conference on mining’s impact on philippine economy and ecology
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MINING CHART 1
MARCH 1, 2012
Conference on Mining’s Impact on Philippine Economy and Ecology
March 2, 2012 (Friday)Grand Ballroom, Inter-Continental Manila
Peter WallaceChairman
The Wallace Business Forum
we tell it like it is
MINING CHART 2
MARCH 1, 2012
A CV
MASTER OF SCIENCE, CONSERVATION UNIVERSITY COLLEGE LONDON
BACHELOR OF SCIENCE, MAJOR IN BIOLOGY AND ECOLOGY, AND HONORS IN ZOOLOGYUNIVERSITY OF NSW, AUSTRALIA
INTERNATIONAL BACCALAUREATE DIPLOMA INTERNATIONAL SCHOOL MANILA
UNDERTAKEN ENVIRONMENTAL IMPACT ASSESSMENTS FOR INFRASTRUCTURE PROJECTS FOR GOVERNMENT AND THE PRIVATE SECTOR
AUTHORED A STUDY TO MINIMIZE IMPACT OF ROAD THROUGH WETLANDS AND MANGROVES, AND EFFECT ON MIGRATORY BIRD SPECIES, AND SIMILAR PROJECTS
AS A VOLUNTEER- PLANTED TREES- WORKED ON LAND REGENERATION- TAUGHT UNDERPRIVILEGED KIDS- PROJECT TO PROTECT SMALL ANIMALS- COMMUNITY SERVICE IN LA CARLOTA
ALL BY AGE 28
MINING CHART 3
MARCH 1, 2012
MINING IS UNAVOIDABLETHIS IS A FUNDAMENTAL POINT THAT CANNOT BE IGNORED –
AND MUST BE TAKEN INTO ACCOUNT:
OUR DAILY LIVES ARE DEPENDENT ON MINED PRODUCTS.
BANNING MINING WOULD TAKE US BACK
TO NEANDERTHAL TIMES.
IT WOULD ALSO OPEN THE DOOR TO ILLEGAL MINING.
IT IS UN-CHRISTIAN AND SELFISH IN THE EXTREME TO SAY
“LET SOMEONE ELSE DO IT”.
MINING CHART 4
MARCH 1, 2012
“VERY PROBABLY THE PHILIPPINES WILL DEFEND WITH INDESCRIBABLE ARDOR THE LIBERTY SHE HAS BOUGHT AT THE COST OF SO MUCH BLOOD AND SACRIFICE. WITH THE NEW MEN THAT WILL SPRING FROM HER BOSOM AND THEIR REMEMBRANCE OF THE PAST , SHE WILL PERHAPS ENTER OPENLY THE ROAD OF PROGRESS WITH WHICH A YOUNG MAN RETURNS TO CULTIVATE HIS FATHER’S FARMLAND SO LONG DEVASTATED AND ABANDONED DUE TO THE NEGLIGENCE OF THOSE WHO HAVE ALIENATED IT.
THEN THE MINES – GOLD, IRON, COPPER, LEAD, COAL AND OTHER MINERALS – WILL BE WORKED AGAIN AND WILL HELP SOLVE THE PROBLEMS OF POVERTY.”
DR. JOSE RIZAL SAID:
MINING CHART 5
MARCH 1, 2012
AND EVEN THE BIBLE IN DEUTERONOMY CHAPTER 8 VERSES 7-9:
“FOR THE LORD YOUR GOD IS BRINGING YOU INTO A GOOD LAND—A LAND WITH BROOKS, STREAMS, AND DEEP SPRINGS GUSHING OUT INTO THE VALLEYS AND HILLS; A LAND WITH WHEAT AND BARLEY, VINES AND FIG TREES, POMEGRANATES, OLIVE OIL AND HONEY; A LAND WHERE BREAD WILL NOT BE SCARCE AND YOU WILL LACK NOTHING; A LAND WHERE THE ROCKS ARE IRON AND
YOU CAN DIG COPPER OUT OF THE HILLS.”
I’M PRO-ENVIRONMENT.I FOUNDED A FOUNDATION FOR WATERSHED PROTECTION.
MY DAUGHTER IS AN ENVIRONMENTAL SCIENTIST.BUT I MUST HAVE MINERALS IN MY LIFE.
