POLICY AND RESEARCH
SIGNING AWAY SOVEREIGNTY: HOW INVESTMENT AGREEMENTS THREATEN REGULATION OF THE MINING INDUSTRY IN THE PHILIPPINES
In the last decade, the resource-rich Philippines has bet heavily on the mining industry as a development strategy, an approach that has come under growing scrutiny. With 47 large-scale mines in operation and growing evidence of their social and environmental costs, all the presidential candidates in May 2016 election were forced to explain their position on, and their nancial ties to, the extractive industry. Most candidates, including President-elect Rodrigo Duterte, argued for “responsible mining” and an end to “exploitative contracts”. Yet few candidates addressed whether a new government could e ectively enforce new regulations on a largely foreign-controlled mining industry.
This briefing argues that the country’s ability to properly regulate or close polluting mines will be severely constrained by a network of investment treaties the Philippines has signed, which provide excessive protection for foreign investors. This legal straitjacket will become still tighter if the government goes ahead with the EU–Philippines Free Trade Agreement and the Regional Comprehensive Economic Partnership (RCEP).
Human and environmental costs prompt national movement against mining
The need for further regulation of the mining industry in the Philippines has become ever more obvious since 2004 when mining was declared a priority for “national economic development”. Despite promises of economic growth, industrialisation and jobs, the industry has contributed less than 1% of the country’s Gross Domestic Product (GDP). Moreover, many mines have been found guilty of human rights violations including illegal demolitions, harassment of local residents, and of environmental impacts such as water pollution, as documented in the Rapu Rapu Gold Silver Copper and Zinc Mining Project and the Dipidio Gold and Copper Mine.
Indigenous communities have been particularly hard hit as it is estimated that two-thirds of o cially recognised ancestral domains are covered with mining concessions. Environmental damage has also been a major concern as almost 50% of all key biodiversity and protected areas are a ected by mining. The government has had to suspend several mining operations, such as those in operating in Surigao del Sur, Zambales and Cagayan, mainly as a result of investigations into their compliance with environmental policies.
Growing anger at the impacts of mining on the communities and environment, and the policies that allow it, led to the creation of the Alyansa Tigil Mina (ATM)—a coalition of organisations and groups that has decided collectively to challenge the aggressive promotion of large-scale mining in the Philippines. They initially sought the scrapping of the 1995 Mining Act (RA7942), an end to full foreign ownership, a stop to large-scale mining and the formulation of an alternative bill that would require strict regulations on mining. These demands became part of a national debate in the run-up to the national elections.
Mining industry protected by International investment agreements
As this brie ng shows, however, the mining industry has a very effective line of defence against regulation, namely the existing network of investment treaties that the Philippines has rati ed: 31 Bilateral Investment Treaties (BITs) and seven Free Trade Agreements (FTAs), all of which have an investment protection chapter. These include treaties with Australia, Canada, China, Japan, Malaysia, South Korea and the UK—all host nations of major multinational mining companies. All of these treaties, bar very few exceptions, allow investors to sue the government at international arbitration tribunals if they consider that their pro ts have been unduly a ected. Extractive companies have been one of the sectors most given to launching arbitration lawsuits, and 52 current cases worldwide are relating to mining. Based on the 44 cases for which data are available, mining companies have sued governments for a total of USD 53 billion.
Denying or revoking mining permits because of environmental concerns or violation of the human and social rights of indigenous communities has already led to at least ten investment treaty cases. The governments of Bolivia, Indonesia, Mongolia, Peru and South Africa have all faced costly lawsuits after taking measures to tackle fraud within the mining industry, make mining companies comply with an agreed pollution clean-up, and remedy past discrimination. Indonesia and South Africa eventually lowered environmental standards in order to pre-empt such lawsuits.
The Philippines has yet to face a mining-related arbitration lawsuit, but has already experienced a very costly case launched by the German company, Fraport. Although the Tribunal eventually dismissed the case, the Philippines government ended up paying USD 58 million solely in legal fees, equal to the annual salaries of 12,500 teachers.
Time to roll-back not to extend investor protection
A growing number of countries are beginning to understand the nancial, social and environmental costs of the system of investors’ rights—with countries as diverse as Australia, Bolivia, India, Indonesia and South Africa revising their investment treaty policy.
