Expert warns PH to avoid Indonesia mining mistakes

A mining expert on Thursday asked the Philippines to carefully study the Indonesian experience with downstream processing and learn from its mistakes before it imposes a ban on the export of unprocessed minerals.

“Despite some success, Indonesia’s experience with compulsory downstream processing and refinery is not hugely encouraging for the Philippines,” said Bill Sullivan, senior foreign counsel of Christian Teo & Partners.

Sullivan said during the Mining Philippines Conference that while the Philippines should aim to maximize the benefits from the mining industry, downstream processing would not necessarily be more beneficial for the country.

“Moving down value chain and requiring full downstream processing and refinery of all minerals does not necessarily mean Philippines will derive increased benefit from local mining industry. It all depends on economics of DP&R [downstream processing and refining] in the case of individual minerals,” said Sullivan.

The government earlier said it was looking at imposing a ban on the export of raw ore in a bid to compel mining companies to put up more processing plants in the country.  Sullivan said in the case of Indonesia, only nickel had shown any real progress in the downstream processing. 

He said a total of 18 nickel smelters including well-established producer PT Indoferre had closed while other nickel smelters were said to be not in operation and unprofitable.

CoMP executive director Ronald Recidoro

“The perceived lack of government commitment to full DP&R of all metal mineral has severely impacted investor interest in new smelter construction and undermined foreign investor confidence in Indonesia as a reliable investment destination,” said Sullivan.

Sullivan said in the case of the Philippines, downstream processing “may be, but is not necessarily the right approach.”

Meanwhile, the Chamber of Mines of the Philippines said it would fine-tune its members’ social development management program and corporate social responsibility to encompass not just environmental protection and social development, but also address climate change resiliency and adaptation. 

“We will also engage with developmental experts and agencies to make the SDMP a more potent and effective weapon to fight poverty,” said CoMP executive director Ronald Recidoro.

SDMPs are provided for in DENR Administrative Order No. 2010-21, the implementing rules and regulations of Republic Act No. 7942, or the Philippine Mining Act of 1995.

A precondition to starting a mining operation, SDMP is a five-year plan carried out during the life of the mine to bring about a sustained improvement in the living standards of the host and neighboring communities.

It serves as a partnership between the mining operator and its host and neighboring communities meant to provide alternative livelihood opportunities for mine workers and their families.

Under the setup, at least 1.5 percent of the total mining and milling costs of the company is monetized and placed in a trust fund for affected communities.

Of the amount, 75 percent must be spent on community-development programs; 15 percent on mining technology and geosciences advancement programs; and 10 percent on information, education and communication program.

CoMP said that aside from fine-tuning its SDMP, it would also continuously support and comply with the Extractive Industries Transparency Initiative in the country.

The PH-EITI was created by Executive Order No. 147 issued by former President Benigno Aquino III in 2013 to ensure greater transparency and accountability in the extractive industries, specifically in the way the government collects and companies pay taxes from extractive operations.

“In the next few weeks, you will be seeing a reinvigorated Chamber of Mines, starting with a new board of trustees that will be armed with a fresh mandate. We will be more aggressive in communicating our environmental protection and social development activities,” Recidoro said. 

“More importantly, we will increase our engagements with government and other key stakeholders, to hear their position and consider them in our advocacies,” he said.

The three-day Mining  Philippines 2017 International Conference and Exhibition closed on Thursday, bringing together the country’s major mining players, investors and experts in the mineral sector. 

Topics: Bill Sullivan , Philippines , Indonesia mining mistakes , Ronald Recidoro
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