MINING CHART 6
MARCH 1, 2012
THE ANSWER IS TO CONTROL MINING –
TO DO THE LEAST POSSIBLE DAMAGE
TO SUPPORT THE LOCAL COMMUNITY
TO REHABILITATE THE LAND AT THE END OF THE LIFE OF THE MINE
THE ROLE OF EVERYONE SHOULD BE
TO ENSURE THOSE 3 THINGS ARE DONE.
THE SOLUTION IS:
RESPONSIBLE MINING NOT BAN MINING.
…MINING IS UNAVOIDABLE
MINING CHART 7
MARCH 1, 2012
Mining in our daily lives
MINING CHART 8
MARCH 1, 2012
Mining in our daily lives
Farming and Fishing need Mining
MINING CHART 9
MARCH 1, 2012
Clock: iron, nickel, petroleum, silica⑪ Sink: iron, nickel
Radio: copper, gold, iron, petroleum Toaster: copper, iron, nickel, mica, chromium, petroleum Electrical Wiring: copper, aluminum, petroleum Microwave: copper, gold, iron, silica Stove: aluminum, copper, iron, nickel, silica Refrigerator: aluminum, copper, iron, nickel, petroleum, zinc Salt: halite
Plates: clay, silica, feldspar Cutlery: iron, nickel, silver, chromium
Mining in our daily lives
MINING CHART 10
MARCH 1, 2012
Computer: gold, silica, nickel, aluminum, zinc, iron, petroleum Pencil: graphite, clay Telephone: copper, gold, petroleum Books: limestone, clay Pens: limestone, mica, petroleum, clay, silica, talc Film: petroleum, silverCamera: silica, zinc,
copper, aluminum, petroleum
Chair: aluminum, petroleumTelevision: aluminum,
copper, nickel, silica, strontium
Mining in our daily lives Stereo: gold, iron, nickel, beryllium, petroleum⑪ CD: aluminum, petroleum⑫ Chest: iron, nickel,
copper, zinc⑬ Floor: limestone⑭ Wall: gypsum, clay, mica
MINING CHART 11
MARCH 1, 2012
2200 lbs. of iron & steel240 lbs. of aluminum
50 lbs. of carbon42 lbs. of copper41 lbs. of silicon
22 lbs. of zinc405 lbs. of 30 other minerals including titanium, platinum,
and gold
Mining in our daily lives
An average car uses these metals
MINING CHART 12
MARCH 1, 2012
iron, copper, nickel, lead, zinc, aluminum, manganese, chromium, vanadium, tungsten, platinum, gold, silver
Mining in our daily lives
Your tricycle can’t run without these metals
MINING CHART 13
MARCH 1, 2012
IRON: electronics, screws, brackets
LEAD & TIN:circuit boards
COPPER:circuit boards,
wires
ALUMINUM:brackets, heat sinks
GOLD:Integrated circuits
Mining in our daily lives
Your TV works because of these metals
MINING CHART 14
MARCH 1, 2012
58% plasticsmade of petroleum
16% ceramics made of silica
24% copper
2% silver, gold, palladium, platinum
Mining in our daily lives
An average cellphone contains
MINING CHART 15
MARCH 1, 2012
• WE NEED A METAL SEWING MACHINE
• WE NEED A METAL CLOTH PRODUCTION MACHINE
• WEAVING ON A WOODEN WEAVE IS OK IF THERE ARE 100-M PEOPLE IN THE WORLD
Mining in our daily lives
MINING CHART 16
MARCH 1, 2012
Mining in our daily livesThe Church uses products of Mining