That is why the Philippines government’s move to negotiate RCEP and the EU–Philippines FTA, which will extend investors’ rights with more countries, is a dangerous step that will prevent e ective regulation of the country’s mining industry. Worse still, unlike the existing BITs, it will be much harder for the Philippines to revise its investment policies in the future since regional trade agreements (unlike BITs) do not expire.
The stark truth that communities across the Philippines who are facing pollution in their rivers and destruction of their lands have realised is that they are up against some of the most powerful transnational mining companies, and that an international trading system is stacked against them. This complex web of trade and investment agreements has created an architecture of impunity that has made it increasingly impossible to reject or even e ectively regulate mining operations. It is crucial that the Philippines starts to unravel this web by halting negotiations on further treaties and seeking to revise those that are already in existence.
HUMAN RIGHTS SITUATION IN AUSTRALIA: FOCUS ON THE GOVERNMENT OF AUSTRALIA’S RESPONSIBILITY TOWARD THE HUMAN RIGHTS VIOLATION COMMITTED BY AUSTRALIAN CORPORATIONS
This UPR Submission presents present the human rights violation committed by Australian corporations abroad by bringing the cases of the alleged human rights violations by OceanaGold Corporation in the Philippines and in El Salvador. The reports will focus on the impact of the extractive activities on the enjoyment of human rights of Indigenous Peoples, Local Communities, Women and Human Rights Defenders.
UPDATE ON THE FPIC PROCESS AT BROOKE’S POINT, PALAWAN
Two FPIC processes have been attempted so far by the Lebach Mining Corporation (LMC) in Brooke’s Point, Palawan.
The first community assembly for the FPIC process took place on August 6-11, 2012. The second community assembly meeting took place on March 18-22, 2013.
Five (5) barangays – Ipilan, Aribungos, Barong-Bargon, Mambalot, Maasin – were surveyed by the first Community Consultative Meeting (CCA), with IPs in 3 of the barangays (Maasin, Ipilan, and Aribungos) submitting their opposition to the Palawan NCIP.
While there is no exact figure of the anti- and the pro mining supporters, a conservative estimate averages around 300 anti-mining and pro-mining attendees in every barangay. Of this number, approximately 200-250 individuals are anti-mining and about 50-100 are pro.
With the help of Ancestral Land Domain Watch (ALDAW); Palawan NGO Network, Inc. (PNNI); and Environmental Legal Assistance Center (ELAC), Inc.; the IP leaders petitioned the Palawan NCIP to declare the FPIC as null and void after the required Pre-Condition Certificate, allegedly issued by NCIP ADO-4, was revealed to be falsified. Additionally, the FPIC process undertaken by the company had only addressed the issue of “utilization,” not of “exploration.”
The petition asks for the following:
Declare the second Community Consultative Meeting null and void;
Resolve the petition filed at the first CCA;
Make the Lebach Mining Corporation to be accountable for illegal exploration using false FPIC certificate.
The follow-up CCA for the second FPIC process was held on March 18-22, 2013. It was likewise declared a “failure” due to the unresolved issues from the first CCA meeting. Here, barangay captains were faced with last-minute changes for the CCA meetings; many were unable to attend or give their consent as necessary for the FPIC. Of the 5 CCAs that occurred, only the CAA conducted in Ipilan was declared to be a failure. The barangay – whose captain was able to attend – outright refused to give consent to LMC as required for FPIC.
In Aribungos, a blackout interrupted the morning’s meeting for the FPIC and many of the participants, including the barangay captain, were unable to return for the afternoon session. The venue was private compound of Rinela Dulay, a pro-mining leader. Pro-mining delegates and Lebach miners were the vast majority who attended and the resulting FPIC was initially declared to be valid.
Likewise, barangay captain in Mambalot was unable to attend due to an unannounced last-minute location changes from a barangay hall to a private compound.
In addition to these problems, the agenda from the second CCA will have to be redone as the new agenda points were inconsistent with the previous FPIC guidelines. Due to all of these concerns, the Palawan NCIP has declared the most recent FPIC petition process to be false and the Lebach Mining Corporation will be held responsible.
The NCIP did not generally declare all the second CCAs to be a “failure.”
Despite the issues that arose in March, the Provincial Officer of the NCIP continued the FPIC consultation process for documentation purposes. Analyzing the issues and concerns would be for his benefit as this knowledge would help introduce the new PO to the IP dynamics in the area along with the barangays.
