 85 percent of Filipinos belong.

The worst environmental disaster occurred in 1996, when an earthquake caused a drainage tunnel to collapse at a copper mine on Marinduque Island, contaminating a river. A United Nations assessment mission described the situation as an "environmental disaster."

The owner, Marcopper Mining, was a joint venture between Placer Dome, of Canada, and a Filipino businessman. In an attempted rehabilitation, Placer Dome paid $70 million in compensation to affected villagers. The Boac River was considered biologically dead soon after the spillage.

This incident and others hardened attitudes among environmentalists and communities against multinational miners. The Marcopper disaster was followed by a legal challenge to a 1995 mining law that allowed foreign interests to wholly own a mining operation. The effect was to halt almost all new foreign investment in the industry for a decade.


Opponents of large-scale mining have not given up hope of a legal solution, last month filing petitions to the Supreme Court to scrap the mining law.

Among the most strident opponents of major new mining projects have been Catholic bishops.

"Unfortunately, the Catholic Church - a significant amount of it - is against mining on the basis of the environmental damage it does, and they claim it is anti-poor," Wallace said.

The government has taken steps to smooth the path for mining investors in recent years. Arroyo set up a high-powered committee, the Mineral Development Council, to help coordinate policy and respond to the industry's needs.

Miners say they are particularly concerned by the slow pace at which the government issues mining permits, the lack of coordination between local governments and the national government and an often poor security situation around mine sites.

But in an interview, Arroyo said the miners have to do more to ensure they win over the communities in which they operate. She said environmental and community relations problems surrounding some mining projects in the past "contributes to the skepticism" of many Filipinos toward mining.

"I want to cut down on red tape, including in the mining bureaucracy, but having said that, I also want to make sure that we are able to ferret out the responsible miners from the fly-by-nighters," Arroyo said.

"It's really very important that we make sure that the mining investor works not only for the company but also for the community," she said.

Big miners say it is local communities that have been losing out from the way mining has been managed in the past. A 1991 Small-Scale Mining Act allows provincial governments to issue permits to almost anyone who can afford a pick and a shovel. The small operators in theory sell ore to contractors to ship or refine.

But in practice a lot of small miners are backed by highly organized syndicates. They have used locally issued permits to invade concessions owned by other miners, failed to effectively exploit the mineral wealth of an area, caused environmental damage without cleaning up and paid few taxes back to the communities, analysts and foreign miners say.

Some areas, like the Diwalwal gold field on the southern island of Mindanao, have become gun-totting no-go zones.

"Even the police won't go there," said Gregory, the Rusina manager. "Millions of ounces are squandered, recoveries are way down. Money is not spent on communities and pollution and rehabilitation are a problem."

Concerns over lawlessness have been aggravated because of threats against miners by communist and Islamic insurgents. This year, insurgents with the communist New People's Army threatened to attack foreign mines and then launched several small raids.

The Canadian miner TVI Resource Development was on the sharp end of that problem in 2002 when 15 local people were killed on their way to a market when two vehicles owned by the miner were ambushed by Islamic insurgents.

TVI, which operates a mine near Zamboanga, in Mindanao, that has deposits of gold, sliver, copper and zinc, was itself subject to criticism for heavy-handed security and alleged human rights abuses by guards.

John Risdel, the company's managing director, said a legacy of hostility has been reversed by intense efforts at consultation to win over the local community and the dearming of most of its guard force. It will still rely on the military for some protection, but depends more on the good will of local people to provide information and prevent attacks on the mine.

To help rebut criticism of the human rights record, Risdel hired the former deputy head of Amnesty International in the Philippines as a community relations adviser.

"We have learned so much about the culture and the people of Zamboanga," he said. "We are working with the people and gaining the social license to operate."