So we must have mining in our lives
MINING CHART 17
MARCH 1, 2012
OVER THE PAST 20 YEARS THE PHILIPPINES HAS BEEN THE POOREST PERFORMER
PERFORMANCE IN ASEAN
WE HARDLY MADE A DENT ON POVERTY UNLIKE OUR NEIGHBORS2.3 MILLION FAMILIES ALREADY ON CCT BECAUSE THERE ARE NO JOBS
INDONESIA EMPLOYS 1.5M IN MINESTHE PHILIPPINES ONLY 340,000
ESTIMATED PROPORTION OF POPULATION LIVING BELOW
$1.25/DAY (IN PPP)
Philippines
MINING CHART 18
MARCH 1, 2012
MINERAL ORE GLOBAL RANK ESTIMATED RESERVES (TONS)
GOLD 3RD 5 BILLION
COPPER 4TH 8 BILLION
NICKEL 5TH 0.8 BILLION
CHROMITE 6TH 40 MILLION
THE PHILIPPINES RANKS HIGH IN THE WORLDON MINERAL RESOURCES RESERVES
MINING CAN PROVIDE THE BOOST THE ECONOMY NEEDSTOTAL REVENUES $43-B, 3% OF GDP BY 2018
INVESTMENTS FROM 2011-2017 PROJECTED TO REACH $15-BWILL HAVE 3% SHARE TO GDP BY 2018
MINING CHART 19
MARCH 1, 2012
SHARE OF MINERAL EXPORTS TO TOTAL ANNUAL EXPORTS (%)
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010-5
15
35
55
75
Philippines
Peru
Chile
Brazil
S. AfricaVietnam
India
MINING CHART 20
MARCH 1, 2012
OVER THE NEXT 5 YEARS WE EXPECTTHE PHILIPPINE ECONOMY TO GROW AT AN AVERAGE OF 5.5%
GDP GROWTH FOR THE PAST 25 YRS
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
-2
0
2
4
6
8
10 GOV’T CAN EASILY RAISE GDP GROWTH TO AT LEAST 6.5% P.A. BY SPENDING MORE ON INFRA
AND SUSTAINING THE ANTI-CORRUPTION STANCE.
THAT’S ASSUMING EVERYTHING CONTINUES ON THE CURRENT TRACK.
BUT MINING CAN BE A GAME-CHANGER.
TAMPAKAN ALONE CAN ADD 1% AGE POINT TO GDP GROWTH
MINING CHART 21
MARCH 1, 2012
WE CAN LOOK AT 2 SCENARIOSAWAITING THE MINING SECTOR:
SCENARIO 1
MINING GETS FULL GOVERNMENT SUPPORT AND FAST ACTION ON APPROVALS ETC.
WHILE THE OPPOSITION REALIZES THEIR ROLE IS TO HELP CONTROL, NOT BLOCK MINING.
INVESTORS PUT REAL MONEY IN
MINING CHART 22
MARCH 1, 2012
SUSTAINABLE, WORLD’S BEST PRACTICE MINING – UNDER CLOSE MONITORING OF FORMIDABLE WATCHDOGS
AT LEAST 112,000 MORE DIRECT JOBS FROM $15-B INVESTMENTS: JOBS THAT PAY WELL, GET WORKERS’ KIDS TO SCHOOL, & ENSURES WORKERS’ FAMILIES DON’T GO HUNGRY
ROADS, SCHOOLS & HOSPITALS BUILT IN REMOTE AREAS
THEN WHAT HAPPENS?
ELECTRICITY AND WATER COME TO THE VILLAGE
WE BREAK THE POVERTY TRAP
GDP GROWS AT 7-8% P.A., NOT 5.5%
MINING CHART 23
MARCH 1, 2012
INFORMAL, SMALL-SCALE MINING TAKES OVER
DISASTERS CONTINUE AND MINING COMMUNITIES REMAIN POVERTY-STRICKEN
SCENARIO 2
GOVERNMENT CONTINUES TO DILLYDALLY & FLIP FLOP
OPPOSITION SUCCEEDS IN BLOCKING DEVELOPMENT
THE OPEN PIT BAN STAYS, EVEN EXPANDS
INVESTORS LEAVE
THEN WHAT HAPPENS?
JOBS AREN’T CREATED, SUPPORT SERVICES DON’T HAPPEN
ECONOMY SUFFERS, GDP TRICKLES ALONG AT 3.5-4%
MINING CHART 24
MARCH 1, 2012
WHY IS RESPONSIBLE MINING BENEFICIAL?