In short, the CCA carried out in March 2013 would not be considered to be a second, valid CCA to be counted towards the FPIC, given the involvement of the Lebach Mining Corporation in the FPIC process.
Given the involvement of the Lebach Mining Corporation in the FPIC process, the meetings carried out in March would not be considered to be a second, valid CCA to be counted towards the FPIC.
The company will be subject to fines.
THE TAMPAKAN QUANDARY
By Atty. Dante Gatmaytan
ON FEB. 19, 2013, the Department of Environment and Natural Resources (DENR) announced that it issued an environmental compliance certificate (ECC) for the Tampakan copper-gold project of Sagittarius Mining, Inc. (SMI) in Southern Mindanao.
The DENR followed a directive from the Office of the President (OP) dated Feb. 4 (OP Case No. 12-F-159) where Executive Secretary Paquito Ochoa, Jr. rebuked the DENR for failing to issue the ECC. He wrote that SMI had complied with the requirements of the Environmental Impact Statement and should be issued an ECC. Ochoa opined that the DENR did not have to consider the ordinance banning open pit mining in South Cotabato as an obstacle to the issuance of the ECC.
These developments may create the impression that mining in Southern Mindanao is imminent. It is not. In the same announcement, Secretary of Environment and Natural Resources Ramon Paje said that the grant of ECC to SMI was “subject to certain conditions,” and failure to comply may result in the cancellation of the ECC. SMI also needs to satisfy the requirements of other laws such as the Mining Act of 1995 and the Local Government Code of 1991.
For example, Paje explained that under the ECC, SMI is directed to follow the provisions on toxic and solid wastes of laws on clean air and water and mining. SMI must observe appropriate practices on vegetative restoration, engineering structure, land use, and soil and water management, and ensure proper stockpiling and disposal of generated waste materials and erosion control.
Paje added that under the provisions of the Mining Act, SMI must set up a Multipartite Monitoring Team and submit an Environmental Protection and Enhancement Program that would integrate a final mine rehabilitation and decommissioning plan for when the project is terminated or completed. It must set up contingent and trust funds that would address future concerns for mine rehabilitation, wastes and tailings, and final decommissioning.
The Local Government Code adds requirements that project proponents also have to satisfy. Local governments can enact additional requirements under their police power to protect the health of the residents and the environment. The Supreme Court has upheld, for example, a city Ordinance banning the shipment of all live fish and lobster outside Puerto Princesa City for specified periods, as well as a resolution by Palawan prohibiting the catching, gathering, possessing, buying, selling, and shipment of live marine coral dwelling aquatic organisms (Tano v. Socrates, G.R. No. 110249, August 21, 1997).
Under the present state of the law, local government approval of national government projects is required. The Local Government Code in part provides:
SECTION 26. Duty of National Government Agencies in the Maintenance of Ecological Balance. — It shall be the duty of every national agency or government-owned or -controlled corporation authorizing or involved in the planning and implementation of any project or program that may cause pollution, climatic change, depletion of non-renewable resources, loss of cropland, rangeland, or forest cover, and extinction of animal or plant species, to consult with the local government units, nongovernmental organizations, and other sectors concerned and explain the goals and objectives of the project or program, its impact upon the people and the community in terms of environmental or ecological balance, and the measures that will be undertaken to prevent or minimize the adverse effects thereof.
SECTION 27. Prior Consultations Required. — No project or program shall be implemented by government authorities unless the consultations mentioned in Sections 2 (c) and 26 hereof are complied with, and prior approval of the sanggunian concerned is obtained: Provided, That occupants in areas where such projects are to be implemented shall not be evicted unless appropriate relocation sites have been provided, in accordance with the provisions of the Constitution.
The legal landscape has crafted a partnership between the national and local governments on matters that affect the welfare of local residents. It rejects the Marcos era approach where the national government took what it wanted regardless of its harmful impacts on local peoples.
When the Local Government Code was signed into law in 1991, President Corazon C. Aquino said, “I consider the code as the linchpin of my political program. The new law lays down the policies that seek to institutionalize democracy at the local level. It hopes, therefore, to allow the people the widest possible space, to decide, initiate, and innovate, in building a free nation.” Today President Benigno Aquino III is poised to shatter the code. The issuance of the ECC is designed to pressure local governments to relent and to allow the Tampakan project to proceed. The pressure to force local communities to surrender their autonomy may lead to the dismantling of the constitutionally crafted partnership between the national and local governments.
