DESPITE its high potential for growth, the mining industry faces three major challenges—the new administration’s stand on mining, existing debate on the industry’s fiscal regime, and existing impositions from previous administrations that have kept employment levels low.
A study undertaken by the Department of Labor and Employment’s Institute for Labor Studies observed that the Duterte administration’s stand on “responsible mining” and its most recent actions have kept mining companies on their toes.
The study, commissioned by the Chamber of Mines of the Philippines, asked the mining companies if they intentionally reduced their workforce at any time in 2015.
Five out of 21 companies or 23.81 percent answered “yes,” citing financial losses, uncompetitive price, and off-mining season or the lack of mining activities as their reasons.
From 2014 to 2015, there were 1,754 reported vacancies, a number that could have been higher if the mining companies were allowed to operate at full capacity, the study said.
Hard-to-fill positions went vacant for more than a year because only a few applicants applied for the job.
It is assumed that those in the production process were also pursuing exploration activities at the same time. No company said they were solely in the rehabilitation stage.
Primary data gathered showed that 18 out of 21 Chamber of Mines of the Philippines respondents were mining companies. Four were solely in the exploration stage, while 14 were in the exploration, mining production and rehabilitation stages.
Some respondents said they were through with the exploration stage, but the enactment of Executive Order 79 stopped them from moving on to the mining production stage.
This meant some were left with only a skeletal force in their offices. Further restraints such as limiting mining areas and DENR suspensions further diminished the number of opportunities in the mining industry.
“The underlying assumption is that, if external developments are positive, these are conducive to company expansions. Company expansions, of course, mean a need for more jobs,” the study said.
The top three factors seen to have an influence on the employment level were government policy direction, change in policy and regulatory environment and application of new and advanced technology.
“While government policy direction and change in policy and regulatory environment are similar, the difference between these two factors is that government policy direction is seen in a more general sense, touching on concepts such as the impact on industry: If government were to prioritize the development of the mining industry as a whole; if new export policies are to be implemented; if new trade deals are signed; if there is an upgrade in the credit rating, and so on,” the study said.
The study found that many respondents saw “a blurry outlook” under the Duterte administration.
Before the 2016 election, the survey showed, mining companies were hopeful that a new administration might agree to a better fiscal regime so that Executive Order 79 might be lifted.
Pessimism soon set in, however, after President Rodrigo Duterte named an anti-mining activist, Regina Lopez, as the secretary for the Department of Environment and Natural Resources.
Survey respondents said uncertainty that followed Lopez’s recent mining audits meant they could not do planning.
After a disputed audit of metallic mines, Lopez ordered 23 of them closed and five more suspended.
“These recent actions by the government have serious economic implications for the mining companies and the industry as a whole,” said Stephanie Rose Flores, author of the study.
The second major challenge facing mining companies is the amended mining fiscal regime, which remains unsettled.
“The former President Aquino’s administration has been pushing to gain more from mining revenues through proposed House Bills (HB) 5367, 3586 and 5843, all of which aim on revising the existing mining fiscal regime. All of the bills propose higher tax shares from mining, which results (in) economic implications for the mining company, affecting the outlook of the industry,” Flores said.
A third major challenge is the Executive Order 79, series of 2012, which calls for a review and amendment of the Philippine Mining Act of 1995.
“Parts of the EO 79 have made a serious impact on the business, such as Section 1, which closes areas to mining applications and Section 4, which prohibits the signing of new mineral agreements. Since the implementation of EO 79, several mining companies are only at their exploration stage,” the study said.
Several COMP respondents also acknowledged that constantly changing technology means new skills must be developed. Use of different equipment especially in surveying, geologic, and mine planning functions require highly technical skills.
Since these skills were not taught in university curriculums, they either need technical assistance from other countries, or their workers need to be trained for the new environmental standards.
COMP respondents were asked to enumerate the occupations likely to expand the most from 2016 to 2020.
“Again, companies had a hard time answering the question because many were very uncertain of the outlook of the mining industry,” the survey noted.
A few COMP respondents acknowledged the Asean market integration and climate change as influential in determining their company’s employment prospects.
For Asean market integration, an increase in integration means that mining companies will need to be more competitive in selling their mineral supply to other countries, as well as making their mining processes cheaper.