1. CONTRIBUTES TO GROWTH OF LOCAL AND NATIONAL ECONOMY
Investing capital and re-investing profit in the country Revenue generation through taxes Utilization of local goods and services Additional employment in rural areas Improvement of infrastructure (roads, power and water
systems, buildings)
MINING CHART 25
MARCH 1, 2012
2. IMPROVES THE QUALITY OF LIFE ESPECIALLY IN RURAL AREAS
Provides infrastructure for community dev’t (roads, housing)
Provides access to hospitals and other healthcare facilities
Brings in quality education in remote areas Implements social management and dev’t programs
MINING CHART 26
MARCH 1, 2012
3. SUPPORTS THE ENVIRONMENT
Implements best and sustainable environmental practices in mining
Carries out progressive mine rehabilitation Builds structures that prevent disasters and
environmental degradation Fully rehabilitates the area at the mine’s end
IT’S SMALL SCALE THAT DOESN’T DO ANY OF THIS
MINING CHART 27
MARCH 1, 2012
THE PHILIPPINES HAS THE LOWEST LEVEL OF PERSONAL WEALTH
MINING IS NOT THE ONLY REASON, BUT IT’S CERTAINLY A MAJOR REASON.
COUNTRY 2010 GDP per CAPITA (US$)
INDONESIA 4,200VIETNAM 3,100PHILIPPINES 2,200
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
0
2
4
6
8
10
12
14
Philippines
MINING CONTRIBUTION TO GDP (%)
Vietnam
Indonesia
MINING CHART 28
MARCH 1, 2012
SAUDI ARABIA IS RICH BECAUSE IT HAS OIL AND PUMPS IT OUT OF THE GROUND TO SELL IT.
THE PHILIPPINES IS POOR BECAUSE IT HAS GOLD IN THE GROUND – AND LEAVES IT THERE.
MINING WEALTH OF THE COUNTRY IS ESTIMATED TO BE AT $840 BILLION OR P47 TRILLION
(4 TIMES THE ANNUAL GDP)
BUT THE PHILIPPINES ACCOUNTS FOR LESS THAN 3% OF WORLD MINERAL SUPPLY DESPITE BEING RICHLY
ENDOWED WITH RESOURCES.
MINING CHART 29
MARCH 1, 2012
MINERAL EXPORTS IN 2011 AMOUNTED TO A MERE $2 BILLION
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
0
5
10
15
20
25
IT’S A MERE 5% OF EXPORTS TODAY.IF IT HAD CONTINUED AT 20%, IT WOULD HAVE BEEN $9-B
THE CONTRIBUTION OF MINING TO THE ECONOMY CAN’T BE DENIED
PERCENT SHARE OF MINING TO TOTAL EXPORTS SINCE 1975
IN THE 1970’S, MINERAL EXPORTS PEAKED &CONTRIBUTED 24% TO TOTAL EXPORTS.
MINING CHART 30
MARCH 1, 2012
JUST FOR THE 1ST 3Q OF 2011, LARGE-SCALE METALLIC MINING EMPLOYED 220,000
TOTAL EMPLOYMENT IN METALLIC AND NON-METALLIC MINING IS AROUND
340,000.
THEN ADD TO THAT ALL THE EMPLOYEES OF SUPPORT SERVICES AND SUPPLIERS,
PROBABLY RUNS TO ≈2 MILLION2002
2003
2004
2005
2006
2007
2008
2009
2010
3Q20
11
0
50
100
150
200
250
EMPLOYMENT IN MINING AND QUARRYING (IN THOUSANDS)
MINING CHART 31
MARCH 1, 2012
MINING EMPLOYS 220,000 ON 60,000 HAS. = 0.2% LAND MASS
AGRICULTURE EMPLOYS 12M ON 9.6M HAS. = 32% LAND MASS
ON A PER HECTARE BASIS:
MINING EMPLOYS 4 PERSONS/HA. WHILE
AGRICULTURE EMPLOYS 1 PERSON/HA.
AVE. MINING WAGE (rank and file)* : P550/day = P2,200/ha.VS.
AVERAGE FARMER INCOME**: P260/day = P260/ha.
PEOPLE-WISE WHICH IS THE BETTER LAND USE?