In the face of an assertive national government, the battle to fight for autonomy ultimately rests on the people of southern Mindanao and their officials. Rep. Daisy Avance Fuentes has reclaimed the governorship of South Cotabato in a close race against incumbent Arthur Pingoy, Jr. Fuentes signed the ordinance banning open-pit mining before she ran for a seat in Congress. The peoples’ resolve and respect for the legal system should determine how this quandary can be prudently and fairly addressed.
Dante Gatmaytan is associate professor at the UP College of Law.
Source link: http://www.bworldonline.com/content.php?section=Opinion&title=The-Tampakan-quandary&id=70788#sthash.ryHKuDiI.dpuf
TAMPAKAN: HOW TO LOSE MONEY AND TERRIFY PEOPLE
Blog by Andy Whitmore, PIPLinks
On 30th January, the relatively minor Australian ‘miner’ Indophil released their quarterly report for the three months ending 31 December 2013.i Such standard reporting fare hardly registers very high on the ‘news Richter scale’. Yet, part of the release managed to spark reports, first in the Philippine press, and then across global news wires.
Indophil is the junior partner of Glencore Xstrata in the Tampakan project in the Southern Philippines. This project has long been resisted by many of the local B’laan indigenous people, and has been the centre of huge amounts of controversy. This is at least partly thanks to multiple human rights violations resulting from the attempts of various companies to push this project through against public opposition in a highly militarised area.
The news that was jumped upon by the press is the quote that “Glencore Xstrata has informed Indophil of its preference to divest its stake in Tampakan.”iii This led to headlines such as Rappler’s “Glencore-Xstrata selling Tampakan stake”iv and Reuters’ “Glencore Xstrata to sell stake in Philippines copper-gold project”.v
For those of us who have followed this project, working on behalf of the B’laan communities, I guess this throws up a number of questions. First, is this really news at all? Glencore has been saying to anyone who wants to listen that it they wish to pull out of a number of large-greenfield (copper) projects. Indeed the Chinese competition authorities have insisted Glencore must divest of at least one mega-copper project in order to secure last May’s merger with (or rather take-over of) Xstrata. The currently nominated project is Las Bambas, but the company is so far struggling to secure the sale. Also, Glencore have effectively ‘moth-balled’ the Tampakan project, including widespread redundancies, which is hardly a ringing endorsement of their enthusiasm.vi
Therefore, none of this seems like particularly fresh news, but perhaps it is the most direct ‘confirmation’ of sale we’ve had (even if Glencore is maintaining a characteristically gnomic silence on the affair). Likewise, it seems the headline writers have distorted what was originally announced to make it much more a fait accompli.
So what is in it for Indophil to publicise this news? As their report notes later “To date, no formal divestment process has commenced in respect of Glencore Xstrata’s interest in Tampakan, although discussions have been ongoing.”vii So if there seems no need to announce to the world that these discussions are happening, why do it?
The wants and desires of these two bed-fellows have seldom matched in the past. Indophil, as a smaller company with greater pressures on cash-flow, have long been pushing for the project to progress faster than their senior partners wish. (It is interesting to note that while Xstrata and then Glencore have, rightly, come in for criticism for trying to steamroller the project through against local wishes, at least they have been advocating for a slower pace in order to gain the necessary ‘social license to operate’). Now it seems that Glencore’s enthusiasm has deteriorated to the point of the project being on virtual, permanent hold. A behemoth like Glencore can afford that easily, given that it keeps the asset on its books while it concentrates on other developments (and the slow process of re-arranging assets after its merger). A minnow like Indophil needs some sort of return as it stares at its cash reserves, and shareholder patience, draining away.
So Indophil needs to look like it is doing something. And that something is to be talking to Glencore on ways forward. Its apparent, indeed somewhat fanciful, solution is to buy out Glencore’s majority stake in the mine. That solution would put it back in the driving seat of the dumper-truck, with full diesel engine ahead (straight into the road blocks thrown up by local opposition). But it also seems, in honesty, extremely unlikely. Looking at the accounts of the company, its only apparent major asset is its 37.5% share of the project. What collateral can it raise to get the money to buy out the majority partner’s share? Surely not it’s own share? That’s a strange form of double accounting. It is not impossible, especially if a white knight were fool enough to ride to the company’s aid (a large Chinese mining company or one of the larger Philippine mining houses, like Philex or San Miguel Corp; the latter having already sunk money into the project and looking to supply the coal-fired power for the mine). But it is very unlikely. And that then begs the question why would any would-be rescuer invest through financing Indophil, rather than just buying any stake directly from Glencore?