They also noted the desire to build processing plants, but given the high costs of electricity, they will likely lose to their Asean competitors.
On the other hand, the study said, climate change will, alongside the need to comply with stricter environmental standards, change mining processes. The season for mining may now need to either shortened or lengthened, depending on the new rainy season.
The development of manufacturing sector should be encouraged, the study said, and this can be done through incentives and creation of industrial zones.
“The development of the manufacturing sector, specifically those engaged in the smelting and refining of metallic and non-metallic minerals, in the Philippines would very much need support from the government. PASAR is, at the moment, monopolizing the smelting and refining of copper. Meanwhile, Nickel Asia has its own mineral processing facilities. Freeing the market from barriers… would allow the entry of manufacturing firms,” it said.
The study said there was already a demand for minerals from the electronics and construction industry, yet the raw materials have to be refined and shaped into the products demanded before being used by electronics and construction players.
“This is the gap. Gains from such a move would be 1) economic growth via manufacturing sector, 2) increase in jobs in the countryside, 3) in the long-term, poverty reduction. Yet, the disadvantage to this move will be that manufacturing firms will still end up as less competitive compared to their Asean counterparts, because the Philippines has the highest costs of electricity. This is in addition to the large income and corporate tax. Providing attractive incentives should be given much thought,” the study said.
The study also recommended providing incentives to promote “green jobs.”
“There is so much waste at the end of the mining process, yet recycling or reuse processes have not been fully developed. Worldwide, there is a much greater awareness and clamor for more sustainable processes in production, for all the industries. This is also known as the transition to the Circular Economy, an economy wherein processes are repeated until a said natural resource is fully exhausted or utilized. According to the World Economic Forum [2014], mining companies in other parts of the world have started adopting measures to better promote the circular economy. Incentivizing companies to adopt greener measures will also promote green jobs [most especially if work is consistent with the decent work agenda], which will lead to an overall sustainable economy,” the study said.
The study said the mining companies have been compliant with labor standards, providing generous compensation and benefits as compared to other industries.
“No doubt, the development of the mining industry should be nurtured and supported,” the study said.
“And in order to achieve the said objectives, the mining industry should also be made a priority in the Duterte administration,” the ILS study said.
“Workers in the mining industry are, overall, well compensated. These companies comply with the regional minimum wage rates. It is also apparent that the benefits received by workers regardless of rank meet the minimum benefits required by the government,” the survey said.
The workers were also provided with the mandatory social security schemes such as the SSS, PhilHealth, Pag-ibig and ECC and such insurance benefits as life insurance, accident insurance, medical and health insurance and hospitalization plan.
The workers were also entitled to 15-day vacation leave, 15-day sick leave, eight-day emergency leave, nine-day bereavement or burial leave, four-day calamity leave, 14-day maternity leave and 14-day paternity leave.
Among the health care benefits, the mining firms accorded their employees and workers an annual physical examination, medical care, dental care, optical assistance, hospital assistance, medicine allowance, first-aid treatment and special laboratory exams.
Some companies provided car plans, free housing, free amenities such as water and power and educational plan for employees and their dependents.
The Manila Standard, in its recent visit to the mine site of Nickel Asia in Rio Tuba, Palawan, found that the company has put up its own school, mostly for the children of indigenous people and their employees’ children for free, with teachers trained and accredited by the De La Salle University. The teachers, who were uprooted mostly from big universities, were well-compensated and received as much as P50,000 in salaries a month.
The Nickel Asia also has its own hospital that serves the residents and employees for free.
But the study also showed work in the mining industry is very hazardous, hence there is a need to ensure the safety and health of mining workers is a priority.
The study also showed a huge gap in the male and female workers in the industry.
“Only a mere 10 percent of the total employees in the industry are female, while 90 percent are male, an undeniably huge gender gap,” the study said.
The study said the prevailing notion, which holds true around the world, is that, among Science, Technology, Engineering and Mathematics (STEM)-related professions in different industries, the larger proportion of workers is male.
Flores cited a 2014 study by the Department of Science and Technology that in engineering and architect-related professions, there is a wide gap between males and females since, and the gap has not narrowed for more than 20 decades.
The study said the Philippine mining sector has an immense economic potential in terms of abundance of resources and employment generation.