*data from a responsible mining firm**from National Wages and Productivity Commission; ave. among regions
MINING CHART 32
MARCH 1, 2012
MajorRice Producers
10 Largest Rice Producersin the Philippines (in tons):
1. Nueva Ecija - 1, 356, 1612. Isabela - 1, 036, 917 3. Pangasinan - 1, 011, 115 4. Iloilo - 823, 376 5. Cagayan - 702, 561 6. Leyte - 582, 890 7. Camarines Sur - 560, 889 8. Tarlac - 557, 943 9. North Cotabato - 449, 202 10.Maguindanao - 433, 766
No Operating Mines are located in these
Provinces!
Operating Mines
MINING CHART 33
MARCH 1, 2012
A TYPICAL MPSA COMPANY OR PROJECT ALREADY CONTRIBUTES ABOUT 43.7% OF ITS REVENUES TO THE PUBLIC SECTOR
AND WITH ROYALTIES, IT CAN GO AS HIGH AS 52.8%
ASIDE FROM TAXES, THE PUBLIC SECTOR ALSO BENEFITS FROM OTHER FORMS OF CONTRIBUTIONS OF RESPONSIBLE MINING COMPANIES TO THE ECONOMY
MINING CHART 34
MARCH 1, 2012
CONTRIBUTIONS OF TVI PACIFIC INC. Million (PHP)
Roads 94Employment 413Property Rights of Subanen 40Water 1Education 23Training-capacity, agriculture, crafts, apprenticeship, on-the-job 14Health facilities and medical personnel, ambulance 37Transportation-to market, work 10Environmental cleanup 2003 (pre-project)-SSM mercury, cyanide 24Taxes and royalties - municipal, excise, royalty to Subanen, royalties to rights owner 537 TOTAL 1.2 BILLION
FOR EXAMPLE:
THE MUNICIPALITY OF SIOCON HAS GONE FROM CLASS 4 TO CLASS 1
MINING CHART 35
MARCH 1, 2012
Philippines/Actual MPSA Company
OECD Africa Latin America
-10%
0%
10%
20%
30%
40%
50%
60%
43.7%
32.6% 34.4% 39.5%
Data for Philippines are based on an actual MPSA company
Source: Data on OECD, Africa & Latin America were sourced from PWC Global Study on Total Tax Contribution of Mining
TOTAL TAX RATE BY REGIONTOTAL TAXES AS % NET INCOME
FURTHER RAISING TAX RATES WILL RENDER THE COUNTRY EVEN LESS COMPETITIVE THAN IT IS NOW
MINING CHART 36
MARCH 1, 2012
PH VS. INDONESIA (MINING TAXES)
PHILIPPINES INDONESIA (1)Type of Metal All Copper Gold Nickel (2)
1) Income Tax 30% 25% 25% 25%Taxes/Fees/Royalties (3) Excise Tax (4) 2.0% 4.0% 3.75% 5.0%Business Tax (5) 1.5% N/A N/A N/A
In Mineral Reserve
Add: Mineral Reserve Royalty 5.0% N/A N/A N/A In Ancestral Land
Add: Royalty to IPs 1.0% N/A N/A N/A 2) Total 9.5% 4.0% 3.75% 5.0%
Notes:1. Assumes publicly listed company; royalty rates following approval of Regulation No. 9, 2012.2. Royalty is applicable to Nickel Ore; Nickel Matte is taxed at 4%.3. Based on Gross Output.4. Royalty in the case of Indonesia.5. Assumes municipalities charge at the maximum allowable rate of 70% of 2% as per Sec. 143 (h) of the Local Gov't Code; the 30% balance is charged at the rate applicable in Makati.
MINING CHART 37
MARCH 1, 2012
THE TAMPAKAN PROJECT
OVER 5 YEARS IT WOULD PAY:
P250B IN NATIONAL TAXES P95B IN LOCAL TAXES
IT WOULD ADD 10.4% TO RGDP
OVER 20-YEAR LIFE, PAY $7.2-B TO GOVERNMENT=P15 BILION PER YEAR
ONE OF THE LARGEST UNDERDEVELOPED COPPER-GOLD PROJECTS IN THE WORLD
A $5.9 BILLION INVESTMENT – LARGEST EVER FDI
WE ONLY ATTRACTED ABOUT $1.7 BILLION IN 2010 AND UNDER $1-B LAST YEAR!