Also how likely is it that any negotiations between Indophil and Glencore would go well? As noted their relationship has been historically strained. (Interestingly, these spats have given campaigners one of their greatest gifts, via a prospectus that Xstrata published in 2008 when trying to buy out Indophil’s stake from their shareholders. In it Xstrata laid out all the reasons that investing in Tampakan was a serious risk in order persuade Indophil shareholders to sell at the price offered. All those points argued then still hold true, and any potential buyer into the project now would do well to consult that document!).viii
The current relationship far from happy. The headline-seeking news sources missed a genuinely interesting snippet of information buried in Intex’s recent report. The Supreme Court of Queensland has (re)scheduled court proceedings between the two project partners. It seems that Indophil has not yet made Glencore Xstrata the registered legal owner of the 62.5% share of the local company, Sagittarius Mining Inc. (SMI), that they bought some time back. According to the report “Indophil has lodged its defence, and the Court process is continuing.”ix Apparently this problem has occurred for tax reasons (what better reason is there?), and is supposedly owing to the nefarious world of Philippine bureaucracy. So it would seem that Glencore Xstrata doesn’t even legally own the shares it is trying to divest! As if this cursed project needed any more uncertainty… So, it looks like there must be more of that inevitable delay; the very delay that Indophil, even as it fights the court case, can so do without.
To me that is the key point. There will be delay, and JCB-digger loads of it. I am sure on past experience it will take a long time to find a buyer for Glencore’s share (assuming one can be found), to go through necessary due diligence and then, if after that they can, to secure a sale. The example of Las Bambas is indicative of the Tampakan situation. Under pressure to sell because of the merger, deadlines were set for the project’s sale. Various Chinese conglomerates declared an interest, and yet now – roughly 9 months after the merger – still no deal has been done as the Chinese buyers look for a bargain, and Glencore refuse to give it to them.x
For those supporting the B’laan and other local communities opposed to the mine, such uncertainty and delay are surely all welcome (assuming that the ideal won’t happen; that is that the companies involved simply get up and leave). These latest shenanigans just add to the arguments of what a black-hole the project is, sucking in company money and resources while failing to move forward.
There are at least two absolute, clear local impediments for the project moving forward. The first is the provincial government’s ban against open-pit mining. There are often rumours this could be overturned, but so far this has failed to happen. Tellingly, despite arguing it is unconstitutional, the companies have been very reluctant to take a case to the Supreme Court. The second, and perhaps more important is to get the free, prior, informed consent of the B’laan who will be affected by the project. Recently, B’laan representatives have lobbied the Philippine government to ask that no free, prior, informed consent even take place, as the pre-conditions for giving free consent were not there, while their area is militarised and their leaders are being killed. Given the blood that has been spilled, it seems unlikely that position will change any time within people’s living – and possibly ancestral – memories.xi
Indophil know this, and surely their directors and current investors must be terrified as uncertainty piles on misfortune for them. But any other investor considering betting on this project would just walk on by.
i. Indophil Resources – Quarterly Report – December 2013 – http://www.indophil.com/system/resources/BAhbBlsHOgZmSSJLMjAxNC8wMS8zMC8…
ii. For a range of articles on the situation see: http://www.piplinks.org/companies/Indophil+Resources
iii. Indophil Resources, ibid.
vii. Indophil Resources, ibid.
viii. Xstrata Copper Bidder’s Statement, Offer by Xstrata Queensland Limited to acquire all of your shares in Indophil Resources NL., 13 June 2008
ix. Indophil Resources, ibid.
x. Chinalco out of race for Glencore’s Las Bambas mine, Reuters, 25 November 2013, http://www.reuters.com/article/2013/11/25/us-chinalco-lasbambas-idUSBRE9… Merged group must demand good price for Las Bambas, Financial Times, 2 February 2014, http://www.ft.com/cms/s/3/5e085c4c-8a59-11e3-9c29-00144feab7de.html?site…
xi. Philippines: B’laan leaders lobby against FPIC process at Tampakan, Mines & Communities, 23 January 2014 http://www.minesandcommunities.org/article.php?a=12545
1 / 1