MINING CHART 38
MARCH 1, 2012
REGIONAL INCOME WILL INCREASE FROM ADDITIONAL EMPLOYMENT
ABOUT 10,000 JOBS DURING PEAK OF CONSTRUCTION PHASE
AND 2,000 JOBS DURING OPERATIONS PHASE
BETWEEN 12% AND 130% INCREASE IN AVERAGE PER CAPITA INCOME IN HOST VILLAGES
- UP TO P250-M P.A. IN HOST VILLAGES
- UP TO P120-M IN OTHER VILLAGES IN HOST MUNICIPALITIES
- UP TO P265-M IN OTHER MUNICIPALITIES IN HOST PROVINCES
THE TAMPAKAN PROJECT
Source: David PearceCentre for International Economics
MINING CHART 39
MARCH 1, 2012
IN THE FRASER INSTITUTE ANNUAL SURVEY OF MINING COMPANIES, PHILIPPINES IS IN THE BOTTOM 10
HOWEVER THE COUNTRY WOULD PLACE 7TH – FROM THE TOP – ASSUMING A “BEST PRACTICES” POLICY REGIME
2008/2009 2009/2010 2010/2011 2011/2012
OVERALL RANK AS DESTINATION OF MINING
INVESTMENTS59 70 66 88
NO. OF COUNTRIES SURVEYED 71 72 79 93
RANK BASED ON PURE MINERAL
POTENTIAL(ASSUMES A “BEST PRACTICES” POLICY REGIME)
11 33 19 7
THUS, INVESTMENTS WOULD COME IN IFTHE GOV’T ADOPTED MARKET-ENABLING POLICIES
MINING CHART 40
MARCH 1, 2012
AGAIN, THE SOLUTION:RESPONSIBLE MINING, NOT BAN MINING.
WHAT IS NEEDED IS REGULATORY CHANGES THAT WILL ADDRESS THE REAL PROBLEMS IN THE INDUSTRY.
AND EFFECTIVE IMPLEMENTATION OF THEM.
1. PUT SMALL SCALE MINING UNDER NATIONAL CONTROL.
ENSURE THEY ACT RESPONSIBLY SO AS TO MINIMIZE HARM TO THE ENVIRONMENT
STOP THEIR USE OF MERCURY REQUIRE THEM TO PAY TAXES SELL THEIR GOLD TO THE BSP – AS MANDATED STOP ILLEGAL EXPORT
MINING CHART 41
MARCH 1, 2012
2. STRENGTHEN THE CAPABILITY OF DENR AND MGB TO PROPERLY AND FULLY MANAGE MINERALS DEV’T – BY BOTH SMALL AND LARGE-SCALE MINES. AND FUND IT ADEQUATELY.
3. LOCAL LAWS CANNOT BE ALLOWED TO OVERRULE NATIONAL LAW. ANY BAN OR CONTROL IN A PARTICULAR AREA MUST COME FROM THE NATIONAL GOV’T AND BE IN LINE WITH NATIONAL LAW.
4. SHARE OF REVENUES TO GOV’T MUST BE FAIR. BUT MUST KEEP THE COUNTRY COMPETITIVE WITH OTHERS TO MAINTAIN INVESTOR CONFIDENCE & INTEREST.
MINING CHART 42
MARCH 1, 2012
5. ANY CHANGE CANNOT BE RETRO-ACTIVE, AND MUST RESPECT INTERNATIONAL TREATIES. GRANTED AGREEMENTS MUST BE HONORED.
6. THE ENVIRONMENT MUST BE PROTECTED – BUT IN A REALISTIC FASHION. MINES MUST PROGRESSIVELY RESTORE THE LAND AND DO A FULL REHABILITATION AT THE END OF THE MINE’S LIFE. RESPONSIBLE COMPANIES WILL.
MINING CHART 43
MARCH 1, 2012
MINING IS UNAVOIDABLETHIS IS A FUNDAMENTAL POINT
THAT CANNOT BE IGNORED –
AND MUST BE TAKEN INTO ACCOUNT:
OUR DAILY LIVES ARE DEPENDENT ON MINED PRODUCTS.
SO WE HAVE TO CONTROL, NOT BAN.
LET US WORK TOGETHER ON CONTROL.
THANK YOU.
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